what you are asking for here, and according to the testimony received out there month before last, they have no evidence of anybody ever having gone out of business because of the minimum wage levels. Secretary WIRTZ. We have not, either.

Mr. ROOSEVELT. The Chair wishes to acknowledge with pleasure the presence of the ranking minority member of the full committee, Mr. Frelinghuysen.

Mr. FRELINGHUYSEN. Thank you, Mr. Chairman.

I appreciate this opportunity to listen to the Secretary. I only regret that my other committee is expecting me to come over to listen to the Attorney General tell us how he solved the problems of southeast Asia, so I will not be here the entire morning.

I have as usual been interested in your testimony about the importance of closing the gaps in the protection now afforded by the Fair Labor Standards Act. My questions are very general, Mr. Secretary. Broadly speaking, your pitch for this bill is that it is part of the antipoverty program. Is that right?

Secretary WIRTZ. That was half of it. The other part of it is that it is good business, in our judgment.

Mr. FRELINGHUYSEN. Good business, of course, is what we are all interested in. This proposal has been described as another step, which of course it is, and as a very small bite out of the big problem.

What interests me is how you reach your conclusions about how far to go in extending coverage. You have indicated that so far as you can see, there is no reason to expect any adverse impact or effect on employment. On the basis of what has been done before, you indicate there has been no serious effect; therefore, you draw the conclusion that there should be no serious impact here.

How do you determine how far to go?

Just as an example, it does not seem to me that we are providing protection to very many low paid individuals in the laundry and drycleaning area, if we are only going to extend protection to 80,000, and there are 513,000 total in this kind of employment.

Partly, I recognize, this is a jurisdictional problem. Partly it is a question of drawing lines, as you say, on an administrative basis. But how do you decide only to cover 80,000 out of 513,000?

If we are talking about poverty as one of the problems we are trying to reduce or ameliorate, I would think we might be a little more aggressive. Might we not at least explore the possibility of extending protection to more than 80,000 out of that 513,000?

Secretary WIRTZ. We would have no objection, Mr. Frelinghuysen. Mr. FRELINGHUYSEN. But we cannot act blindly, and unless you are going to help us in exploring this problem

Secretary WIRTZ. This does represent our best recommendation. We start from the congressional decision to take the $250,000 line, in 1961. We have taken that as a basis for direction and advice with respect to this.

We have added to that some of the considerations to which you referred; namely, our own experience with respect to our administrative potential, as to how far we can go in doing an honest job of administering the program as it applies to small units.

We have tried to balance in, too, the broader considerations-and you said your question was in broad terms-the broader considerations that affect the way in which some small bsuinesses are conducted. We know that they do not lend themselves to the same logical economic rules that the larger enterprises do, so that somebody will start up a small neighborhood operation of some kind or other on economic principles which are different. We have tried to take that into

account.

Those are the principal elements which would enter into the making of a decision, those elements which are reflected in the congressional decision of 1961, our own balance of judgment as to what we can do administratively, our recognition of those small enterprises which are conducted on other than logical economic grounds. They would add up to the best advice we can give you now.

But I say quite candidly that if there were a feeling it should go further, we would not oppose that.

Mr. FRELINGHUYSEN. How, for instance, do you reach a conclusion with respect to the gasoline service operators?

Secretary WIRTZ. There we have taken the congressional line of

1961.

Mr. FRELINGHUYSEN. At the bottom of page 9 of your statement, you say that the 1961 amendments extended minimum wage protection to employees of gasoline establishments over a certain size. Then you say that these same amendments included an overtime exemption for any employee of a gasoline service station, which presumably means any gasoline service station.

If you remove that exemption entirely, you are removing it for both large and small stations?

Secretary WIRTZ. Our paragraph is not well written, Mr. Frelinghuysen. It is meant to convey a distinction between the minimum wage and the overtime.

You see, all we are doing: By emphasizing different words, a different meaning has come from the paragraph.

But what we are doing on filling station employees is simply to extend the overtime protection to exactly the same group to whom Congress extended the minimum wage protection in 1961.

Mr. FRELINGHUYSEN. Only to the employees of certain, we assume, reasonably large establishments?

Secretary WIRTZ. The same group exactly. Congress in 1961 said that this group of filling station employees shall receive the minimum wage protection, but not the overtime, and our only proposal now is that that same group be given the overtime protection, as well as the minimum wage protection.

Mr. FRELINGHUYSEN. Do we have any figures about the total number of employees in the gasoline service stations?

Secretary WIRTZ. We will get that.

Mr. FRELINGHUYSEN. I assumed that the 86,000 employees referred to the employees of a relatively small number of establishments. Secretary WIRTZ. Yes.

Mr. Lundquist's suggestion is that, subject to our check, it is probably less than 20 percent.

Mr. FRELINGHUYSEN. And again, this is done on the theory that if you go too vigorously into removing what might be considered inequi

ties of pay or protection of one kind or another, either minimum wage or overtime pay, you will have an adverse impact on the employment situation in a particular area?

Secretary WIRTZ. No. I had not mentioned that. I think that there could conceivably be a point at which that factor would come in. It was not among those I had mentioned.

Mr. FRELINGHUYSEN. Surely, I would think that in any evaluation of your recommendations for change, you would have to be considering the possible adverse effects, no matter what the areas in which you are making the recommendations.

Secretary WIRTZ. If we went further, we would make a determination as to whether that did have an adverse effect.

Mr. FRELINGHUYSEN. Even to go this far, I would think you would have to have a concern about whether or not there would be an adverse effect.

Secretary WIRTZ. We have, and have satisfied ourselves as best we can, and have set forth the basis for it, that there is no adverse effect in going this far.

Mr. FRELINGHUYSEN. Thank you.

Mr. ROOSEVELT. The Chair would like to say he overlooked something earlier.

The committee has a new counsel, Mr. John Schuyler, sitting to my right. I am happy to introduce him to the members of the committee and also to you, Mr. Secretary, and your staff.

Secretary WIRTZ. We had the pleasure of saying hello earlier. Thank you.

Mr. PUCINSKI. Two years ago, Mr. Secretary, we had testimony that they were paying 30 cents an hour down in Georgia to the people that work in the forests cutting down trees for the pulpwood industry, that they work 10 hours a day and they work 7 days a week, and for a 70-hour week they bring in a paycheck of $21.

Would your proposal on page 6 affecting the logging industry cure that particular situation?

Secretary WIRTZ. It would. And it was developed with that specific situation in mind.

Mr. PUCINSKI. Now, with the hotels, motels, and restaurants, as you know, this committee has been wrestling with that problem for many years, I think long before I came to Congress. And I am not quite sure I understand the formula that you propose, on page 4.

You suggest a formula of $1 million annually, and receiving for resale $250,000 worth of out-of-State goods each year. I am not quite sure I understand that, Mr. Secretary.

Secretary WIRTZ. This is again the line that comes from the 1961 enactment by Congress, and it is, in general-and again I do not know all the details of it, frankly-it is, in general, this line that you take with respect to hotels, motels, and restaurants, two tests, in fact, really, three.

The first one is the dollar volume of business done by the whole enterprise, regardless of how many units it may have, and that must be at least a million dollars, before there is coverage of any part of any of the employees of that enterprise.

Mr. PUCINSKI. Is this just a restaurant?

Take, for instance, Marshall Field's in Chicago. Let's say that they have a contract with somebody that operates the restaurant in this store. Does the million-dollar volume apply to the department store, or to the restaurant in that store?

Secretary WIRTZ. I will answer, subject to check, that it would apply to the restaurant part of that operation. But I would like to check that with the Solicitor.

Mr. DONAHUE. It would depend on the circumstances, Mr. Pucinski.

Mr. PUCINSKI. What are these circumstances?

Mr. DONAHUE. The likelihood is that the million-dollar test would apply to the department store as a whole, with the restaurant being part of it.

Mr. PUCINSKI. Even if the restaurant is owned by someone else, and is merely leasing space in the department store?

Mr. DONAHUE. Normally so. It would be the exception rather than the rule that the restaurant would be considered a separate enterprise from the overall department store. However, there are factual circumstances within which the separate restaurant would not be a part of the enterprise.

It simply depends upon the facts. If the restaurants does less than $250,000 worth of business, however, it would not be considered.

Mr. PUCINSKI. This is very important, though, and I would like to find out what your thinking is, because in your statement, here, in one of the industries, I forget which one it was, you tell about the 12employee exemption, and how all of a sudden work is being farmed out to companies of less than 12 employees, in the logging industry.

So, conceivably, I can see where, perhaps, with the enactment of this legislation, you might have drugstores signing a lease with a new corporation to run the restaurant or the lunch counter. For this reason, I want to know whether your thinking is in terms of the total establishment, or the person who owns and operates the restaurant part of the establishment.

Mr. DONAHUE. Lease arrangements in department stores would normally be considered part of the enterprise as a whole. If, however, it is separately owned, keeps all the books separately, and all of the employees are separately paid on separate payrolls, and all of the billing and accounting is done completely separately, we would probably consider it as a separate establishment, which is not a part of the overall enterprise in which the store is physically situated. Mr. DANIELS. Mr. Pucinski, would you yield at that point?

Suppose you have this situation. I will give you a hypothetical question: Field's owns a department store, and in that department store there is a restaurant. The restaurant is leased by a separate written agreement to Mr. X, who agrees to pay Field's 5 percent of its gross annual income on a month-to-month basis.

Now, Field's has no control over the employees. It does not hire. It does not fire. The employees are strictly and solely hired, retained, discharged, paid for, by Mr. X.

In that situation, would Field's come under the act?

Secretary WIRTZ. Mr. Chairman, in all deference to the Solicitor of the Department of Labor, who is sitting here beside me, what you are asking us to do, Mr. Daniels, is to give you an interpretation, here,

of section 3 (r) of the 1961 statute, and I am frankly at the point of hesitation, as to whether we should appropriately give you a precise answer on that situation.

We would be glad to, but I would like an opportunity, frankly, to refer it to the Administrator as well as to the Solicitor for a pretty careful ruling.

Mr. DANIELS. Conceivably this situation exists, and exists in many places throughout the United States.

Secretary WIRTZ. I say we will be glad to answer, but I question a little the process of doing it here, because it is a matter in which the Administrator, under the statute, should make a ruling, subject to the advice of the Solicitor.

Is that right?

Mr. DONAHUE. That is correct.

Mr. ROOSEVELT. The Chair will have to say that the committee feels, I am sure, that in considering these amendments, they would like to know how, before we write the new legislation-what the opinion of the Administrator, with the advice of the Solicitor, is going to be, because we feel in receiving testimony, for instance, from department store people, or even hotel people, under certain circumstances, we would like to know whether the gross rental is the determining factor, or whether the gross amount of the restaurant is the determining factor, and we cannot very well consider the specifics of the legislation unless we have some information as to how the Department interprets the act at that point.

Secretary WIRTZ. My suggestion is not to give you a lesser answer, but to give you a full answer, because I agree completely with what has just been said, and we would be happy to supply the answer, which is really an interpretation of subsection (r).

Mr. DENT. Do we not have some kind of a regulation or some knowledge of what we do in the matter of retail establishments now, that have concessions, for instance, for shoe departments that come in, and concessions for optometrists?

Many of the large stores will give a separate concession. Do we not just consider the income from that to the enterprise itself, rather than the gross of the concessionnaire?

Mr. LUNDQUIST. Generally, we consider leased departments as part of the enterprise in which they have this lease.

Mr. ROOSEVELT. You mean the gross income of the leased part? Mr. LUNDQUIST. Oh, yes; for purposes of determining the milliondollar enterprise test. And these views are stated in our interpretative bulletin on retail and service establishments.

We have, as the Secretary pointed out, need for analyzing these things carefully, but we have said a number of things already about the leased departments in our Bulletin 779.

Mr. ROOSEVELT. 779? Will counsel make a study of that?

Mr. MARTIN. I was going to make that point, Mr. Lundquist. We discussed this matter with you in an executive hearing a while ago. Your ruling was, I believe, that these leased departments in the store were covered by the act even though they did not do the volume of business, a quarter of a million dollars, or a million dollars, unless they had an entrance separate from the main store. That was one of the stipulations contained in the ruling which you published in the Federal Register.

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