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Mr. FRANKLIN. It doesn't give the employee anything but puts him back out on the unemployment rolls and the money goes into the contractor's pocket.
Mrs. FRANKLIN. While we are discussing an example of a week vacation, which is a minimum, our company has employees in this type of work who have worked for us for 10 years or more at various installations.
This past year we have paid as much as four weeks vacation which we can substantiate with records.
Mr. THOMPSON. You seem to me, from what I know of this industry, to be remarkably honest and enlightened people.
I don't know how you can compete. Mrs. FRANKLIN. Would you believe seven days a week, 365 days a year, working at it?
That is the reason. Mr. THOMPSON. I would, but I am still amazed at how others in this industry are exploiting their workers. In many cases, for instance, isn't it pretty routine to deprive the worker of his rest break?
Mr. FRANKLIN. Yes. Example: They will in many cases say, “We will pay you to clean this room here, which will take an hour", so they will make a contract with this man that he will clean this room and pay him for an hour but once he gets in to do the work, he finds that it takes him three hours to complete the work and they say, “So sorry, you said you were going to do it in an hour and an hour is all we are going to pay you for it”.
Mrs. FRANKLIN. While it would take all day to give you specific instances of all these violations, companies and places, we are very sure the Labor Department does in fact have these records which would substantiate every allegation that we have made.
Mr. THOMPSON. We are going to be talking to those people and many others.
Isn't another gimmick in this industry to make the employees do their own laundry and provide their own uniforms?
Mr. FRANKLIN. Yes, and frankly I would really like to see if there was some way of the law covering uniform requirements. All of our operations are under contracts with the exception of two.
I would like to see all union contracts carry a clause in it where it required the employer to furnish the uniform and to pay the person for laundering it and all of our contracts do carry this provision.
Mrs. FRANKLIN. But here again if this benefit is not recognized by the Labor Department at such time as they make their wage determination, we are right back where we started in that we cannot do this competitively and the union would be putting us in a non-competitive postion if everybody isn't required to pay this benefit.
Mr. THOMPSON. Yes, that is obvious.
Would you tell the subcommittee what hannened in Fort Benning in May of last year, where Dynamic Enterprises ended up as the low bidder on a contract.
Mr. FRANKLIN. There were 11 bidders at Fort Benning. All of them were sent telegrams and given this union contract that I have in my hand with the agreement between the cafeteria, snack bar. and post exchange employees union, AFL-CIO local 731, and Quality Maintenance Company, Inc., which is out of Kansas City, Missouri.
This contract had been in effect for many months. The wages had been agreed upon. All parties who were bidding, not only those who bid but others who had received invitations were all notified that this
contraot would be in effect and wages and fringe benefits contained therein would be what would be paid.
Ten companies, ten companies bid to honor this contract. The reason that I say 10 companies bid to honor this contract is that we were second bidder and we had bid to honor it, so all of the others must have also.
One company, Dynamic Enterprises, was lower than our bid.
Now this comes about by the fact that the wage determination called for $1.74 an hour. The union contract at Benning called for $1.89 and $1.99 an hour.
Mr. THOMPSON. You bid on the basis of $1.89 and $1.99?
Mr. FRANKLIN. Yes, $1.89 and $1.99. I am sure that the other 10 did also because they were within the price range much higher than Dynamics.
When Dynamic was awarded the contract, they said to the union, “We will recognize your union but we are not going to recognize the contract."
They didn't recognize the contract and I admire Mr. Race for holding out as long as he did until approximately the latter part of September as he probably received no dues from his members.
The employees were getting no protection and the union finally made a compromise agreement with Dynamic Enterprises for $1.74 an hour.
Mr. THOMPSON. Who is Mr. Race ?
Mr. FRANKLIN. He is the business agent for this union out of Atlanta, Georgia.
So you take 15 cents an hour for some 600 to 800 employees, and you multiply this out, sure, the Government received the service for a hundred thousand dollars less, but at the expense of the employees.
This went into his pocket because he gets the benefit of all over that $200,000 which is twice that amount approximately that he gets for himself.
Mr. THOMPSON. Most of these workers I presume in that area would be Black?
Mrs. FRANKLIN. That is correct. That was very much a concern for us. Over a period of many years we have worked with the Black people in Alabama, Georgia, and other places and we in most cases found them to be good workers who were appreciative of a job and in the case of Fort Benning we feel that when these people were exploited, I would say they did not know their rights.
They did not know who to go to to give them relief with their problem.
Mr. THOMPSON. You have notified the Labor Department from time to time about Dynamics alleged violations, haven't you? Mr. FRANKLIN. Yes.. Mr. THOMPSON. Have other contractors, that you know of? .
Mr. FRANKLIN. I am sure that they have, yes, because they are all trying to compete on the same basis.
Mr. THOMPSON. What sort of response have you gotten from the Labor Department?
Mr. FRANKLIN. Our response actually has always been very very great from them, from this standpoint. In the past Mr. Costello has handled the compliance and has pursued these very diligently
Mr. Landis at the present time has this responsibility and I am sure he is pursuing this as diligently, but when they receive the Examiner's report, and I will read the last sentence of the report here and no debarment is taken, Labor Department personnel must become very discouraged.
“This recommendation rests upon the lack of reliance which may be reposed in respondents based upon its history of non-compliance with the Act and its contracts virtually during its entire existence."
This is the Examiner's report. It said the whole time the company has been in business it has not complied with the act.
Mrs. FRANKLIN. Mr. Chairman, in this connection, and we do work all over the country, we have found the people of the Department of Labor in the field to be most interested in this problem and to understand and to investigate.
But in our opinion, their work in this direction can serve no purpose if at such time it gets to Washington, nothing is done about it.
Mr. THOMPSON. Yes.
Mrs. FRANKLIN. I do feel that the people in the field have attempted to correct this problem yet it is quite obvious when it gets here six months later, except for the fact that a few people did see fit to go into it, who would have known that this happened all over the country?
Mr. FRANKLIN. How would you feel if you were put in the Labor Department shoes; make all these many investigations, do all of this work, which costs the Government thousands and thousands of dollars, and we as well as other contractors and taxpayers are paying for these investigations just to have it go for nil? It would be very discouraging.
Mr. Thompson. I would think so.
As I listen to this testimony and that of other witnesses before, on another day, it just becomes such startling testimony to me, but for a specific instance, I wonder if you could tell me about the Robbins Air Force Base in Georgia that you mentioned in your testimony as to what reason you think that the Department of Labor made no wage determinations in this particular case ?
Mr. FRANKLIN. Well, I will say first of all that when I talked to the Department of Labor, they were dealing with a report that they had just received and I quote that they actually were not supposed to be using this report that they had, but the date of the report and the statistics were for 1968 which is three years old.
This is worse than last week's newspaper, So, I think from this standpoint this is one of the areas where possibly the material that is being used to determine the wage determinations is not up to date as to what is going on in a particular area.
Mrs. FRANKLIN. The Labor Department will readily admit that they do not in fact conduct a real survey in a given area to determine the prevailing wage rate.
Mr. THOMPSON. We know of one instance where they did though, on an establishment with no other guards within miles. In making a
wage determination, they looked at the guards already working for the service contractor and said,
"Oh, well, you get $1.65 an hour now and therefore that is the prevailing wage for guards in this area, and $1.65 will therefore be the determination.”
That is really fantastic. Mrs. FRANKLIN. It would appear whichever situation serves the best purpose is used, let's put it that way.
Mr. THOMPSON. They don't have to look very far to make a deal like that.
Mr. FRANKLIN. I think that a lot of people hang their hat on the clause in the Act that says "the prevailing wage” and when you find one, then say "that is fine" and let it go.
Mr. THOMPSON. Yes. Mrs. Hicks?
I commend you for having hearings to bring testimony like this before members of this committee and the Congress because certainly Dynamics Enterprises, Inc., has gone far beyond any reasonable situation.
Mr. O'Hara. Mr. Chairman, I am very interested, of course, in the witness's testimony and I would like to explore this question a little further.
The witness suggested that, well, let me put it this way: It would seem, on the face of it, that if a prevailing wage determination called for $2 an hour it would cost an employer that much to perform the contract whether he figured on paying $2 an hour or he figured on paying $1.75 an hour until he was caught and then making a back wage payment to come up to $2.00. . On the face of it, that would seem to be the case, but the witness has suggested that isn't really the case, that in actual fact it might even be cheaper to start off with intent to violate even though you might later on be required to pay up to the prevailing wage determination.
Could you explain to us just why it might be cheaper to do it that way?
Mr. FRANKLIN. Give me the question again, please.
Mrs. FRANKLIN. I understand what you are asking and I might say before we answer that question, that here again the Labor Department has numerous files on this subject to substantiate that this is being done.
It rather boils down to the fact that a contractor willing, as you say, that the wage determination may be $2 or whatever, and they decide they will pay less than that.
Based on previous happenings of this type, many contractors have been allowed to do this and when caught by the Labor Department, they know that the Labor Department does not have unlimited amounts of people to go and investigate these violations.
They conveniently misplace records. Employees are no longer employed and cannot be located to substantiate these violations. After this goes on for numerous months, the Labor Department then decides to make what you might consider a settlement of this situation which
ultimately means that if a contractor in fact owes his employees $100,000, he possibly may only have to refund $50,000 of this money which clearly gives him a $50,000 profit.
It is as simple as that and they do have records to substantiate this.
I am sure you understand that we do not have all of these records but we are very aware that the Department of Labor does have them.
Mr. O'HARA. That is the point I wanted to have brought out. There are two provisions of the Act that deal with violations.
One of them says you have to pay the back wages. The second says that you are going to get blacklisted and not be eligible for any future government contracts for a period of three years.
Now, the first one by itself is not an effective penalty because in the meantime some of the employees have disappeared, some of the possible claimants of back wages are no longer around to make their claim, or to determine how much they might be owed.
Mr. THOMPSON. Or they don't know how much they're owed.
In the end, if the testimony seems to be going badly for the company as indeed it did seem to be going badly for Dynamic Enterprises in its case. ... Let me digress, Mr. Chairman, to show what I mean.
I have the transcript here of the hearing on the Pensacola (Dynamic Enterprises) Case, for instance, pages 382 and 384:
The chow line would open 15 minutes early two days a week but that wasn't counted in. You weren't paid for that time.
There were about five minutes on all shifts and all meals during which employees, all of them had to get up early and prepare the line for serving.
Those are hard things to determine how much there was an underpayment on.
Here is another one: “They are being asked to work overtime all of the time and they weren't usually small amounts, less than an hour", on page 403 of the hearing.
“And they weren't getting paid for it."
Mr. THOMPSON. They must have learned their techniques from the textile people.
Mr. O'HARA. Here “abrupt and abbreviated lunch periods” on page 417.
“They are supposed to have a half hour for lunch and they usually end up getting 15 minutes."
All of these things added together amount to quite a bit but they are hard to establish, and then the way it worked out finally in this particular case, after three days of hearing, the defendant company decided to settle and so they entered into an agreement to pay an amount of $50,000.
No one would seriously contend that the above amount is the full amount that may have been due as a result of the violation.
So here you go. You go ahead and violate and maybe you won't get caught so then you are really home free. Maybe you can buy out of it for less than it would have cost you to abide by the law,
Mr. THOMPSON. Then, of course, you deduct your legal fees. Mr. O'HARA. That is right. You deduct your expenses. So the real penalty then is the threat that maybe you are going to get caught and debarred from further government contracts, right?