I will appreciate it if you will include this statement as a part of the record on the hearings now being held by your committee with respect to this subject. Sincerely yours, EDW. A. O'NEAL, President. Mr. McCONNELL. The committee will adjourn until 10 o'clock in the morning. (Whereupon, at 4: 50 p. m., an adjournment was taken until Saturday, November 15, 1947, at 10 a. m.) MINIMUM WAGE STANDARDS SATURDAY, NOVEMBER 15, 1947 HOUSE OF REPRESENTATIVES, SUBCOMMITTEE No. 4 OF THE COMMITTEE ON EDUCATION AND LABOR, Washington, D. C. The subcommittee met at 10 a. m., Hon. Samuel K. McConnell, Jr. (chairman of the subcommittee), presiding. Mr. McCONNELL. The committee will please come to order. STATEMENT OF GEORGE T. STEWART, MANAGER OF W. N. RUSSELL & CO., WESTMONT, N. J. Mr. MCCANN. Please state your name and your business address, Mr. Stewart. Mr. STEWART. My name is George T. Stewart; my business address is 34-60 Albertson Avenue, Westmont, N. J. Mr. MCCANN. Will you tell what business you are in? Mr. STEWART. We are manufacturers of cast stone and precast con crete products. Mr. MCCANN. What is your telephone number? Mr. STEWART. Collingswood 5-1057. Mr. MCCANN. Would you like to read your statement, or would you prefer to have it received in evidence at this point and then make oral comment to the committee? Mr. STEWART. I would prefer to have it received in evidence and then just to speak extemporaneously on it. Mr. MCCANN. Is that agreeable? Mr. McCONNELL. That is agreeable to the committee. (The statement above referred to is as follows:) STATEMENT OF GEORGE T. STEWART, WESTMONT, N. J., Manager of My name is George T. Stewart. I am manager of the W. N. Russell & Co., manufacturers of precast concrete and cast stone that is used for architectural trim. This small business is located at 34–60 Albertson Avenue, Westmont, N. J., and has been in operation for the past 28 years. I am appearing before you at the suggestion of the National Small Business Men's Association of which we are active members. The views I express, however, are my own. I wish to present for your consideration an experience with the Enforcement Section, Wage and Hour Division, United States Department of Labor. On October 16, 1945, without invitation or appointment, an investigator, Mr. L. A. Watkins, of the Wage and Hour Division presented his card and demanded the right to go over all our pay roll records. I naturally resented the intrusion and interruption in the middle of a busy day but resented even more the Gestapo method of approach. However, it being required by law I had little if any choice in the matter. I made the requested records available for his perusal and extended the use of my office and stenographer as a courtesy. Mr. Watkins next demanded access to the shop for the purpose of personally interviewing some of the employees. When it was explained that shop noises and conditions would make such an interview impractical he was content to use my office for the interviews-if I would absent myself. This I agreed to in an effort to get said investigation over and done with, in order we might resume production. To carry on his interview he requested that one man be in the office with him and another be held in readiness outside the office. This chain to be maintained to save his time-notwithstanding the fact that he was keeping two men from their post and thus interfering with the normal flow of production and the work of the other men dependent in one way or another on the two men he was holding up. With time off for lunch and his normally short day he soon packed up and went home, but promised to return next day. Several days later he did return and continued the interviews with resultant loss of time and production. He finally exhausted the list of employees that could be interviewed and up to this point had not found any violation of the said act. I might say at this point that I believe from my conversation with Mr. Watkins and his superior, Mr. Castroll, that the investigators work on a percentage basis. By that I mean that from a certain number of investigations made they are expected to report a certain percentage of violations. This is required if they are to continue in their jobs as investigators. It further becomes a necessity in order to perpetuate the very existence of the Bureau and to justify the request of huge sums of money in the form of congressional appropriations to continue the enforcement sections of said Bureau. It is the one instance where the defendant (or employer in this case) is presumed guilty until proven innocent. This in itself is so un-American. Mr. Watkins was not content to give us a clean bill, but continued his investigation by visiting several employees in their homes at night and asking them questions regarding their fellow employees. Several men reported the same thing to me on subsequent mornings following a night visit by Mr. Watkins. course, this was simply an extension of Gestapo methods. Of By this time I was more than slightly annoyed with the thing and was prepared to let Mr. Watkins know my feelings in the matter. We had nothing to fear from the investigation, because since the inception of the act we had complied with the provisions thereof. We even consulted with our company attorney for counsel and followed his legal opinion in the application of the law to our firm. Mr. Watkins showed up several days later. The mountain had finally brought forth the mouse. He cited for me title 20, chapter V, part 541 of Federal regulations. This consists of six parts: A. Supervisory capacity. B. Directing work of subordinate employees. C. Right to hire and fire. D Exercise discretionary powers. E. Compensated by salary not less than $30 per week. F. Not more than 20 percent of total time spent in work comparable to men under his direction. Our superintendent, Mr. Walton, easily qualified under A, B, C, D, and was being paid almost double the required $30 per week, but, and here Mr. Watkins gloated, he was a working foreman, not a white collar variety. He spent more than 20 percent of his time in working with the men. We are a small firm averaging at that time from 8 to 12 employees. What could our superintendent do with the other 80 percent of his time in accordance with the present wording of the act? This is an excellent example of the unfairness of the act to the small firm with 10 employees and a foreman. Now, Mr. Watkins could sleep at nights instead of visiting the homes of our employees. He had found his violation. We were advised we were compelled by law to reimburse our nonexempt working foreman for all hours over 40 for the previous 4 years and to discontinue paying him a straight salary and pay him on an hourly basis. Mr. Walton did not want to be on an hourly basis, he preferred a steady definite income whether he worked or not, but the law said otherwise-now we may not pay him if he is sick or absent. This is an instance where the act is unfair to an employee. To compute the wages allegedly due Mr. Walton they took his weekly salary, which included an allowance for possible overtime and used it as a basis to determine his hourly rate for 40 hours. This rate multiplied one and a half times determined his overtime rate for all hours in excess of 40. Since Mr. Walton was not required to ring in or ring out-they used the average overtime of employees under his supervision as a basis for his overtime. The net result was we were advised to pay Mr. Walton $876.80 less deductions within 90 days, or be cited for contempt. I immediately appealed this rank decision to the local supervisory inspector, Mr. Castroll. He upheld Mr. Watkins' decision whether it was right or wrong. The interview granted me was a farce. I consulted the company attorney, our auditor, and several other reputable sources of counsel and advice. From each I received the same answer. A test case would be a useless waste of time and money inasmuch as the courts were bound by the wording of the act and thus all decisions to date were against the employers. The question whether the wording of the act was fair, impartial, practical or even honest could not be considered by the court. Now is the time when the wording and the application of the act can be con-sidered on the basis of its honesty, impartiality and fairness to employer and employee alike. With this present act in force it places a whip in the hands of the individual employee to be used as a threat or a means of revenge in the case of a lay-off or other dispute with his employer. It is possible for an employee to claim overtime pay for several years' previous work and the burden of proof would rest with the employer. Witness the wave of portal-to-portal pay suits. This was in large industry. Give it another name and it could apply against small business. This act designed to spread employment during a period when there wasn't a sufficient number of jobs to absorb the employables has now become a Frankenstein. There is more and more demand for goods, for increased production. There aren't a sufficient number of skilled employables to fill the need and demand. But with this wage and hour law in effect the employer hesitates to work overtime to step up production because of the time and half time penalty required by law. His cost production is instantly increased 50 percent the minute he exceeded 40 hours in one workweek. Can he in turn charge 50 percent more for that item or product made in the overtime period? If he is compelled to pay this premium rate he must add to the over-all selling price to absorb this additional cost. Thus everything produced is sold on a higher price level than is necessary. This in turn effects both employer and employee in higher living cost. In addition if the act is continued the employer and employee alike are penalized by higher taxes to maintain an entire bureau overloaded with unnecessary personnel who in some cases work-yes even labor-to bring forth a mouse. In fairness to employer, employee and the Nation as a whole-the act should be annulled. Our present high wage level, increased demand for production and our everyday American way of life makes continuation of an antiquated law silly and useless. Mr. McCONNELL. Proceed. Mr. STEWART. We had a rather unhappy experience insofar as this wage and hour law is concerned or, rather, the enforcement of it. One day, in the middle of a very busy day, a gentleman presented himself or, rather, presented his card and demanded-and I use that word advisedly-demanded to see our pay-roll records, history of employees, and so forth. I asked for his credentials and, after presenting themthey seemed to be in good order-I gave him access to the records he requested. His attitude, very frankly, was very antagonistic to begin with. In other words, we were criminals to start with. However, that was more |