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We might also note that the employees are being severely penalized by present policies of the Department of Labor in not taking into account future wage increases when it renders its wage determinations.

This has effectively put a wage freeze on these low-income and lowskilled people. We have just recently had the unfortunate experience of having negotiated, with A.B.C. Food Service, as a matter of fact, wage increases and fringe benefits increases at four separate installations in California.

These increases were not exorbitant. They were in fact less than 10 percent, but we felt they were fair under the circumstances. These increases were slated to take effect in this July.

We took them to the Department of Labor 2 weeks ago. We were told that the Department of Labor could not consider these because they were going to go into effect in the future, that the Department of Labor could only consider those rates which are in effect at the present time.

That means in effect that nobody will ever get a raise. They will have to stay at the same rate in perpetuity if this is followed to its logical conclusion.

Obviously, again, this is not what Congress had in mind and I am sure that the concept of prevailing wage was not meant to be a static concept, that it was meant to take into account the realities of collective bargaining and that labor unions would be involved in this situation and that these service workers are entitled to union representation just as much as any other employee under the National Labor Relations Act.

We feel that the present policy of the Department of Labor which has been generated by the Comptroller General's ruling of September 1969 has brought about an effective deprivation of rights to which these people are entitled under the National Labor Relations Act.

It seems to me that the Service Contract Act and the National Labor Relations Act can be accommodated with no difficulty if the Department of Labor would take into account reasonable future increases.

I am not saying they should take into account increases to go into effect two or three years hence, but when you have a situation, as we have where increases were slated to go into effect three months after the wage determination was rendered, it certainly is reasonable for the Department of Labor to consider these increases.

Indeed, their own regulation, and I mention this in my prepared statement, Section 4.164(b), their own regulations indicate they are required to do this, to take these increases into account.

Yet they have taken the position that they are bound by the ruling of the Comptroller General which was issued in September 1969 that says that future increases cannot be taken into account.

I know of no basis upon which the Comptroller General can rest in law for this ruling but nonetheless it is being followed by the Secretary of Labor.

So, we think whatever changes are required in the Service Contract Act to make it clear should be enacted to let the Department of Labor know that they have to take these future increases into account.

Mr. THOMPSON. Well, the departments have, as you know, a long history of either paying attention to the Comptroller General's rulings when they agree with them or ignoring them when they don't agree with them.

Mr. GRUBER. That seems to be the case. We have been to them and the excuse is a shrug of the shoulders, “What can we do about it?" This is what the Comptroller General says.

It seems to me, as you point out, Mr. Chairman, that they can do quite a bit about it if they wanted to.

Secondly, on the successor employer situation, we think something must be done in this situation. Again, I would imagine that legislation would be required unless the Emerald Maintenance Decision is reversed by the Court of Appeals and that case is presently on appeal to the U.S. Court of Appeals for the Fifth Circuit. .

I would hope that it would be reversed. If it is not, you are going to leave both the employer and labor in a very precarious position.

The incumbent employer is going to be caught in a cross-fire between existing contractual obligations and the obligation to try and get the contract and he is almost certainly going to lose the contract, and the employees are going to be penalized because the rights for which their representative bargained are not going to be given them..

I hear the buzzer.
Mr. THOMPSON. That is the second round.

Mr. O'HARA. Mr. Chairman, I would like to bring out one other point with Mr. Gruber, if I may.

May I?
Mr. THOMPSON. Go ahead.

Mr. O'HARA. The Emerald Maintenance decision is a very disturbing one to me. Under the successor doctrine as enunciated in other cases, if Emerald Maintenance had been a successor in a contract that provides services to the General Motors Corporation, let's say, they would have been bound by the terms and conditions of the previously negotiated contract, is that right?

Mr. GRUBER. No question about it under the Burns Detective Agency case which was previously decided by the Board before Emerald Maintenance.

The Board in Emerald Maintenance noted existence of the case but said, “We have to make exception in the service contract field.” Mr. O'HARA. That is my point, Mr. Chairman. It would be one thing if the Board had said: Well, we have reconsidered this whole business of the successor doctrine and we think maybe we have gone too far and we would like to retreat a little, perhaps we have over-applied the successor doctrine in the past and we are charting a new path for ourselves.

That isn't what they said. They said, “Well, the successor doctrine is still good, but we are going to create an exception to it."

That is to say, if the prime contractor, if the source of the contract had been a private industry of any kind, then they would continue to apply the successor doctrine in its original rigor, but because Mc

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Namara and O'Hara and Thompson and those enacted the Service Contract Act of 1965, they decided that people working on this contract are not going to get the wages, hours, and working conditions that had previously been negotiated for them.

In other words, Mr. Chairman, they are using this Act to deprive workers on federal service contracts of benefits they would otherwise receive.

Now, if there has ever, Mr. Chairman, been a distortion of the intent of Congress, that would be it, to take this Act which was enacted for the sole and entire purpose of protecting the people, service workers, working for contractors who hold federal service contracts, where the entire intention and the only intention of that legislation was to protect those workers, and to take that Act and use it against them is such a travesty, Mr. Chairman, that I find it hard to credit.

I understand that there was an intervenor in that case. Mr. GRUBER. Exactly so. The Air Force. Mr. O'HARA. A federal agency intervened in that case and pleaded for that result.

Mr. GRUBER. That is exactly right. Mr. THOMPSON. I am sorry we can't talk more with you, Mr. Gruber. We apologize. It is evident that we don't run the House.

Mr. O'HARA. That has been evident for some time, Mr. Chairman. Mr. GRUBER. Thank you very much for the opportunity to speak. I appreciate it very much.

Mr. THOMPSON. The Committee will adjourn to meet tomorrow, April 2 at 10 a.m. in Room 2175 and we will hear these gentlemen whom we could not hear today.

Thank you very much.

(Whereupon, at 11:25 a.m. the hearing was recessed to reconvene at 10 a.m., Friday, April 2, 1971 in Room 2175.)

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