the full House Committee on Education and Labor reported the legislation favorably on four separate occasions: May 1, 1962 (H. Rept. 1719); June 11, 1964 (H. Rept. 1475); May 5, 1965 (H. Rept. 291); and March 28, 1968 (H. Rept. 1219). The current bill in the House, H.R. 15198, is presently pending before the Rules Committee. Senator YARBOROUGH. Just a moment, Mr. Haggerty. I will instruct counsel to get those four reports and file them with the committee. Thank you. Will you continue, please? Mr. HAGGERTY. On August 10, 1965, the House passed H.R. 1153, which is substantially the same as the bill pending before your committee (Cong. Rec. pp. 19,872 to 19,879). Hearings were then held before this committee in October 1966 on H.R. 1153 as it passed the House, but no further action was taken in the Senate. In view of this substantial legislative history and in order to avoid a further duplication of testimony before this committee, I shall merely recapitulate the major reasons for supporting this legislation. The industry promotion funds which are the subject of this bill are the products of the collective bargaining process. They are established by management and labor in collective bargaining agreements. These collectively bargained funds should not be confused with the advertising programs of individual enterprises or indeed of trade associations which are financed by dues of members of the association. It is the simple thesis of this bill that, if the collective bargaining process is to be used in establishing the fund, then it should be permissible to provide for joint administration of the funds procured by the collective bargaining agreement. It is important to recall that the need for enactment of the bill arises solely from the nature of the drafting of section 302 of the TaftHartley Act, rather than any considerations of public policy. The subject matter of the contributions covered by this bill was not considered by the Congress which enacted the act. The reason why these contributions are illegal is because of the method chosen by the draftsmen of the act to indicate the legality of certain trust funds. That method was to enumerate specifically the objects for which joint funds could be established. The consequence of that method of drafting was to make illegal all trust funds which were not specifically enumerated. The unfortunate consequence of the drafting method employed in the formulation of section 302 (c) of the act may be seen in the fact that the law as enacted in 1947 made illegal, and the subject of criminal action, trust funds established for the purpose of pooled vacation, holiday, severance, or similar benefits, or defraying costs of apprenticeship or other training programs. It was not until 1959 that the legislative processes of the Congress produced the amendment which is known as section 302(c) (6) of the act validating trust funds established for these nonobjectionable purposes. A further such amendment, as embodied in S. 3149, is now necessary to validate the joint administration of industry promotion funds and boards or committees to interpret collective bargaining agreements. This bill will not authorize the invasion of management prerogatives. It provides specifically that "such funds shall not be commingled with any other funds or used in any manner to share expenses or otherwise defray the cost of programs that are employer or management functions or labor organization functions * * Although the bill would authorize jointly administered funds to be used to promote products of particular industries in the building and construction trades, it will not accelerate jurisdictional strikes. For that matter, it should be realized that the provision for joint administration will not affect the basic purpose for the utilization of these funds. Collectively bargained funds which are now unilaterally administered have not had any effect on jurisdictional disputes and the provision for joint administration should not change the current situation. At present, unilaterally administered promotion funds are the subject of permissive-not mandatory-collective bargaining. (Detroit Resilient Floor Decorators Local 2265 of the United Brotherhood of Carpenters and Joiners of America, AFL-CIO, and Mill Floor Covering, Inc., 136 NLRB 769 (1962).) The provision for joint administration in the bill will not affect the permissive character of the collective bargaining which prevails at the present time. Indeed the bill is explicit that mandatory bargaining shall not be required for the establishment of an industry promotional program or for the establishment of a jointly administered fund in connection with joint committees or joint boards empowered to interpret provisions of collective bargaining agreements. It is respectfully submitted for the reasons which have already been given repeatedly that this bill would merely correct a legislative drafting oversight in the original enactment of the Taft-Hartley bill. There are careful safeguards in this bill with respect to the administration of these joint funds, and it would seem clear that the matter having been thoroughly considered through the various steps of the legislative process, the bill should be enacted at this session of the Congress. Mr. POWER. Now, Senator, I have a couple of exhibits we would like to submit. I have a statement here from Edward F. Carlough, of the AFL-CIO, in support of S. 3149. Senator YARBOROUGH. Does the committee have copies of these here? Mr. POWER. They will be supplied, if allowed, Mr. Chairman. The other is a letter from Andrew J. Biemiller, director of the Department of Legislation of the AFL-CIO to the Honorable Ralph Yarborough, chairman of this committee. Mr. HAGGERTY. If additional copies are required we can furnish them. That concludes my statement. (The material referred to follows:) PREPARED STATEMENT OF EDWARD F. CARLOUGH, GENERAL PRESIDENT, SHEET METAL WORKERS' INTERNATIONAL ASSOCIATION, AFL-CIO The legislative history of Section 302(c) of the Labor Management Act prohibits all payments by employers to employee representatives with certain exceptions, among those exceptions are medical and hospital care, pensions on retirement or death of employees, compensation for injuries, insurance benefits, accident insurance, pooled vacations, and apprenticeship and other training programs. Until 1959 contributions to many of the aforementioned programs were considered to be in violation of Section 302 (c) not because of any public policy basis but simply because of the drafting of the statute. In 1959 with the passage of the so-called Landrum-Griffin Act an amendment known as Section 302 (c) (6) of the Act, validated trust funds established for trust purposes. Unfortunately at that time contributions for joint management of industry promotion funds was not included therein. Industry funds are established through the collective bargaining process of management and labor. Such contributions are in many cases set aside into these funds in lieu of asking for wage increases. In many areas of the Sheet Metal Industry contributions to the industry funds are specifically set aside from the employees and are actually employee contributions. Certainly the promotion of the industry is as important to labor as it is to management. The changing conditions in industry affect to a serious degree the employees opportunities. For this reason this International Association feels strongly that labor should have an opportunity to join with management in fashioning ways to promote its industry. Therefore, I respectfully urge the Senate Subcommittee on Labor to take similar favorable action on S. 3149, and that it be enacted in this session of Congress. Hon. RALPH YARBOROUGH, AMERICAN FEDERATION OF LABOR, Chairman, Subcommittee on Labor, Committee on Labor and Public Welfare, U.S. Senate, Washington, D.C. DEAR MR. CHAIRMANS In connection with hearings of your Subcommittee on S. 3149, a bill to amend Section 302(c) of the Labor-Management Relations Act, 1947, to permit employer contributions for joint industry promotion of products in certain instances or a joint committee or joint board empowered to interpret provisions of collective bargaining agreements, I wish to express the support of the AFL-CIO for this legislation. Section 302 now prohibits all payments by employers to union represenatives except payments to certain specified exempted employer-supported funds such as health and welfare funds. This prohibition is aimed at preventing employer bribery, extortion, shakedowns, and other corrupt practices. Although the restrictive language of Section 302 has been construed as being broad enough to cover joint labor-management industry promotion funds, it is at least questionable whether this result was intended by the Congress. These programs should not be prohibited by law because they have the desirable effect and purpose of expanding business opportunities and employment in the industries where they have been developed. S. 3149 would specifically exclude from the prohibition contained in Section 302 jointly administered "trade and industry" product promotion programs and trust funds to defray the cost and expenses of joint committees or boards for the interpretation of collection bargaining agreements. The bill would permit, but would not require, collective bargaining between labor organizations and employers on the establishment of such programs or funds. We believe enactment of S. 3149 would be an act of simple justice. Therefore, we urge approval of this bill by your Subcommittee. Mr. Chairman, I respectfully request that this letter be included in the record of hearings by your Subcommittee on S. 3149. Thank you. Sincerely yours, ANDREW J. BIEMILLER, Director, Department of Legislation. Senator YARBOROUGH. Senator, are there any questions? Senator FANNIN. Yes. President Haggerty, in your statement on the second page of your testimony, at the top, "these collectively bargained funds should not be confused with the advertising programs of individual enterprises or indeed of trade associations which are financed by dues of members of the association." How is it possible to delineate the difference between a product promotion fund and a general industry advancement fund? Mr. HAGGERTY. The answer, Senator, to your question would be that these funds are by and paid into through a collective bargaining agreement between management and labor to be spent only for that purpose. Senator FANNIN. The union member pays them? Mr. HAGGERTY. No, I think the employer would pay, the same as other fringe benefits. Senator FANNIN. Do you want to correct that statement, then. The employer pays all of the funds? Mr. HAGGERTY. Yes, and as a result I guess you could probably say that while it is paid by the employer directly to the fund, it is a part of the collective bargaining package something the employee gives up to the employer so it can be paid into the fund. Senator FANNIN. Can you give me an illustration of what they give up? Mr. HAGGERTY. It would be in the wage package. Senator FANNIN. It is not necessarily true that they give up anything, is it? Mr. HAGGERTY. Yes, they certainly give it up in wages, I mean why would they have to bargain collectively for it if they are not going to get something or give something. Senator FANNIN. What I would like you to do is to answer the question on how you can delineate between the difference between a product promotion fund and a general industry advancement fund. I don't think you have answered the question. Mr. HAGGERTY. I didn't get this last-it is a different question, isn't it? Senator FANNIN. No, it is the question I asked to begin with. How is it possible to delineate the difference between a product promotion fund and a general industry advancement fund? Mr. HAGGERTY. One, I think, is a unilateral action by the person who is paying for the product promotion fund, whereas the second part of the question would be something which the employee in collective bargaining makes a sacrifice in the way of wages for the development of their jointly sponsored promotional fund for the mutual benefit of their craft. Senator FANNIN. The question is, though, how are you going to delineate, who is going to make the decision on delineation? Mr. HAGGERTY. By agreement. Senator FANNIN. If the funds are paid in by the employer and the employer wants to use the money in a certain way and the union members that are dealing on this subject with the employer decide it should not be spent in that way, then they could not spend the funds on promotional activities; is that right? Mr. HAGGERTY. That is what it is for, for promotional activities of a product which is probably handled, developed, and applied by the members of the union who are bargaining with the employer and therefore I think there is a general interest on both sides there. Senator FANNIN. But what my question is, if the company wants to spend the money in a certain way and the union objects then they cannot spend that money on promotional activities. Althought they have contributed the full amount. They would be in a better position to determine what would promote their products, but they would still be unable to do so. Mr. HAGGERTY. I am not certain I understand your question. Senator YARBOROUGH. The cloakroom has just called to say that 97-387 O-68-2 there is objection and all committee hearings not specifically authorized must terminate immediately. We have orders that any further hearings in the Senate committee are illegal due to a crucial vote that is coming up today on the floor on a crime control bill. I am sorry to interrupt you, Senator Fannin, and you, Mr. Haggerty. I know you wanted to finish, but this is a matter that neither of us had control over here. We thought we had the 30-minute leeway. We hoped to finish with you and possibly Mr. Donahue, Solicitor for the Department of Labor, who has not been reached. Again, I want to express my regret to the witnesses who have come in from out of town. If it is uncertain for you, our life is far more uncertain in the Senate. We don't know from one day to another when we will be. Mr. HAGGERTY. Could you give us some idea of when you will call this again? Senator YARBOROUGH. No; I have no idea at all. We will have to study the calendar. We will have to check with the other subcommittees of this committee and do the best we can. We can't give any of the parties, proponents or opponents, any assurance of what day it will be. But we will give all of you reasonable notice, hopefully, that when we start again we will be able to proceed for some hours in the hearing. Thank you, again, for your patience and understanding of the Senate rules which preclude us from meeting any further this morning. Thank you. (The supplemental statement of Mr. Haggerty follows:) SUPPLEMENTAL STATEMENT OF C. J. HAGGERTY, PRESIDENT, BUILDING AND This statement, for inclusion in the hearing record, is intended to supplement my testimony of May 21, 1968, on S. 3149 and to respond to objections to that Bill interposed by several witnesses representing contractor associations on July 15, 1968. The objections raised by the aforementioned witnesses are simply repetitive of those raised in the past and rejected in the other body of Congress (which passed essentially the same bill in August, 1965) and can be boiled down to a single, startling assertion: That the collective bargaining process should be foreclosed to contractors and labor organizations who voluntarily wish to cooperate in the operation of two types of otherwise lawful, non-objectionable programs of mutual concern and interest. One of these programs-the settlement of disputes involving the interpretation of collective bargaining agreements-obviously requires the participation and, ideally, the cooperation and internal regulation of both parties. And, the fact that thousands of existing industry promotion programs have been created through the collective bargaining process indicates that management has recognized the proper interest on the part of labor's representatives in product promotion programs. Indeed, Robert B. Wood, representing the Sheet Metal and Air Conditioning Contractors' National Association, conceded in his testimony that in his industry in the Pittsburgh area, union cooperation with industry promotion "works well" (stenographic transcript for July 15, 1968 (hereinafter referreed to as "Tr."), pp. 37, 51-2). But, apart from the validity of the views of those employers who refuse to recognize the unions' interest in product promotion programs in their industries, there is absolutely no justification for a proscription-indeed a criminally enforceable proscription against those employers who believe otherwise and favor this Bill. As the Committee knows, the national employer representatives of several construction industries favor this bill and have, for many years, urged its passage. Several of these witnesses repeatedly urged the defeat of S. 3149 on the ground that employers currently engaged by both product promotion and contract-dis |