Recent Decisions of Interest to Labor' Wages and Hours 2 Motor Carrier Act Exemption-Employees in Intrastate Transportation. Section 13 (b) (1) of the Fair Labor Standards Act exempts from the maximum-hours requirements "any employee with respect to whom the Interstate Commerce Commission has power to establish qualifications and maximum hours of service pursuant to the provisions of section 204 of the Motor Carrier Act, 1935." In a recent case the United States Supreme Court considered the applicability of this exemption to a motor carrier's employees whose activities in interstate transportation, as a group, amounted to less than 4 percent of their total employment activities during the year. 3 The employees in question were truck drivers and mechanics, 96 percent of whose work activities dealt solely with intrastate transportation of commodities most of which were, however, destined to move in interstate commerce. They worked over 40 hours a week and received only the regular rate of pay for all hours worked. The Administrator of the Fair Labor Standards Act sought to enjoin their employer from violating the act, contending that these employees did not fall within the exemption in section 13 (b) (1). The facts, as they appeared to the Court, indicated that the drivers' and mechanics' services 1 Prepared in the Office of the Solicitor, U. S. Department of Labor. The cases covered in this article represent a selection of the significant decisions believed to be of special interest. No attempt has been made to reflect all recent judicial and administrative developments in the field of labor law or to indicate the effect of particular decisions in jurisdictions in which contrary results may be reached, based upon local statutory provisions, the existence of local precedents, or a different approach by the courts to the issue presented. This section is intended merely as a digest of some recent decisions involving the Fair Labor Standards Act and the Portal-to-Portal Act. It is not to be construed and may not be relied upon as an interpretation of these acts by the Administrator of the Wage and Hour Division or any agency of the Department of Labor. 3 Morris v. McComb (U. S. Sup. Ct., Nov. 17, 1947). in interstate transportation amounted to less than 4 percent of the employer's total trucking services, and that the employees' performance of such services was shared indiscriminately and mingled haphazardly with the performance of similar services not interstate in character. For example, one driver made 97 interstate trips; two made none; and for the group as a whole the number of such trips averaged 16. On the basis of these facts, the Court ruled that such employees were subject to the power of the Interstate Commerce Commission to establish qualifications and maximum hours of service for the entire group of the carrier's drivers and mechanics pursuant to section 204 of the Motor Carrier's Act, and that the exemption under the Fair Labor Standards Act applied. The Court held that the Commission's power was based on congressional intent to assure safety in interstate transportation. Hence, the amount of time employees actually spent in interstate transportation activities and the manner in which these activities were actually divided among the employees in the group were immaterial. The fact that the Commission had not established qualifica tions and maximum hours for these employees was not the test; the statute requires only that the Com mission has such power in order to exempt employ ees in interstate transportation from the overtime provisions of the Fair Labor Standards Act. Four justices dissented, Mr. Justice Murphy taking the position that the exemption in section 13 (b) (1) of the Fair Labor Standards Act was intended to apply only to employees devoting & substantial part of their activities to interstat transportation. The majority decision, he held would permit widespread evasion of the act by carriers primarily engaged in intrastate trans portation. Persons Making Railroad Car Doors Held Railroad Employees. A determination by a trial court that persons engaged by a railroad company t manufacture doors for the railroad's freight car on railroad property are not independent con tractors and employers but are, together with the workmen they hired and supervised, employees o the railroad, was upheld by a United States Cir Walling v. McKay, 70 F. Supp. 160. cuit Court of Appeals. None of these employees, therefore, are subject to the overtime provisions of the Fair Labor Standards Act as they fall within the exemption of section 13 (b) (2) which applies to certain classes of railroad employees. The employees making the doors were hired, fired, paid, and supervised by the managers and not by the railroad company, and the managers assumed the economic risks of profit and loss. The contract between the managers and the railroad declared that the former were independent contractors and that their workmen were not employees of the railroad. Neither the managers nor their workers were on the railroad's pay roll, and they received none of the rights and privileges of railroad employees. On the other hand, the relationship between the managers and the railroad imposed no obligation on either party to continue the arrangement. The railroad provided practically all the working material and equipment. Further, it had submitted to a ruling by the Commissioner of Internal Revenue that the manager and his workers were railroad employees, and it treated them as such for tax purposes. The Circuit Court, relying on the United States Supreme Court's decision in Rutherford Food Corp. v. McComb," held that the existence of an independent contractor or employer-employee relationship is not to be determined solely by the terms of the contract, nor by traditional commonlaw concepts of master and servant, but rather by the actual facts and circumstances of the case. Weight Accorded Ruling of Wage and Hour Local Office. In a suit by employees to recover unpaid overtime compensation and liquidated damages under the Fair Labor Standards Act, the trial court denied recovery, holding that the employees were executives and exempt from the overtime provisions of the act. In so ruling, the trial court refused to admit in evidence the determination of the local office of the Wage and Hour Division that the employees bringing the suit were not executives. On appeal, the United States Circuit Court of Appeals sustained the trial court, holding it had properly excluded such evidence, and that, in any event, such evidence was not entitled to the weight given to the regulations and interpretative bulletins of the Administrator of 7 McComb v. McKay, U. S. C. C. A. (8th), Nov. 4, 1947. Cintron v. Bull Insular Line, Inc. (U. 8. C. C. A. (1st), Nov. 7, 1947). . the Wage and Hour Division. Such regulations and bulletins are general interpretations of the law or statements of standards to which the courts give great weight in deciding individual cases. The trial court was not bound to accord weight to the determination of the local office, since this was the question that was to be decided by the court. If the determination of the local office were accepted, the employer would be denied any opportunity to show that it was erroneous. 8 Reliance on Court's Decision or Attorney's Opinion Not Good-Faith Defenses. In a suit by an employee under the Fair Labor Standards Act, a district court denied the validity of the employer's "good faith" defenses raised by him under sections 9 and 11 of the Portal-to-Portal Act. One defense was based on the fact that in a previous injunctive suit by the Administrator, the trial court ruled that the employees involved were exempt from the Fair Labor Standards Act. The Administrator appealed but abandoned his appeal. The district court held that neither such abandonment nor the trial court's decision constituted an administrative regulation, order, ruling, approval, or interpretation of an agency of the United States or an administrative practice or enforcement policy of any such agency upon which the employer could rely as a valid "good faith" defense under section 9. The other defense asserted that the employer relied in good faith on his attorney's opinion that the employees in question were exempt from the Fair Labor Standards Act. The court held that such reliance was insufficient to prove good faith under section 11 of the Portal-to-Portal Act, and that the attorney's opinion did not constitute reasonable grounds for believing that the employees were exempt from the Fair Labor Standards Act. The case is being appealed to the Circuit Court of Appeals for the Eighth Circuit. Labor Relations Discharge for Cause. Section 10 (c) of the amended National Labor Relations Act provides: "No order of the Board shall require the reinstatement of any individual as an employee who has been suspended or discharged, or the payment to him of any back pay, if such individual was suspended or discharged for cause." A United Gustafson v. Wolferman, Inc. (U. 8. D. C. W. D. Mo., Sept. 24, 1947). States Circuit Court applied this provision in a recent case, in which the Board had ordered reinstatement of certain discharged employees. The employer, after a strike, had discharged 150 employees. The Board found that the employer had sufficient economic reason-curtailment of his business-to justify such a reduction in force. The employer contended that inasmuch as the Board had found the reduction to be economically justified, the employees involved in the proceeding were not entitled to reinstatement as they had been discharged for cause within the meaning of section 10 (c) of the act. The court sustained the Board's conclusion that the discharge of such employees was discriminatory. The Board found that the ratio of strikers to nonstrikers who were fired was 12 to 1, whereas the ratio of strikers to nonstrikers in the entire force was only 2 to 1; that several of the union members discharged had greater seniority and ability than nonunion employees who were retained; and that the employer's personnel director admitted that participation in the strike was one of the considerations used in making up the discharge roster. Said the court: Consequently, although the discharges were for cause in the sense that there was a legitimate business reason for making them, they were not for cause in the sense that there was any lawful basis for the selection of the particular employees discharged. That the term "for cause" was used in the statute [section 10 (c)] in both senses, there can be no doubt. Effect of Campaign Promises on Validity of Representation Election. In a recent situation, the National Labor Relations Board ordered the employer to bargain with the Union certified as the bargaining representative of his employees in an election conducted by the Board. In a proceeding for review in a Federal Circuit Court, 10 the Board's request for enforcement of its order was allowed. The employer sought to justify his refusal to bargain on the ground that the union did not properly represent a majority of the employees. He contended that the union, during its preelection campaign, used fraudulent, illegal, and • National Labor Relations Board v. Sandy Hill Iron & Brass Works (U. S. C. C. A. (2d), Nov. 5, 1947). 10 Wilson Athletic Goods Mfg. Co. v. National Labor Relations Board (U.S. O. C. A. (7th), Nov. 18, 1947.) unfair methods to secure votes. He sought t introduce evidence that after the election, severa employees who voted for the union, stated t him that they had voted for it only because the were misled by the false campaign statements o the union, and that the number who so com plained were sufficient to have changed the resul of the election. The court, in sustaining the Board, ruled tha no error prejudicial to the employer was com mitted in excluding evidence which was immateria and legally insufficient to prove that the election was not valid under the law, when the election itself was conducted fully pursuant to all th statutory requirements. Said the court: We think the Board has discharged its full duty if it provides an election, surrounded with the usual safeguards, where the employee is permitted to cast a ballot in secrecy and have it counted as cast. To permit employees, subsequent to such election, to testify as was attempted to be done in the instant case, that they cast a ballot contrary to that which they intended because of false preelection promises, would destroy the stability which an election was devised to produce. Failure to File Non-Communist Affidavits. I several recent decisions the National Labor Rela tions Board has dealt with the failure of union seeking certification as bargaining representative to file the financial and organizational data an the non-Communist affidavits required by se tions 9 (f), (g) and (b) of the amended Nation Labor Relations Act. In one case 11 the Boar dismissed a petition that was pending on the da the amendments to the act became effectiv after the union had failed to comply with th act's filing requirements within the time give it by the Board. The Board stated that th act's prohibition of any investigation of a repr sentation question in which the union failed file the required data and affidavits was intende to preclude not only the initiation of such s investigation but its continuation or completi as well. The Board construed the term "invest gation" to include every step in a representati proceeding until its completion, including t election itself. Since, the amendments becan effective prior to the completion of the invest gation and the union failed to comply with t u In re Rite-Form Corset Co., Inc., 75 NLRB No. -, Nov. 4, 1947. filing requirements, the representation petition had to be dismissed. In two other cases 11 the petitioning unions had Fon consent elections held prior to the effective late of the Taft-Hartley Act, but had not been ertified prior to that date. The Board ruled that the unions' failure to comply with the affidavit and iling requirements of the act render them ineligible for certification, and that the act of certification is in fact the last step in the investigation. In another case 13 the intervening union was denied a place on the ballot, because it had failed aither to achieve or to initiate compliance with the filing requirements of the Taft-Hartley Act. In still another decision 14 the Board permitted & labor organization to intervene, but its participation in any election which might be held was made contingent upon compliance with sections 9 (f), g) and (h) before a specified date. Appropriate Unit-Extent of Organization. The petitioning union in a representation proceeding, sought a unit which would include only the employees in a small section of the enterprise, having been unsuccessful in organizing all the employees in the establishment. There was no history of collective bargaining among the employees. The Board held 15 that, while the employees to be included in the unit could be distinguished on functional grounds from the rest of the employer's workers, there were sharp functional distinctions among the employees within the unit sought, and none fell within any recognized craft grouping. Hence, it could find no criteria for setting these employees apart in a separate bargaining unit except the fact that the union had already succeeded in organizing them. The Board ruled that the extent of organization is a factor, among others, to be given weight in determining the appropriate unit; however, if it is the sole factor it cannot be the determinative element because section 9 (c) (5) of the National Labor Relations Act, as amended by the Taft-Hartley Act, provides that "the extent to which the employees have organized shall not be controlling." In re Myrtle Desk Co., 75 NLRB No. —, Nov. 17, 1947. In re Colonial Radio Corp., 75 NLRB No. —, Nov. 17, 1947. In re Sigmund Cohn & Co., 75 NLRB No. —, Nov. —, 1947. * In re Kinsman Transit Co., 75 NLRB No. 16, Oct. 28, 1947. In re Delaware Knitting Co., Inc., 75 NLRB No. 27, Nov. 14, 1947. Veterans' Reemployment Promotion of Veterans. In a recent case 16 under the Selective Training and Service Act, veterans requested reemployment in higher positions than the ones they left, claiming that during their military service, the employer had promoted several who had less seniority than they did. The court, in denying the veterans' request, held that the veterans were not entitled to the promotions sought unless they could prove that their employer did not consider them to be on furlough or leave or had failed to treat them in accordance with his established rules and practices relating to employees on furlough or leave. The employer's regular, and well-established practice was that employees on furlough or leave lose any promotional opportunities occurring during their absence. 19 The same court in a very similar case" held that a veteran's period of military service did not count in determining his wage rate when his employer's established practice at the time of the veteran's entry into military service was not to credit his employees' furlough or leave time for the purpose of computing their next periodic wage increase. Resigning From Position on Deferred Status to Become Available for Induction. In a recent case,' a Federal district court held that a veteran who had been deferred because his occupation was essential, and who, in order to get into the military service, resigned from his deferred position, was not entitled to the reemployment benefits conferred by section 8 of the act. The veteran's draft classification was not changed to 1-A until after his resignation, and he was not inducted until 2 months after his resignation. The court reasoned that the veteran had not left his employment in order to perform service in the armed forces, because at the time of his resignation, he could not under the law either enlist or be inducted. Hence, his resignation was for the purpose of acquiring a nondeferrable draft status which he hoped would eventually lead to his induction into military service. Merger of Two Positions. Under the Selective Service Act an employer need not reemploy a veteran if circumstances have so changed as to 16 Trischler v. Universal Potteries (U. 8. D. C. S. D., Ohio, Nov. 13, 1947). 1 Nevins v. Curtiss-Wright Corp. (U. S. D. C. S. D., Ohio, Nov. 13, 1.947) 19 Rudisill v. Chesapeake & Ohio Ry. Co. (U. S. D. C. W. D., Va., Oct. 14 1947). make reemployment unreasonable. This provision was considered in a recent case,20 in a Federal district court. The veteran, an attorney employed as a claims adjuster by a casualty insurance company, left the company's service to enter the armed forces at a time when the company employed two claims adjusters. Thereafter, the remaining adjuster performed both his own duties and those of his former co-worker. Upon the remaining adjuster's resignation, the company hired another, who alone performed all the company's claim-adjusting work. The company refused to reemploy the veteran upon his application for reemployment. The court ruled that the veteran was entitled to his reemployment rights under the act. The decrease in the volume of the employer's business which permitted one adjuster to take care of all the claims formerly handled by two adjusters, the court held, was not such a change in circumstances as to make it unreasonable to require reemployment of the veteran in his former position. Position of Like Seniority, Status, and Pay. A recent decision 21 by a Federal district court under the Selective Service Act makes several interesting points. The veteran at the time of his induction had been co-manager and secretary of the enterprise, the defendant being the president and other co-manager. Each was receiving $500 a month as a salary, and each had reached that level by successive, equal, and simultaneous wage increases. During the veteran's service, the defendant acquired majority control of the corporate enterprise and changed it to a partnership with the defendant becoming general partner and the veteran a limited partner. Upon the veteran's discharge the defendant, who was receiving a monthly salary of $750 offered the veteran his old salary of $500 per month. The court held that this offer did not satisfy the requirements of the act, since the defendant co-manager was receiving a greater salary at the time the offer of reemployment was made. It also ruled that the change in the business from a corporation to a partnership was not such a change in the employer's circumstances as would make the veteran's reemployment unreasonable. » Jennings v. Public Mutual Casualty Co. (U. S. D. C. E. D. Mo., Sept. 19, 1947). 1 Kan v. Trang (U. 8. D. C.'N. D. Calif., Nov. 13, 1947). Decisions of State Courts Arizona-Unemployment Compensation After Strike Ceases. The Arizona unemployment compensation law denies unemployment compensation to workers whose unemployment is due to a work stoppage caused by a labor dispute. The Arizona Supreme Court recently decided 22 that strikers are disqualified to receive such benefits only so long as the work stoppage is current. Once the strikers have been replaced and the employer has resumed operations, a work stoppage within the meaning of the statute no longer exists and the displaced employees become eligible for unemployment compensation benefits. Kentucky-Compulsory Payment for Voting Time Unlawful. A Kentucky statute requires an employer to permit an employee to absent himself from work for 4 hours on election day in order to vote and makes it a misdemeanor for the employer to deduct from the wages of any employee who exercises such statutory right. The State constitution provides that the employer must permit the employee to so absent himself but is silent with respect to payment of wages for such time. In two cases 23 the Kentucky high court held that the provision of the statute compelling the employer to pay for the time spent by the employee in voting violated both the Kentucky State and the United States Constitutions since it (1) arbitrarily required employers to pay for work which is not performed, (2) discriminatorily required employers to subsidize the voting privilege of their employees, and (3) did not constitute a reasonable exercise of the police power. The court's basic position was that this particula statutory provision deprived the employer of his property without due process of law. New Jersey-Injunction Against Mass Picketing A jurisdictional dispute between carpenters and iron workers engaged on a construction projec resulted in a walk-out by the carpenters. Some time later the carpenters, deciding to return to work, found their access to the project successfully barred by the iron workers' mass picket line The carpenters obtained an injunction agains " Garrison v. Pirron (Ariz. Sup. Ct., Oct. 14, 1947). Illinois Central R. R. Co. v. Kentucky (Ky. Ct. of App., June 3, 1947 and International Shoe Co. v. Kentucky (Ky. Ct. of App., June 3, 1947). |