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This is a group of some 86,000 employees, who now must receive the minimum wage, but who are not protected by the overtime provisions, and who are working an extraordinary amount of overtime, and so the proposal is that the overtime provision be extended to cover the filling station employees.

Those, Mr. Chairman and members of the committee, are the groups who would be affected by the proposed legislation.

I should like to say, in summary and conclusion, this: The principal argument which has been directed against the extension of the Fair Labor Standards Act coverage is that it will reduce employment in certain areas.

I am appreciative of the basis of that suggestion. You will know that so much of our time in the Department is taken up with consideration of methods of eliminating unemployment and with increasing employment that the last thing we want to do is anything which will cut down the amount of employment in this country.

I can only say to you that to the best of our analysis, based on the studies which have been made

a number of them at the direction of the Congress, others at the suggestion of this committee-we come to the necessary conclusion, on the basis of the information at our command, that none of this will reduce employment, that if it has any direct effect on employment or unemployment, it will increase employment, or at least that there is no evidence that it will decrease employment, and that it is essential, in our judgment, to carry out the commitment against poverty, to carry out our commitment against esploitation, to bring these wages up to the minimum.

And so I say to you that the proposal will, in our judgment, help provide wages at which people can live, and it will have no effect on reducing employment.

It is our conviction, Mr. Chairman and members of the committee, as I indicated at the outset, that in the interests of the service of our conscience, in the interests of carrying on the business of this country on the fairest, most equitable, and efficient basis, these changes should be made in the present legislation.

Thank you.

Mr. ROOSEVELT. Mr. Secretary, thank you very much, sir, for both your statement and your comments. I think you have presented to us a very factual and helpful statement.

I think we will, of course, as you recognize, have to face some very difficult problems. One of them you touched on slightly.

And because we are a little pressed for time, I am going to try not to make our questions too detailed, but would ask, if there are some parts of this that we may have questions about later, whether we can have the privilege of submitting them in writing to you, and solicit you for comment?

Secretary WIRTZ. We should be glad to do that, Mr. Chairman.

May I say I have here with me today a gentleman who is familiar to the committee, or well known to the committee, but I do want to introduce Mr. Donahue, our Solicitor, and Mr. Merrick, an assistant of mine, who has also been working with the committee, and we shall le glad by written form or in a subsequent session or in whatever way to respond to whatever questions you have.

Mr. ROOSEVELT. Thank you.

I think it would be the understatement of the year to

say

that we are familiar with all these gentlemen, and have been most gratified by our contact with them.

You touched briefly on the tips situation, and you solved it by saying that they should be credited only to the extent that they are reported to the employer, and again paid back by him in the form of wages.

What is our answer to the employer who says that he does not know anything about the tips?

Secretary WIRTZ. We recognize that possibility, Mr. Chairman, and have anticipated it in a form reflected in the proposed legislation.

It will be possible as an administrative matter to work out, in particular cases, what seems to us a fair reflection of that situation. Specifically and illustratively, if a situation of that kind is presented to us, we will investigate it, and may, as we interpret the statute, make an administrative determination as to what treatment should be given tips in that situation.

Just to be specific, if in looking into the situation we find a wage practice such as would warrant the conclusion that tips constitute 15, 10, or 25 percent of the wages, we can make a determination that where the wages are, for instance, 90 cents, there is basis for concluding that a tip factor of 15 percent should be added.

The problem that you refer to is a very real one, and we would expect to face the necessity of working out, administratively, answers in particular cases.

Mr. ROOSEVELT. Do you think there is any justification to the charge that by allowing the tips situation to exist we are encouraging certain types of employment which are referred to as less than completely moral?

The matter was brought to our attention with reference to an organization in which the people giving the service receive practically no wage and therefore are dependent entirely for their remuneration upon the good will of the customer, which leads to, at times, supposedly unfortunate circumstances.

I have said that as diplomatically as I can say it.
Secretary Wirtz. I will answer it as diplomatically as I can.
Mr. AYRES. Will you yield, Mr. Secretary?
He is referring to the Playboy Club.
Mr. ROOSEVELT. You can count on my friend from Ohio.

Secretary Wirtz. Answering in broader terms, limiting myself to the bare facts of the question, I would say that the problem does lend itself to administrative management, and would answer your question as straightforwardly as I can, that we would administratively make whatever determination is necessary with respect to the handling of tips in such a way that it would not contribute to the kind of practices to which you refer, and would be designed to curtail those practices as far as possible.

Mr. ROOSEVELT. Thank you, sir. Now, in the same area, uniforms and room and board allowances - does the same administrative setup take care of those ? Secretary Wirtz. Yes, sir; it does.

Mr. ROOSEVELT. Lastly, on this point, in the question of resorts, or seasonal hotels, how do you view this situation? Should we give special attention there?

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Secretary WIRTZ. There is no difference in the treatment of it, as far as the statute is concerned. In the study which we have made of this area, pursuant to the instructions of the statute, and have filed with the committee, there is a reference to this situation. It is our conclusion that there is no necessity of special treatment in the statute for that situation.

Mr. ROOSEVELT. The studies which were made for the farm process! ing recommendations: are those available in written form! Have they already been filed with the committee?

Mr. LUNDQUIST. Yes; the farm processing report was not submitted this year. This was a report that went up a year or so ago.

Mr. ROOSEVELT. Is there a more up-to-date one than that, or is that C! the most up-to-date one?

Mr. LUNDQUIST. That is the most up-to-date one. It is with the committee now.

Mr. ROOSEVELT. With respect to the transportation workers section,

where there is today, in the Interstate Commerce Act a prescribed isë number of maximum hours will that act or this act be prevailing?

Secretary Wirtz. That act will apply, Mr. Chairman, where there is a specific prescription of a limit on the number of hours.

Mr. ROOSEVELT. Lastly, in the gasoline station section, is there any limit there at all on size by numbers of employees that you have in mind?

Secretary Wirtz. No; there is not, Mr. Chairman. Mr. ROOSEVELT. Would you consider this to be unrealistic? We have given size to most of these other retailing operations, and I can foresee a considerable scream of horror to the very little station that has two, three, or four employees, saying that this really is going to make it impossible for them to operate.

Secretary Wirtz. I want to check my answer, but it is my impression that the general $250,000 provision in the statute would be applicable to this situation.

Is that right?

That is correct. Under 3 (s).(5). So it would mean it would not be applicable to any filling station which had a volume of business of less than a quarter of a million dollars a year.

Mr. ROOSEVELT. I do not have the figures at my thumb, but I do not think that is very realistic, because I think in pumping gasoline your volume will be so high that perhaps we should consider an alternative of total employees.

Could we ask, as an example, that we are able to know how many employees would be removed from coverage if we said that there must be, say, 5 or more, or 10 or more,

in

a station ? Secretary Wirtz. We will be glad to supply that information to the extent it is available.

Jr. ROOSEVELT. Obviously, 10 or more would be a very large station, and so I do not think we need to ask for anything beyond that.

Mr. LUNDQUIST. Mr. Chairman, if may: Our experience has indicated that the $250,000 annual sales standard here is an adequate one in relation to the small business.

We are not investigating; we have no jurisdiction; and we have so found that we have no jurisdiction, in the small gas station that you alluded to here. The $250,000 test, as it is in the statute, is a high one, so that the small gas station does not come under the statute.

Mr. ROOSEVELT. Give us the facts and figures to back that up.

Secretary WIRTZ. I understand your request, Mr. Chairman, to be for information which we can supply which would indicate how much difference it would make if there were a limit put on it in terms of four or five or whatever proper number of employees?

Mr. ROOSEVELT. Right.

I think it is also important for us to know how many stations of the 200,000-some-odd stations in the country are eliminated by that

test.

Mr. Dent. I want to say that I concur with the aims of this legislation as outlined by the Secretary, and believe that most reasonable persons will. I think it is time that we make another step in this direction.

I had marked, in my copy of your talk here, the very points that the chairman has brought up, and I do not want to belabor it at this time, but if I remember rightly, is there not something in our reg. ulation dealing with whether or not a station belongs to a chain, whether it is a franchise, or individually owned ?

And does that not have something to do with the $250,000 total? Or is it the individual station, regardless of whether it is a franchise station or a chain station? My mind is not clear on that point right

now.

Secretary Wirtz. May I ask Mr. Donahue, the Solicitor, to reply to the detail of the question? It is my impression that the only reference presently is to the $250,000.

Mr. DENT. Is that a chain total, or an individual station total?
Mr. DONAHUE. That is an individual station total, Mr. Dent.

Mr. DENT. That means that a station would have to pump almost 200,000 gallons a month to be covered by the act, and that is a lot of gasoline to pump in a station.

Secretary Wirtz. That is my impression. I think we can eliminate that by the answer to the chairman's question, which we will. But I share your impression that $250,000 is quite a substantial filling station operation.

Mr. Dent. Yes, because it is proven again by the number of employees that are covered by the minimum wage, and evidently they are reflected in a number of stations that have a $250,000-a-year gross. And we only cover 186,000 employees in the country, and that is 30 States, so I believe that there must be a great number of stations where we have no jurisdiction either on the minimum wage or the overtime.

I think that this is worthy of very serious study. But as the Director of the Bureau says, or as the Administrator says, we have no jurisdiction to even go in and find out the number of employees and what their hours are, in stations under $250,000 a year.

Secretary WIRTZ. We will give you as much as we can.

I know in the town I grew up in, a station that did a quarter of a million dollars a year would have been a whopping big station.

We will get as full a picture of that as we can.

Mr. DENT. I also would like to have the hotel report, because, you see, in Pennsylvania we are fast becoming a recreation State, since we are losing all our industry, and therefore we are very much interested in trying to preserve the Pocono Mountain area for what it is, and the Ligonier Mountain area, where I live. I would like to have the report on these summer hotels and seasonal hotels; that is what we have up in our area.

I would like to have the report on that, if possible, to study before we get into the full picture.

Secretary WIRTZ. That, Mr. Dent, is in the report which we filed just within the last several days.

Mr. DENT. That is the material I just received! It is in there?
OK, I will find it.
Thank you very kindly, and thank you for coming up this morning.
Mr. ROOSEVELT. Mr. Ayres?
Mr. AYRES. Mr. Secretary, it is always a pleasure to have you

before the committee.

I notice on page 13 in your conclusion you have the sentence:
Conscience demands that this proposed action be taken.

Do you feel, Mr. Secretary, that in good conscience, we can say that an employee working for a company doing a number of dollars' worth of business should be protected under the law, but the individual working for a company doing a dollar less should not be covered?

Secretary WIRTZ. No. I should agree with the implication of the suggestion that conscience cannot be completely satisfied by that kind of rule.

I assume that in the effective service of our conscience, we recognize some lines that have to be drawn on an administrative basis. I do not like those lines, but I respect the necessity of it and find no way of avoiding that line, but would agree with you that it will mean that some individuals are caught.

Mr. AYRES. I should know the answer to the next question, but I do not.

How many employees do you have to have before you are subject to paying time and a half for overtime?

Secretary Wirtz. There is no limitation presently, in terms of number of employees. There is a limitation in terms of the dollar amount of the business involved.

Mr. AYRES. Does that vary with different occupations?

Secretary WIRTZ. Yes, it does. There are different tests, and thus, illustratively, even in these that we are suggesting to you here today, there is an enterprise test as far as the laundries are concerned. There is an enterprise and establishment test as far as the hotels are concerned. So there are differences.

Now, I should have answered your first question a little differently. There is the two or more" requirement, as far as the overall application of the law is concerned. But when you come to these jurisdictional lines, they are drawn largely in terms of dollar amount, volume, and there are different lines, which we have attempted to adapt to the different situations.

Mr. AYRES. Is it not true, now, Mr. Secretary, that we are construing dollar volume to be related with what we normally refer to as “goods in interstate commerce" ?

Secretary Wirtz. I am frankly not sure of the implications or the meaning of the question.

Mr. AYRES. Previously, the act only applied to those engaged in interstate commerce?

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