FAIR LABOR STANDARDS AMENDMENTS OF 1973

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP75B00380R000600150002-2
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 114
• Document Creation Date: December 9, 2016
• Document Release Date: September 8, 2000
• Sequence Number: 2
• Publication Date: May 29, 1973
• Content Type: REGULATION

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93n CONGRESS HOU PESENTA IVES REPORT
1st Session3 No. 93-232
MAY 29, 1973.-Committed to the Committee of the Whole House on the State
of the Union and ordered to be printed
Mr. PER11INs, from the Committee on Education and Labor,
submitted the following
REPORT
together with
MINORITY, SUPPORTING, SEPARATE MINORITY, and
INDIVIDUAL VIEWS
The Committee on Education and Labor, to whom was referred the
bill (H.R. 7935) to amend the Fair Labor Standards Act of 1938 to
increase the minimum wage rates under that Act, to expand the cover-
age of that Act, and for other purposes, having considered the same,
report favorably thereon and recommend that the bill do pass.
The Fair Labor Standards Act of 1938 was enacted on June 25,1938.
The basic policy of the Act is contained in its second section :
SEc. 2. (a) The Congress hereby finds that the existence, in
industries engaged in commerce or in the production of goods
for commerce, of labor conditions detrimental to the mainte-
nance of the minimum standards of living necessary for
health, efficiency, and general well-being of workers (1)
causes commerce and the channels and instrumentalities of
commerce to be used to spread and perpetuate such labor con-
ditions among the workers of the several States; (2) burdens
commerce and the free flow of goods in commerce; (3) con-
stitutes an unfair method of competition in commerce; (4)
leads to labor disputes burdening and obstructing commerce
and the free flow of goods in commerce; and (5) interferes
with the orderly and fair marketing of goods in commerce.
(b) It is hereby declared to be the policy of this Act,
through the exercise by Congress of its power to regulate
commerce among the several States and with foreign nations,
to correct and as rapidly as practicable to eliminate the condi-
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tions above referred to in such industries without substan-
tially curtailing employment or earning power.
The bill seeks to implement the po i cy of the Act by (1) providing
an increase in the minimum wage rate, and (2) extending the benefits
and protection of the Act to workers engaged in commerce or in the
production of goods for commerce, or employed in enterprises en-
gaged in commerce or in the production of goods for commerce.
The bill provides that the minimum wage rate for nonagricultural
employees covered under the mi:iairrtum wage provisions of the Act
prior to the effective date of the 1.966 amendments to the Act, and for
Federal employees covered by the 1.966 amendments, will be $2.00 an
hour beginning on. the first day of the second full month after the date
of enactment, or August 1, 1973, whichever occurs first, and $2.20 an
hour beginning July 1, 1974. The proposed minimum wage rate for
nonagricultural employees covered under the minimum wage pro-
visions of the Act, by the 1966 and 1973 amendments will be $1.80 an
hour beginning the first day of the second full month after the date of
enactment, or August 1, 1973, whichever occurs first, $2.00 an hour
beginning July 1, 1974, and $2.20 an hour beginning July 1, 1975. For
agricultural employees covered under the minimum wage provisions of
the Act, the minimum wage rate will be $1.60 an hour beginning the
first day of the second full month after the date of enactment, or
August 1, 19'73, whichever occurs first, $1.80 an hour beginning July 1,
1974, $2.00 an hour beginning July 1, 1975, and $2.20 an hour begin-
ning July 1, 1976. The minimum wage rates for hotel, motel, restau-
rant, food service, conglomerate, and certain public employees in
Puerto Rico and the Virgin Islands, will be in accordance with those
applicable to such employees in the United States. Other employees
in Puerto Rico and the Virgin Islands presently covered by wage
orders would be entitled to percentage increases in the wage orders
generally based upon increases in the applicable U.S. minimum wage
rate.
The wage increases provided by the bill were attuned to considera-
tions of correcting and as rapidly as practicable eliminating labor
Conditions detrimental to the maintenance of the minimum standard
of living necessary for health, efficiency, and general well-being of
workers without substantially curtailing employment or earning
power. It is firmly believed that these gradual and belated increases,
approximately equivalent to productivity and cost-of-living increases
i it recent years, can be absorbed by the national. economy as easily as all
previous increases in the minimum wage rate.
Title It of the bill extends the minimum wage and overtime cov-
erage of the A.ct to Federal, State and local government employees
(the overtime exemption is maintained for federal employees and
State and local policemen and firemen), domestic service employees,
and conglomerate employees. Overtime coverage is extended to agri-
ccultural processing employees., transit system employees, nursing home
employees (a limited exemption is maintained), and maids and custo-
dial employees in hotels and m otels.
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Nonagricultural employees covered under the mini-
mum wage provisions of the Fair Labor Standards
Act prior to the effective date of the 1966 amend-
ments (including Federal employees covered by the
1966 amendments).
Hourly
rate Effective date
$2. 00 1st day of the second full month after the date of
enactment, or Aug. 1, 1973, whichever occurs first.
2.20 July 1, 1974.
Nonagricultural employees covered under the mini-
1.80
1st day of the second full month after the date of
mum wage provisions of the Fair Labor Standards
enactment, or Aug. 1, 1973, whichever occurs first.
Act by the 1966 and 1973 amendments.
2.00
July 1, 1974.
2.20
July 1, 1975.
Agricultural employees covered under the minimum
1.60
1st day of the second full month after the date of
wage provisions of the Fair Labor Standards Act.
enactment, or Aug. 1, 1973, whichever occurs first.
1.80
July 1, 1974.
2.00
July 1, 1975.
2.20
July 1, 1976.
Hotel motel, restaurant food service, conglomerate,
Federal and Virgin Islands government employees
in Puerto Rico and the Virgin Islands.
Other employees in Puerto Rico and the Virgin Islands
presently covered by a wage order.
I Identical coverage as that for counterparts in United States.
2 Percentage increases in wage orders (see section-by-section analysis).
Minimum wage coverage will be extended to the Overtime coverage will be extended to the following:
following:
Federal employees. =, and local employees.
State and local employees. tic service employees.
Domestic service employees. Conglomerate employees.
Conglomerate employees. Agricultural processing employees.
Transit system employees.
Nursing home employees (modification of present exemption).
Maids and custodial employees of hotels and motels.
Almost three years have elapsed since the General Subcommittee on
Labor began considering legislation to raise the living standard of
minimum wage workers whose depressed earnings confine them in pov-
erty. The subcommittee commenced public hearings on bills amending
the Fair Labor Standards Act on June 17, 1970. Hearings continued in
1970 for 17 days until September 17, and were resumed on April 20,
1971, for 7 additional days; two of which were conducted in San Juan,
Puerto Rico, and dealt solely with the application of the minimum
wage rate in Puerto Rico and the Virgin Islands. Testimony was re-
ceived from a multitude of witnesses from government, labor, industry,
business, and other interested groups and individuals.
After several days of informal discussions and formal mark-up ses-
sions, the subcommittee, by a vote of 9-2, ordered a bill reported.
Subsequently the Committee on Education and Labor considered the
bill in open mark-up meetings and ordered the bill reported to the
House by a vote of 26-7. The bill was amended and passed by the
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House, but failed to be referred to a House-Senate Conference
Committee.
The economic urgency for workers the legislation proposes to cover
prompted the General Subcommittee on Labor to begin immediate con-
sideration of legislation to amend the Fair Labor Standards Act in
the 93rd Congress. The subcommittee held 4 days of hearings and re-
ceived testimony from 16 public witnesses representing every segment
of American business and labor which would be affected by the bill.
The subcommittee also heard testimony from Congressional witnesses,
and concluded its hearings on April 10, 1973, with the testimony of
Secretary of Labor Peter J. Brennan who presented the Administra-
tion's minimum wage proposals. After several informal meetings, the
subcommittee marked-up H.R. 4757 at a public meeting on May 2,
1973, and ordered the bill, as amended, reported to the Committee on
Education and Labor.
On May 15, 1973, the Committee on Education and Labor ordered
the bill H.R. 4757 reported, as amended. On May 22, 1973, the Com-
mittee-by a vote of 21 to 9-ordered reported H.R. 7935,a clean bill.
On June 25, 1938, one of the Nation's basic labor laws was enacted-
the Fair Labor Standards Act of 1938. The first statutory minimum
wage was established at 25 cents an hour for the year beginning
October 24, 1938. It was made applicable to all employees, not specif-
ically exempted, who were engaged in commerce or in the production
of goods for commerce.
'l'he original Act provided that the statutory minimum wage would
be raised to 30 cents an hour beginning October 24, 1939. A procedure
was established for raising the minimum wage by stages to a level of
40 cents an hour, industry by industry, as rapidly as possible; but, in
any case, 40 cents an hour was to become the national minimum wage
within 7 years after the effective date of the Act; that is, by October 24,
1945.
During the interval, intermediate minimum wages were applied to
different industries on recommendation of industry committees. The
last order of the Wage and Hour Administrator raising the minimum
wage to 40 cents an hour was issued in July 1944, 1 year before the
date set by the Act for the 40 cents an hour minimum wage rate to
become applicable.
The Act also established an overtime rate (not less than 11/2 times
the employee's regular hourly rate) which was to be paid employees
for employment in excess of certain maximum hours in a workweek.
Thos, during the first year of the Act, that is, from October 24, 1938,
to October 23, 1939, a maximum hours standard of 44 hours a week
was applied to covered employees; during the second year, 42 hours
became the standard; and after 42 years, the standard was reduced to
40 hours a week. The time-and-one-half penalty overtime rate has
never been altered, although amendments were passed in subsequent
years increasing the statutory minimum wage and extendi rig coverage
to unprotected workers.
The Fair Labor Standards Amemdrnents, of 1949 increased the mini-
mum hourly wage rate from 40 cents to 75 cents (to take effect Janu-
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ary 25, 1950), representing an 871/2 percent raise. The Fair Labor
Standards Amendments of 1955 provided another increase in the mini-
mum hourly wage rate which brought that wage rate to $1 an hour
effective March 1, 1956, representing a 331/3 percent increase.
The Fair Labor Standards Amendments of 1961 raised the mini-
mum hourly wage rate by 25 percent to $1.25, effective on September
3, 1963. An intermediate increase to $1.15 an hour was provided effec-
tive September 3, 1961. Employees covered by the Act for the first
time because of the changes made in the Act by the 1961 amendments,
which revised the exemptions and extended the Act's coverage, re-
ceived a minimum wage of not less than $1 an hour beginning Sep-
tember 3, 1961; $1.15 an hour beginning September 3, 1964; and $1.25
an hour beginning September 3, 1965. Employees brought within the
coverage of the Act by the 1961 amendments received overtime pro-
tection beginning September 3, 1963, for hours worked in excess of
44 in any workweek. Effective September 3, 1964, the overtime pro-
tection of the Act was extended to such employees for hours worked
in excess of 42 in any workweek, and effective September 3, 1965, for
hours worked in excess of 40 in any workweek.
Prior to the 1961 amendments, coverage under the Act was limited
to individual employees who were themselves engaged in commerce
or in the production of goods for commerce or in any closely related
process or occupation directly essential to production. The 1961
amendments enlarged the scope of the Act by adding another basis of
coverage-employment in an "enterprise engaged in commerce or in
the production of goods for commerce." Under this basis of coverage
the minimum wage and overtime protection of the Act was extended
to each and every employee of such an enterprise, unless specifically
exempted.
The Fair Labor Standards Amendments of 1966 increased the
minimum hourly wage rate by 28 percent to $1.60, effective on Febru-
ary 1, 1968. An intermediate increase to $1.40 an hour was provided
effective February 1, 1967. Employees covered under the minimum
wage provisions of the Act for the first time by the 1966 amendments,
which also revised the exemptions and extended the Act's coverage,
were provided a minimum rate of not less than $1 an hour beginning
February 1, 1967; $1.15 an hour beginning February 1, 1968; $1.30 an
hour beginning February 1, 1969; $1.45 an hour beginning February 1,
1970; and $1.60 an hour beginning February. 1, 1971. Newly covered
agricultural employees were provided a minimum wage rate of not
less than $1 an hour beginning February 1, 1967; $1.15 an hour be-
ginning February 1, 1968; and $1.30 an hour beginning February 1,
1969. Employees brought within the overtime protection of the Act
by the 1966 amendments received overtime compensation beginning
February 1, 1967, for hours worked in excess of 44 in any workweek;
beginning February 1, 1968, for hours worked in excess of 42 in any
workweek; and effective February 1, 1969, for hours worked in excess
of 40 in any workweek.
In addition to extending the protection of the Act to large groups of
employees employed in private activities which had theretofore been
completely exempt from coverage-such as agriculture-the 1966
amendments were particularly notable for their inclusion of public
employees within the parameter of the Act. A significant number of
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Federal employees were then. covered, but the 1966 amendments also
extended coverage to public employees employed in hospitals and
related institutions, schools and institutions of higher education, and
local transit operations.
In Maryland et. al. v. tiVirtz, Secretary of Labor, et. al., the Supreme
Court considered the contention of appellants-28 States and a school
district--who sought to enjoin enforcement of the Act as it applies to
schools and hospitals operated by the States or their subdivisions.
Appellants argued that the "enterprise concept" of coverage and the
inclusion of State-operated hospitals and schools were beyond Con-
gress' power under the Commerc3 Clause, that the remedial provisions
of the Act, if applied to states, would conflict with the Eleventh
Amendment, and that school and hospital enterprises do not have the
statutorily required relationship to interstate commerce. A three-judge
district court declined to issue a declaratory judgment or an injunction
and concluded that the adoption, of the "enterprise concept" and the
extension of coverage to State institutions do not, on the face of the
Act, exceed Congress' commerce -power. That court declined to
consider the Eleventh Amendment and statutory relationship
contentions.
The. Supreme Court affirmed the -udgrnent of the lower court and
held :
1. The "enterprise concept" of coverage is clearly within
the power of Congress under the Commerce Clause.
(a) A rational basis for Congress' finding the scheme
necessary to the protection of commerce was the logical
inference that the pay and hours of employees of an inter-
state business who are not production workers, as well as
those who are, affect an employer's competition with com-
panies elsewhere. United States v. Darby, 312 U.S. 100,
followed.
(b) Another rational basis is the promotion of labor
peace by the regulation of wages and hours, subjects of
frequent labor disputes.
(c) The class of employer:; subject to the Act, approved in
Darby, supra, was not enlarged by the addition of the "enter-
prise concept."
2. The commerce power provides a constitutional basis for
extension of the Act to State-operated schools and hospitals.
(a) Congress has "interfered with" state functions only to
the extent that it subjects a State to the same minimum wage
and overtime. pay limitations as other employers whose
activities affect commerce.
(b) Labor conditions in schools and hospitals can affect
commerce and are within the reach of the commerce power.
(c) Where a State is engaging in economic activities that
are validly regulated by the Federal Government when
engaged in by private persons, the State may be forced to
conform its activities to Federal regulation. United, States v.
California, 297 U.S. 175.
3. Questions concerning the States' sovereign immunity
from suit and whether particular State-operated institutions
have employees handling goods in commerce are reserved for
a ro irate concrete cases.
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With reference to the objectives of the Act, the Supreme Court,
speaking through Mr. Justice Burton, has observed :
In this Act, the primary purpose of Congress was not to
regulate interstate commerce as such. It was to eliminate, as
rapidly as practicable, substandard labor conditions through-
out the Nation. It sought to raise living standards without
substantially curtailing employment or earning power. * * *
The Act declared its purposes in bold and sweeping terms.
Breadth of coverage was vital to its mission. Its scope was
stated in terms of substantial universality * * * (Powell v.
United States Cartridge Co., 339 U.S. 497 at 509-510, 516
(1950)).
In contrast with the broad objectives of the Act its present coverage
is much more confined in scope.
The Act was a response to call upon a Nation's conscience, at a time
when the challenge to our democracy was the tens of millions of
citizens who were denied the greater part of what the very lowest
standards of the day called the necessities of life; when millions of
families in the midst of a great depression were trying to live on income
so meager that the pall of family disaster hung over them day by day;
when millions were denied education, recreation, and the opportunity
to better their lot and the lot of their children; when millions lacked
the means to buy the products of farm and factory and by their
poverty denied work and productiveness to many other millions; and
when one-third of a nation was ill housed, ill clad, and ill nourished.
On May 21,1937 1 in a message to the Congress, President Franklin
D. Roosevelt, stated that-
Our Nation so richly endowed with natural resources and
with a capable and industrious population should be able to
devise ways and means of insuring to all our able-bodied
working men and women a fair day's pay for a fair day's
work. A self-supporting and self-respecting democracy can
plead no justification for the existence of child labor, no eco-
nomic reason for chiseling workers' wages or stretching
workers' hours.
Enlightened business is learning that competition ought
not to cause bad social consequences which inevitably react
upon the profits of business itself. All but the hopelessly re-
actionary will agree that to conserve our primary resources
of manpower, Government must have some control over
maximum hours, minimum wages, the evil of child labor, and
the exploitation of unorganized labor.
And so to protect the fundamental interests of free labor
and a free people we propose that only goods which have been
produced under conditions which meet the minimum stand-
ards of free labor shall be admitted to interstate commerce.
Goods produced under conditions which do not meet rudi-
mnentary standards of decency should be regarded as con-
traband and ought not to be allowed to pollute the channels
of interstate trade.
On October 26, 1949, upon the occasion of the signing of the Fair
Labor Standards Amendments of 1949, President Harry S Truman
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This Act has proved to be wise and progressive remedial
legislation for the welfare not only of our wage earners but of
our whole economy.
On April 21., 1960, while appearing before the Subcommittee on
Labor Standards of the Committee on Education and Labor, House
of Representatives, the Honorable James P. Mitchell, Secretary of
Labor, cited President Dwight D. Eisenhower's continuing support
for this basic legislation. Secretary Mitchell stated :
In his first economic report issued in January 1954, Presi-
dent Eisenhower said that "an effective minimum wage
program should cover millions of low-paid workers now
exempted."
In his 1955 report, the President indicated that "the
coverage of the minimum wage is no less important than its
amount."
In 1956, he stated that "tae need for an extension of cover-
age remains, and the Congress is again requested to proceed
as far as is practical in this direction."
This request was repeated in 1957, 1958, and 1959, and
in his last report the President reiterated that "the Congress
is again requested to extend coverage of the Fair Labor
Standards Act to several million workers not now receiving its
protection."
In a special message to the Congress on February 2, 1961, President,
John F. Kennedy recommended a minimum wage increase and ex-
panded coverage of the Fair Labor Standards Act of 1938. President
Kennedy declared :
This will improve the income, level of living, morale, and
efficiency of many of our lowest paid workers, and provide
incentives for their more productive utilization. This can
actually increase productivity and. hold down unit costs,
with no adverse effects on our competition in world markets
and our balance of payments.
Now in its fourth decade the Act has meant much to many-greater
dignity and security and economic freedom for millions of American
workers, and an upswing in economic growth for the country as a
whole.
However, as President Lyndon E. Johnson stated in his message to
the Congress of May 18,1965:
1 iany American workers whose employment is clearly
within the reach of this law have never enjoyed its benefits.
Unfortunately, these workers are generally in the lowest
wage groups and most in need of wage and hour protection.
We must extend minimum wage and overtime protection to
them.
It is the committee's intention to extend the Act's coverage in such
a manner as to completely assume the Federal responsibility insofar
as is presently practicable and to raise the minimum wage to a level
which will prevent the disgraceful and intolerable situation of workers
and their families dwelling in poverty.
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At the present time, about 40 percent of the Nation's wage and
salary workers in the civilian labor force are outside the coverage of
the Act. The law presently covers only 46.9 million of the nearly 77.3
million wage and salary workers in the United States. A substantial
number of these 77.3 million are beyond the scope of the Act's prac-
tical, possible, or needed coverage. More than 13 million, for instance,
are executive, administrative, or professional personnel; for whom the
minimum wage provisions of the Act would have little relevance. But
of the remainder-some 64 million-who might be brought within the
wage and hour guarantees, over 16 million are not in fact covered.
TABLE 3.-ESTIMATED NUMBER OF NONSUPERVISORY EMPLOYEES COVERED UNDER THE FAIR LABOR STANDARDS
ACT, BY INDUSTRY
[In thousands[
Total number
of employees
in industry
Number of
employees
covered
Number of
employees not
covered or
exempt
Agriculture-------------------------------------------------------
1,199
485
714
Mining -------------------- ?-----------------------------------
547
542
5
Contract construction______________________________________________
3,481
,
3,462
19
Manufacturing ------------------------------ ?---------------------
17
356
16,788
568
Transportation, communications, utilities_ _ __________________________
4,080
3,991
89
Wholesale trade--------------------------------------------------
3,387
257
all
Retail trade------
10,731
6, 611
4,120
Finance, insurance, real estate
3,395
2,577
818
Services (excluding domestic service) -------------------------------
9,167
6,465
2,702
Domestic service__________________________________________________
2,063?
0
2,063
Federal Government_________________________________________
2,333
636
1697
State and local government__________________________________
6,150
2,817
3, 333
Total - ---------------- ?--------------------------------
.63, 889
46,950
16,9391
About 2 million of those not covered are exempt as "outside sales-'
men" under section 13(a) (1) of the Act. Some others are in occupy
tions where wage rates are already higher than any practical minima
wage level or where hours of service are already compensated, at leas
in accordance with the overtime requirements of the Act. But it is evi
dent that a sizeable number of American workers continue to be de
nied the most basic protection afforded by the Act.
SECTION 1. Short Title.-Provides that the act may be cited as th
"Fair Labor Standards Amendments of 1973."
Title I-Increases in Minimum Wage Rates
SECS. 101 AND 102. Nonagricultural Employees.-Provides a min -
ntum wage rate for nonagricultural employees covered by the Act pri r
to the effective date of the 1966 amendments, and Federal employe s
covered by the 1966 amendments, of not less than $2 an hour beginni g
on the first day of the second full month after the date of enactme t,
or August 1, 1973, whichever occurs first, and not less than $2.20 it
hour beginning July 1, 1974.
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Provides a minimum wage rate for nonagricultural employees cov-
ered by the 1966 .and 1973 amendments to the Act of not less than $1.80
an hour beginning on the first day of the second full month after
the date of enactment, or August 1, 1973, whichever occurs first, not
less than $2 an hour beginning; July 1, 1974, and not less than $2.20
an hour beginning July 1, 1975.
SEC. 103. Agricultural Employees.--Provides a minimum wage rate
for agricultural employees covered by the Act of not less than $1.60
an hour beginning on the first day of the second full month after the
date of enactment, or August 1, 1.973, whichever occurs first, not less
than $1.80 an hour beginning July 1, 1974, not less than $2.00 an hour
beginning July 1, 1975, and not less than $2.20 an hour beginning
July 1, 1976.
SEc. 104. Government, Motel, Motel, Restaurant, Food Service, and
Conglomerate Employees in Puerto Rico and the Virgin Islands.-
The minimum wage rate for hotel, motel, restaurant, food service,
conglomerate, and Government of the United States and the Virgin
Islands employees in Puerto Rico and the Virgin Islands shall be in
accordance with the applicable rate in the United States.
SEC. 105. Other Employees in Puerto Rico and the Virgin Islands.-
Provides for a 2,i per centum increase in the most recent wage order
applicable to an employee in Puerto Rico or the Virgin Islands covered
by the Act prior to the 1966 amen draents. Such increase shall generally
become effective 60 days after the effective date of the 1973 amend-
ments or 1 year from the effective date of the most recent wage order,
whichever is later.
Provides, 1 year thereafter, for a 12.5 per centum increase in the
most recent applicable wage order.
Provides for a 15.4 per centwn increase in the most recent wage
order applicable to an agricultural employee in. Puerto Rico or the
Virgin Islands covered by the Act. Such increase shall generally be-
come effective 60 days after the effective date of the 1973 amendments
or 1 year from the date of the most recent wage order, whichever
is later. Provides an additional 15.4 per centum increase in the most
recent wage order 1 year later, and a further 15.4 per centurn increase
in the most recent wage order 1 year thereafter.
In the case of an agricultural employee whose hourly wage is in-
creased (above that required by wage order) by a subsidy paid, in
whole or in part, by the Government of Puerto Rico, the per centum
increase shall be applied to the sum of (1) the wage rate and (2)
the amount of the subsidy.
For nonagricnltrrral employees covered by the 1966 amendments,
provides three l2.5 per centum increases in the most recent wage
orders, the first increase to be generally effective 60 days after the
effective date of the 1973 amendments or 1 year from the effective
date of the most recent wage order, whichever is later; the second
increase 1 year later; and the third increase 1 Year thereafter.
Provides for the establishment of special industry committees to
recommend minimum wage rates for employees newly covered by the
1973 amendments (other than employees described 'in section 104).
Also requires that all special industry committees recommend the
minimum wage rate applicable in the United States except where
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pertinent financial information demonstrates inability to pay such
rate.
Retains the review procedure first established by the 1961 amend-
ments. This procedure permits any employer, or group of employers,
employing a majority of the employees in an industry in Puerto Rico
or the Virgin Islands to petition the Secretary for the appointment of
a special industry committee to recommend the minimum wage rate or
rates to be paid such employees in lieu of the rate or rates required as a
result of the percentage increase. The Secretary may then appoint a
special industry committee if he has reasonable cause to believe that
employment in such industry will otherwise be substantially curtailed.
Provides further that, notwithstanding any other provision, no wage
rate for covered employees may be less than 60 per centum of the mini-
mum wage rate applicable to counterpart employees in the United
States.
Title II-Extension of Coverage : Revision of Exemptions
SEC. 201. Federal and State Employees.-Amends the definitions of
"employer," "enterprise," and "enterprise engaged in commerce or in
the production of goods for commerce," to include the United States
and any State or political subdivision of a State; t ere y permitting
the extension of minimum wa e and overtime covera
State e to all deral,
an ocal public emp oyees. ederal e e
Covered by t_ l e 1966 amendments), and State and local public em-
ployees engaged in fire protection or law enforcement activities,
exempt from overtime coverage.
EC. 2,02. Transit nip oyees.-Reduces the overtime exemption for
any driver, operator, or conductor employed by an employer engaged
in the business of operating a street, suburban or interurban electric
railway, or local trolley or motor bus carrier, if the rates and services
of such railway or carrier are subject to regulation by a State or local
agency. During the first year after the effective date of the 1973
amendments, overtime compensation must be paid to such employees
for hours worked in excess of 48 per week; during the second year, for
hours worked in excess of 44 per week; and thereafter, for hours
worked in excess 42 per week. In determining the hours of employ-
ment of such an employee, hours employed in charter activities shall
not be included if (1) the employee's employment in such activities
was pursuant to an agreement or understanding with his employer ar-
rived at before engaging in such employment, and (2) if employment
in such activities is not part of such employee's regular employment.
SEc. 203. Nursing Home Employees.-Amends the overtime exemp-
tion for nursing home employees to provide an overtime exemption for
employment up to 8 hours in any workday and up to 80 hours in any
14-consecutive-day work period. This coverage is identical to that for
hospital employees. The present overtime exemption for nursing home
employees is for employment up to 48 hours in any workweek.
SEc. 204. Seasonal Industry Employees.-Reduces and ultimatel
repeals the overtime exemption for employees in seasonal industrieand agricultural processing. Existing law provides an overtime exemp-
tion. for employment in seasonal industries up to 10 hours in any work-
day or 50 hours in any workweek for not more than 10 workweeduring the calendar year. Existing law also provides an overtime ex-
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emption for employment in agricultural processing up to 10 hours in
any workday or 48 hours in any workweek for not more than 10 work-
weeks during the calendar year. In the case of an employer who does
not qualify for the overtime exemption under both categories, the ex..
emption is extended to 14 workweeks daring the calendar year for the
category under which he does qualify.
This section reduces the overtime exemption for employment in sea-
sonal industries to 9 hours in any workday or 48 hours in any work-
week for not more than 7 workweeks during the first year after the
effective date of the 1973 amendments and for not more than 5 work-
weeks during the second year. The overtime exemption for employ-
ment in agricultural processing is reduced to 9 hours in any workday
.tlae 48 hours per week limitation in existing law is not affected) for
not more than. 7 workweeks during the first year after the effective date
of the 1973 amendments and for not more than 5 workweeks during
the second year. In the case of an employer who does not qualify for
the overtime exemption under both categories, the exemption is re-
duced from 14 workweeks during the calendar year to 10 workweeks
during the first year after the effective date of the 1973 amendments
and 7 workweeks during the second year. Effective 2 years after the
effective date of the 1973 amendments the overtime exemptions are
repealed.
SEC. 205. Domestic Service Employees Employed in Households.-
States a finding of Congress that domestic service in households di-
rectly affects commerce and that the minimum wage and overtime
protections of to Act should have been available to such employees
since its enactment. This section prescribes therefore, the minimum
wage (not less than $1.80 an hour beginning on the first day of the sec-
ond full month after the date of enactment, or August 1, 1973, which-
ever occurs first. not less than $2 an hour beginning July 1, 1974, and
not less than $2.20 an hour beginning July 1, 1975) and overtime (com-
pensation for hours worked in excess of 40 per week) rates applicable
to such employees. The provision is not applicable in the case of any
such employee who resides in the household of his employer. Domestic
service employees are described as those whose compensation for serv-
ices constitutes `'wages" under section 209 of the Social Security Act.
Sap. 206. Employment of Students.-Provides for the employment
of full-time students (regardless of age but in compliance with appli-
cable child labor laws) at wage rates less than those prescribed by the
Act in any occupation other than an. occupation listed in the section or
one determined by the Secretary to be particularly hazardous for the
employment of such students. Students may be employed at, a wage
rate of not less than 85 per centum of the applicable minimum wage
rate or 11.60 an hour ($1.30 an hour in the case of employment in agri-
culture), whichever is the higher, pursuant to special certificates issued
by the Secretary. Such special certificates shall provide that such stu-
dents shall, except during vacation periods, be employed on a part-time
basis (not to exceed 20 hours in a Iy workweek). In the case of an em-
ployer who intends to employ five or more students under this section,
the Secretary may not issue a special certificate unless he finds the
employment of any such student "will not. create a substantial prob-
ability of reducing the full-time employment opportunities" of other
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workers. In the case of an employer who intends to employ less than
five students under this section, the Secretary may issue a special cer-
tificate if the employer certifies to the Secretary that he is not thereby
reducing the full-time employment opportunities for other workers.
Sections 15 (Prohibited Acts) and 16 (Penalties) of the Act would bel
applicable to an employer who violated the requirements of this sec-tion. A summary of the special certificates issued under this provision
is required to be included in the Secretary's annual report on the Act.
Section 206 also provides that the Secretary may waive the mini-
mum wage and overtime provisions of the Act with respect to a stu-
dent employed by his elementary or secondary school, where such
employment constitutes an integral part of the regular education pro-
gram provided by the school.
SEC. 207. Laundry and Cleaning Establishments to be Considered
Service Establishments for Certain Purposes.-Requires the considera-'l
tion of laundries and dry cleaning establishments as service establish-
ments in the administration of sections 7(i) (relating to commission
employees) and 13 (a) (1) (relating to executive and administrative
personnel and outside salesmen) of the. Act.
SEC. 208. Maids and Custodial Employees of Hotels and Motels.-
Extends overtime coverage to maids and custodial employees of hotels
and motels.
SEC. 209. Employees of Conglomerates.-Precludes the availability
of the minimum wage and overtime exemptions of section 13 of the
Act (except those relating to employees in executive, administrative, or
professional capacities, or in the capacity of outside salesmen, and the
overtime exemptions relating to employees whose hours of service are
subject to the provisions of the Motor Carrier Act, Interstate Com-
merce Act, or Railway Labor Act) to conglomerates with an annual
gross volume of sales made or business done in excess of $10 million.
The exemptions then, shall not apply with respect to any employee
employed by "an establishment (1.) which controls, is controlled by,
or is under common control with, another establishment the activities
of which are not related for a common business purpose to the activi-
ties of the establishment employing such employee; and (2) whose
annual gross volume of sales made or business done, when combined
with the annual gross volume of sales made or business done by each
establishment which controls, is controlled by, or is under common
control with, the establishment employing such employee, exceeds $10
million (exclusive of excise taxes at the retail level which are sep-
arately stated)."
SEC. 210. Employees of Boat Dealers.-Provides an overtime ex-
emption for any salesman, partsman, or mechanic primarily engaged
in selling or servicing boats if employed by a nonmanufacturing estab-
lishment primarily engaged in the business of selling boats to ultimate
purchasers. Existing law provides an overtime exemption for em-
ployees engaged in related activities and employed by automobile,
trailer, truck, farm implement, or aircraft dealerships.
SEC. 211. Tobacco Employees.-Retains an overtime exemption
applicable to certain employees engaged in activities related to the
sale of tobacco. The exemption would otherwise be reduced and ulti-
mately repealed by section 204 (seasonal industry employees).
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SEC. 212. Substitute Parents for Ines*itutionalized Children.--Estab-
lishes an exemption from the minimum. wage and overtime compensa-
tion provisions of the Act for an employee who is employed with his
spouse by a nonprofit educational ire-stitution to serve as parents to
children who have been placed :n such institution by or through a
public agency or by parentb or guardians who are financially unable
to care for and educate their children or children under their guard-
ianship. The substitute parents must also meet certain other require-
ments.
Title III-Conforming Amendments : Effective Date and Regulations
SEC. 301. Con f r ming Amendments.
SEC. 302. Effective Date and Regulations:-Provides that unless
otherwise indicated, the effective date of the 1973 amendments shall
be, the first day of the second full month which begins after the date
of enactment, or August 1, 1973, whichever occurs first.
COMMENTS ON MAJOR PROVISIONS
INCREASE IN THE MINIMUM, WAGE RATE FOR EMPLOYEES COVERED UNDER
THE ACT PRIOR TO THE 1966 AMENDMENTS: JUSTIFICATION FOR IN-
CREASES IN MI.i>TIMUM WAGE RATES
More than 35 million nonsupervisory employees at work in Septem-
ber 19721 were in establishments covered prior to the 1966 amendments
and have been subject to the $1.60 minimum wage rate since Febru-
ary 1, 1968. For these employees, and the 636,000 Federal employees
covered by the 1966 amendments, the bill proposes increases in the
minimum wage rate to $2.00 an hour effective on the first day of the
second full month after the date of enactment, or August 1, 1973,
whichever occurs first, and $2.20 an hour effective July 1, 1974.
TABLE 4.-ESTIMATED NUMBER OF NQNSUPERVISORt EMPLOYEES COVERED UNDER THE FAIR LABOR
STANDARDS ACT PRIOR TO THE EFFECTIVE DATE OF THE 1966 AMENDMENTS, BY INDUSTRY
[in thousands)
Industry
Total
number of
employees
in industry
Number of
employees
covered prior
to 1966
amendments
Agriculture- - --- ------ - ---
---- --
---
-----
1,199
547
0
542
Mining ----------------- _ ------------
----------------------------------
854
2
Contract construction ----- _-___----------,
-----------------------------------
3,481
,
724
16
Manufacturing
-----------
--
----------------------
17,356
,
--
-
Transportation,communications,utilities--_.--_----------------------------------
4,080
3, 9
2
456
Wholesale trade -------------------------------- ----------------------------
3,387
,
3
736
Retail trade--------------- - - - - - - - - - - - - - - ------- t r a d e - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -----------------------
10,731
,
Finance, insurance, real estate--------------------- ----------- ---------------
Services(excludingdomestic service) ------- -------- ----- ----- ---_------------
9,167
2,466
Domestic service -------------------------------- -------------------------
Federal Government --------------------------------------------------------
2,333
6
150
t
State and local government -,. --___--_------------------------------------------
,
Total---------------------------------------------- ---- - -- -----------
63,889
35,1531
The most recent (late for which all such data are available.
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The impact of a $2.00 an hour minimum wage rate would be felt by
slightly more than 5 per cent of the 35,159,000 employees covered by
the Act prior to the effective date of the 1966 amendments; or, by an
estimated 1,856,000 employees. These are employees who are now earn-
ing less than $2.00 an hour. Only 54,000 of the 636,000 Federal em-
ployees covered by the 1966 amendments would feel the impact of a
$2.00 an hour minimum wage rate.
The impact of a $2.20 an hour minimum wage rate-effective July 1,
1974-would mean wage increases for an estimated 2,618,000 private
sector employees (covered by the Act prior to the effective date of the
1966 amendments) and 64,000 Federal employees (covered by the 1966
amendments) who, at that time, will be earning less than $2.20 an hour.
When the 1966 amendments-increasing the minimum wage rate to
$1.60 an hour-were enacted, they represented a promise that a full-
time worker compensated at the minimum wage rate could at least earn
what was considered to be the poverty level of income; which at that
time was about $3,200 annually for a family of four ($1.60 an hour X
40 hours per week X 50 weeks per year= $3,200 annually). Since then,
increases in the price level as reflected in the Consumer Price Index
have reflected the bankruptcy of that promise.
The Department of Labor early this year redefined the poverty
threshold for a nonfarm family of 4 in the Continental U.S. to $4,200
in annual net income. A minimum wage earner working 40 hours per
week for 50 weeks during the year receives $3,200 in annual gross
income. In Hawaii, the poverty threshold for that same family is
$4,850 in annual net income. In Alaska, it is $5,250.
The poverty threshold for a farm family of 4 in the Continental
U.S. is $3,575 in annual net income. A minimum wage earner in agri-
culture, working 40 hours per week for 50 weeks during the year,
receives $2,600 in annual gross income. In Hawaii, the poverty thresh-
old for the same farm family is $4,125 in annual net income. In Alaska,
it is $4,475.
The bill proposes an initial minimum wage increase to $2.00 an hour
for nonagricultural workers covered by the Act prior to the 1966
amendments. That rate will yield (on a 40 hours per week/50 weeks
per year employment basis) an annual gross income for covered work-
ers of $4,000-some $200 below the annual net income deemed the pov-
erty threshold for a family of 4 in the Continental U.S.; $850 below
that poverty threshold in Hawaii; and $1,250 below that threshold in
Alaska.
For nonagricultural workers covered by the 1966 amendments, the
differences are more significant since the bill proposes an initial mini-
mum wage increase to only $1.80 an hour.
For covered agricultural workers, the bill proposes an initial mini-
mum wage increase to $1.60 an hour. That rate will yield an annual
gross income for full-time workers of $3,200-some $375 below the
annual net income deemed the poverty threshold for a farm family of
4 in the Continental U.S.; $925 below that poverty threshold in Ha-
waii; and $1,275 below that threshold in Alaska.
These differentials become more exaggerated when increases in the
Consumer Price Index (CPI) since the Labor Department's redefini-
tion of the poverty threshold are considered. Moreover, if income is
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from gainful employment, fina:iici-al considerations for the payment of
Social Security and Federal, State, and. local income and other taxes
must be taken into account, bringing the annual income requirement
for subsistence at the poverty threshold to well above Government de-
fined levels.
With respect to increases in the cost-of-living, as reflected by changes
in the CPI, it is significant that the annual average of the CPI for
all items in 1972 was 125.3. The relevant index for March 1973 was
129.8. The base ;year index of 100 was 1967-the year the 1966 amend-
ments to the Act became fully effective. For food and housing, about
all a minimum. wage earner can hope to afford, the March 1973 indices
were 134.8 and 132.3, respectivelly.
These indices reflect a depreciation in the relative economic position
of a minimum wage earner to a level below the $1.25 minimum wage
rate applicable before the 1966 amendments to the Act. In summary,
today's minimium wage of $1.60 buys less than the $1.25 minimum
wage bought in 1966.
Newly covered r Cumulative
Previously covered (nonfarm) Farmworkers percent
inflatic n
Mini- Mini- Mini- from date of
mum mum mum enactment
wage Buying wage Buying wage Buying CPI September
Effective date rate power rate power rate power (1967=100) 19E6
Feb. 1, 1967 -------- 1.40 1.39 1.00 .99 1.00 .99 98.7 0.6
Feb. 1, 1968 -------- 1.60 1.53 1.15 1.10 1.15 1.10 102.3 4.3
Feb. 1, 1969_____ 1.60 1.47 1.30 1.19 1.30 1.19 107.1 9.2
Feb. 1, 1970 -------- 1.60 1.38 1.45 :.25 1.30 1.12 113.9 16.1
Feb. 1, 1971 -------- 1.60 1.31 1.60 31 1.30 1.07 119.4 21.7
Feb. 1, 1972 -------- 1.60 1.27 1.60 .27 1.30 1.03 123.8 26.2
Feb. 1, 1973-------- 1.60 1.22 1.60 .22 1.30 .99 128.6 31.1
CPI =98.1 upon enactment of FLSA Amendments of September 1966.
Stated differently, if acost-of-:living increase mechanism had been
incorporated into the 1966 amendments, the minimum wage rate in
March 1973 would. have exceeded $2.07 an- hour.
A complete Congressional perspective also compels notice to pay
increases granted Federal employees since the 1966 amendments in-
creased the minimum wage rate to $1.60 an hour. In 1966, a Federal
employee (GS- 2;) earned' $3,925 annually. After increases mandated
by the Congress., that Federal employee now earns $5,432 annually--
an increase of more than 38 per cent. A GS-16 level Federal employee
in 1966 earned $20,075 annually. Today, he earns $31,203-an increase
of 55.8 per cent? Generally, if the same cost-of-living and cornparabil-
ity increases Congress approved for Federal employees had been ap-
plied to minimum wage earners, today's minimum wage rate would
well exceed $2.20 an hour.
The Fair Labor Standards Act is irrelevant to contemporary eco-
nomic realities. An increase in the minimum wage rate to $2.00 an
hour is required--virtually immediately--if only on the basis of simple
economic fact. Even at that level, a full-time worker would earn less
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than the poverty threshold and enjoy less buying power than he did
before his wage was increased to its present $1.60 an hour rate. An in-
crease in the minimum wage rate to $2.20 an hour will permit him,
assuming essentially no additional increases in the cost-of-living, to
recapture some of the economic value his wage entitled him to in 1966.
One of the traditional charges against proposed increases in the
minimum wage rate-especially during periods of prolonged infla-
tion-is that such increases further aggravate the inflationary trend.
The committee is pleased to note that a spokesman for the U.S. Cham-
ber of Commerce, in testimony before the Senate Subcommittee on
Labor on related legislation, did not associate that organization with
the charge. At that time, Dr. Richard S. Landry, Administrative
Director, Economic Analysis and Study Group, U.S. Chamber of Com-
merce, said in response to a statement by the Chairman of the sub-
committee :
We do not contend, unlike some of the witnesses that ap-
peared before you apparently, that the minimum wage is in-
flationary. Quite the opposite. Inflation is not caused by
minimum wages. * * *
In actual fact, inflation adversely affects the lowest income worker-
including minimum wage earners-more harshly than any other. He is
its sorriest victim.
As one witness testified :
We do not believe any employed workers should be forced
to go on welfare in order to survive.
'T'hese people work hard at useful jobs; struggle to maintain
their economic independence and self-dignity; and attempt
to achieve self-reliance against overwhelming odds. Yet they
are paid less than a subsistence wage.
No fewer than 20 states and the District of Columbia provide higher
amounts in welfare payments plus food stamps to a family of four,
than the minimum wage rate provides to that family's breadwinner.
Twelve of these States provide higher annual cash welfare payments
than the yearly earnings of minimum wage workers, irrespective of
food stamp considerations.
States whose cash welfare payments are higher :
Alaska, Connecticut, Illinois, Massachusetts, Minnesota, New
? Hampshire, New Jersey, New York, Pennsylvania, South Dakota,
Vermont, and Washington.
States whose cash welfare payments and food stamps are higher:
District of Columbia, Hawaii, Idaho, Iowa, Kansas, Michigan,
North Dakota, Rhode Island, and Virginia.
Under legislation passed by the House of Representatives in the last
Congress, most full-time workers employed at the current minimum
wage rate would be eligible for welfare benefits.
The committee, however, subscribes to the preceding witness' conclu-
sion that the "simplest, most direct and least expensive way to elimi-
nate most poverty is to modernize the Fair Labor Standards Act."
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is,
Another charge against proposed increases in the minimum wage
rate is that such increases crea-Ie unemployment. Section 4(d) of the
Act requires an annual report by the Secretary of Labor, which report
"shall contain an evaluation and appraisal by the Secretary of the mine
imum wages established by thi3 Act . . ." Reports by Secretaries o_E
Labor-in all administrations--have shown substantial benefits and
only rare, isolated instances of adverse effects.
Former Secretary of Labor 1=todc-son, in his January 1971 report to
the Congress evaluating niinimn_m wage legislation, stated :
Although the economic indicators just noted increased at
a fairly rapid rate ii) the year in which the Federal mini-
mum wage for the newly covered group was raised 15 cents,
it is significant that employment in retail trade and serv-
ices-the industries where the newly covered group is largely
concentrated and hence most likely to manifest some impact
from the. wage increase--Cared better than industries un-
affected by the statutory escalation in the minimum wage.
He concluded his summary with this statement:
in view off'. overall economic trends, it is doubtful whether
changes in the minimum had any substantial impact on wage,
price or employment trends. Of much greater significance,
however, is the fact that the 15-cent boost did help 2 million
Workers recover some of the; purchasing power eroded by the
steady
upward movement of prices which had started even
before the enactment of the 1966 amendments.
In the 4(d) report transmitted to the Congress in 1970 by the then
Secretary of Labor George P. Shultz, a similar conclusion was drawn.
With respect to the employment effects of the 1966 amendments,
this report stated :
There was continued economic growth during the period
covering the third phase of the minimum wage and
maximum hours standards established by the Fair Labor
Standards Amendments of 1966. Total employment on non-
agricultural payrolls (seasonally adjusted) rose in 28 out
of the 32 consecutive months between January 1967 and Sep-
tember 1969. In the rhost recent 12-month period, employ-
ment climbed 3.2 percent, from 68.2 million in September
1968 to 70.4 million in' Sept-mher 1969. Employment rose in
all major nonagricultural industry divisions in the 12-month
period between September 1.968 and September 1969. In the
retail, services and State and local government sectors-
where the minimum wage had its greatest impact in 1969,
since only newly covered workers were slated for Federal
minimum wage increases-employment rose substantially.
With respect to price effects Secretary Shultz stated :
The, steady upward inovernent of prices during the period
studied reflects a continuation of the rising trend in prices
which was in motion prior to the enactment of the 1966
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amendments. There are strong indications that other factors,
although possibly not entirely exclusive of minimum wage
escalations, were major causes of price increases occurring
during the period studied.
In the previous administration, former Secretary of Labor Willard
Wirtz, in his 1969 4(d) report, drew substantially the same conclu-
sions. Regarding the impact of the 1966 amendments, Secretary Wirtz
stated :
The increased minimum wage levels set in 1966 have not
contributed to the current inflationary spiral to an extent
which permits reasonable questioning of their net value in
strengthening both the position of low-paid workers in par-
ticular and the economy in general.
And, with respect to expanded coverage in schools and hospitals
newly provided for in 1966, the Shultz report stated :
Overall it can be stated that educational and hospital sec-
tors have had little evident difficulty adjusting to minimum
wages established by the 1966 amendments.
In the 1971 report of the Secretary, however, is historical data on
the relationship between the minimum wage and average hourly earn-
ings. As the report states :
* * * minimum wages have been traditionally compared
to gross average hourly earnings of production workers in
manufacturing for purposes of evaluating the efficacy or de-
sirability of changes in the level of the FLSA minimum,
or of assessing the effects of legislative changes.
With respect to this comparison, the report concluded that :
The relationship between the minimum wage and average
hourly earnings or average hourly compensation varies, de-
pending upon whether account is taken of changes in cover-
age. Although the minimum wage has been increased sub-
stantially, its ratio to earnings has been largely eroded by
gains in average hourly earnings between the periods of
increases in the minimum wage. Consequently, th,e ratio of
the minimum wage to average hourly earnings or to average
hourly compensation per man hour is now lower than it was
in 1950, when the 1949 amendments went into effect. (Em-
phasis supplied.)
That report was the most recent to explicitly relate the minimum
wage rate to average hourly earnings. But it is evident from the eco-
nomic facts available that the disparity has become even more dra-
inatic during the interval.
INCREASE IN TIIE MINIMUM WAGE RATE FOR EMPLOYEES COVERED UNDER
THE ACT BY TIIE 19 66 AMENDMENTS
Over 11 million nonsupervisory employees were covered under the
minimum Wage provisions of the Act by the 1966 amendments.
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TABLE 6.-ESTIMATED NUMBER OF NONSUPERVISO Y EMPLOYEES COVERED UNDER THE FAIR LABCR
STANDARDS ACT BY THE 1966 AMENDMENTS, BY INDUSTRY
Industry :
Number of employees
covered by 1966
amendmen;`s
Agriculture ------------------------------------------------------
05
Mining ----?--------------------
Contract construction
6C8
Manufacturing --------------------------------------------------
E4
Transportation, communications, utilities________________________
08
Wholesale trade------------------------------------------------
120
Retail trade..------------- - - -
2,875
Finance,insurance,real estate___________________________________
E9
Services (excluding domestic servi(e)___________________________
3, 999
Domestic service-----------------------------------------------
Federal Government-___ _____-____-----------------------------
636
State and local governm'nt________._____________________________
2, 817
Total ---------------------------------------------------------
11,791
With the exception of the 636.000 Federal employees covered, and
the 485,000 agricultural employees covered, the bill would increase
the minimum wage rate for such employees to $1.80 an hour effective
oil the first day of the second full month after the date of enactment, or
August 1, 1973, whichevdr occurs first, $2.00 an hour effective July - .,
1974, and $2.20 an hour effective Jaly 1, 1975. The Federal employees
presently covered would be subject to the same rate as that applicable
to employees covered prior to the 1966 amendments. The proposed
minimum wage rate, for covered agricultural employees will be dis-
cussed below.
Of the remaining 10,670,000 employees covered by the 1966 ameno.-
Inents, a $1.80 an hour minimum wage rate--assuming an effective
date of July 1. 1973-would mean wage increases for an estimated
1,349,000. These are employees whc are now earning less than $1.80 an
hour.
The impact of a $2.00 an hour minimum wage rate-effective July :.,
1974-would mean wage increases for an estimated 1,866,000 employees
who, at that time, will be.earning less than $2.00 an hour.
The impact of a $2.20 an hour minimum wage rate-effective July :.,
1975--would mean wage increases for an estimated 2,379,000 employees
who, at that time, will be :earning less than $2.20 an hour.
FN(IREASE IN THE M1- IMUM WAGE .SATE FOR AGRICULTURAL EMPLOYEES
COVERED UNNI)ER THE ACT
The, 1966 amendments extended the minimum Nvage protection of the
Act to 485,000 employees employed in agriculture. The present min: -
nnunl wage rate for such employees is-and has been since February =1,
1969--$1.30 ar hour. The bill proposes to increase that rate to $1.60 all
hour effective on the first day of the second full month after the date of
enactment, or August 1, 1973, whichever occurs first, $1.80 an hour
effective July _1, 1974, $2.00 an hour effective July 1, 1975, and $2.20 an
hour effective July 1, 19713.
The bill does not propose an extension of minimum wage coverage
to additional agricultural employees. :'1t is interesting to note also,
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that the 485,000 covered agricultural employees are employed on ap-
proximately 1 percent of the Nation's farms.
A $1.60 an hour minimum wage rate-assuming an effective date of
July 1, 1973-would mean wage increases for an estimated 96,000
agricultural employees covered under the Act. These are employees
who are now earning less than $1.60 an hour.
A $1.80 an hour minimum wage rate-effective July 1, 1974-would
mean wage increases for an estimated 127,000 agricultural employees
who, at that time, will be earning less than $1.80 an hour.
A $2.00 an hour minimum wage rate-effective July 1, 1975-would
mean wage increases for an estimated 155,000 agricultural employees
who, at that time, will be earning less than $2.00 an hour.
The impact of a $2.20 an hour minimum wage rate-effective
July 1, 1976-would mean wage increases for an estimated 180,000
agricultural employees who, at that time, will be earning less than
$2.20 an hour.
APPLICATION OF THE MINIMUM WAGE RATE TO EMPLOYEES PROPOSED TO
BE COVERED UNDER THE ACT BY THE 1973 AMENDMENTS
The bill would extend the minimum wage protection of the Act to
approximately 6 million employees.
TABLE 7.-ESTIMATED DISTRIBUTION OF NONSUPERVISORY EMPLOYEES WHO WOULD BE BROUGHT UNDER THE
MINIMUM WAGE PROTECTION OF THE ACT BY THE BILL
Number of
Total number Number of employees to
of employees employees be covered by
in industry now covered the bill
Federal Government-----------------------------------------------
2,333
636
1,697
State and local government-----------------------------------------
6,150
2,817
3,333
Domestic service--------------------------------------------------
2,063
--------------
935
Conglomerates----------------------------------------------------
(1)
(r)
(1)
Total ---------------------------------------------------------------------------------
5,965
1 No estimate available.
NOTE.-The estimate of 5,965,000 employees proposed to be covered under the minimum wage provisions of the Act
by the bill does not include those employees of conglomerates who would be covered by a provision of the bill.
For such emnloyees, the bill would require a minimum wage rate
of not less than $1.80 an hour effective on the first day of the second
full month after the date of enactment, or August 1 1973 whichever
occurs first not less than $2.00 an hour effective July 1, 1974, and not
less than 2.20 a hour effective July 1, 1975.
The $1.80 an hour rate would mean wage increases for the following
employees who are now earning less than $1.80 an hour :
Industry :
Employees earning less
than $1.80 an hour
Federal Government-------------------------------------------
--------
State and local government-------------------------------------
77,000
Domestic service-----------------------------------------------
661,000
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fad
The $2.00 an hour minimum wage rate--effective July 1, 1974--
would mean wage increases for the following employees who, at that
time, will be earning less than $2.00 an hour: F,mployeea earning le ra
Industry : than $2 an hour
Federal Go'vernment---------.---------------------------------- -------
State and local government--.---------------------------------- 119,000
Domestic service ------------------------------------------------ 687,OCO
Total --------------------------------------------------------- 806,000
The $2.20 minimum wage rat e--effective July 1, 197 5-would mean
wage increases for the following employees who, at that time, will be
earning less than $2.20 an hour: Employees earning law
Industry : than $0.20 an hour
Federal Government --------------------------------------------- -------
State and local government ---------------------------------------- 157, OCO
Domestic service------------------------------------------------ 708,000
Total ..--------------------------..----------------------------- 865,000
Although the. Fair Labor Standards Act applies to employees in
Puerto Rico and the Virgin Islands, it does not require the paymerLt
of the minimum wage rate prescribed by section 6(a) (1) ; that is, the
rate of $1.60 an hour. Instead, the Act provides for industry corr. -
mittees to convene and recommend minimum wage rates for the vari-
ous occupations and industries in Puerto Rico and the Virgin Islands.
The recommendations are to the Secretary of Labor who, in turn,
translates them into wage orders. The wage orders then, represent
the minimum wage rates applicable to Puerto Rico and the Virgin
Islands. The most recent wage orders ranged from a minimum hourly
rate of $0.47 an. hour for hand-sewers of fabric gloves to the rate of
$1.60 an hour for several occupations and industries.
Industry committees are appointed by the Secretary of Labor and
are required to review minimum wage rates within the industries at
least once during each biennia' period. The purpose of each industry
committee is "to reach as rapidly as is economically feasible without
substantially curtailing employment" the $1.60 minimum wage rate.
-1 ach industry committee is charged with the obligation to recommend
the highest minimum wage rates for the industry which it determines,
having due regard to economic and competitive conditions, will not
substantially curtail employment in the industry and will not give
any industry in Puerto Rico and the Virgin Islands a competitive
advantage over any industry in the United States outside of Puerto
Pico and the Virgin Islands. Whenever the industry committee finds
that a higher minimum wage may be determined for employees en-
?aged in certain activities or in the manufacture of certain produce`s
in the industry than may be determined for other employees in the
industry, the industry committee "shall recommend reasonable classi-
fications within the industry as it. determines to be necessary for the
purpose of fixing for each classification the highest minimum wage
rate that can be determined." No classification shall be made, however,
and no minimum wage rate shall be fixed solely on a regional basis or
on the basis of age or sex.
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23
An industry committee is composed of residents of the island or
islands where the employees with respect to whom such committee was
appointed are employed and residents of the United States outside
of Puerto Rico and the Virgin Islands. The Secretary appoints an
equal number of persons representing (a) the public, (b) employees
in the industry, and (c) employers in the industry. The public members
are disinterested parties, and the Secretary designates one as chairman.
The Department of Labor provides each industry committee with
data pertinent to the matters referred to it, as well as a counsel and
economist. An industry committee receives prehearing statements from
employers, employees, trade associations, trade unions, and all other
interested parties, and conducts hearings on the subject matter. A
committee itself may call witnesses not otherwise scheduled to testify.
Promptly after receipt of all evidence, a committee attempts to
resolve the issues before it and prepare a report containing its findings
of fact and recommendations. After receiving a committee's report,
the Secretary of Labor publishes the recommendations in the Federal
Register and provides by order that the recommendations take effect
upon the expiration of 15 days after the date of publication.
If an industry committee is tunable to arrive at a recommendation
within a reasonable time, or refuses to make a recommendation, it
may be dissolved by the Secretary. An industry committee ceases to
perform further functions when it has filed with the Department its
report, and shall not again perform any functions with respect to any
matter reported on, unless and until directed otherwise. An industry
committee is dissolved automatically when its recommendations are
no longer subject to judicial review (within 60 days after the issuance
of the Secretary's wage orders).
With two notable exceptions the bill preserves the industry com-
mittee approach for ultimately achieving the applicable U.S. minimum
wage rate in Puerto Rico and the Virgin Islands. The committee be-
lieves, however, that the economic situation in the islands-and par-
ticularly in Puerto Rico-has undergone substantial change and that
the 1973 amendments would likely be the last to provide special wage
procedures.
The two exceptions are :
(1) The minimum wage rate for hotel, motel, restaurant, food serv-
ice, conglomerate, and Government of the United States and the Virgin
Islands employees in Puerto Rico and the Virgin Islands will be deter-
mined-on the effective date of the bill-in accordance with the ap-
plicable minimum wage rate in the mainland.
(2) Percentage increases are applied to the most recent wage orders
applicable to other employees in Puerto Rico and the Virgin Islands.
The increases are applicable on several effective dates, as prescribed
by the bill, and are generally determined by the amounts of the per-
centage increases in applicable U.S. minimum wage rates. Such in-
creases may be reviewed by industry committees appointed by the
Secretary.
With respect to the first exception, the committee concluded-after
studying a substantial amount of testimony relating to the applica-
tion of the Act in Puerto Rico and the Virgin Islands-that hotel,
motel, restaurant, food service, conglomerate, and certain government
employees in the islands should be covered by the Act the same as their
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U.S. counterparts. It is significant that wage orders presently appli-
cable in Puerto Rico require a minimum hourly rate of $1.60 an
hour for all employees in hotels and motels with 100 or more sleeping
rooms, $1.60 an hour for arts and crafts workers in hotels and motels
with less than 100 sleepinrooms, $1.55 an hour for all other workers
in hotels and motels with-less than 100 sleeping rooms, $1.60 an hour
for tipped employees in restaurant., and food service establishments,
and $1.50 an hour for all other employees in restaurants and food
service establishments. Covered hotel and restaurant employees in the
Virgin Islands are subject to a $1.45 an hour wage order.
The present coverage then, is already virtually identical to the U.S.
coverage.
Hearings in Puerto Rico revealed that the cost-of-living is higher
in Puerto Rico than it is in the U.S.; yet, the minimum wage rates are
substantially lower. Thus the lower income worker is especially bur-
dened by the higher costs of basic foodstuffs, transportation, and
essentials.
Increases in the Consumer Price Index for Wage Earners' Families
in Puerto Rico have been no less substantial than those applicable
to the U.S.; as has been the casein the Virgin Islands.
Establishments in Puerto Rico generally enjoy special advantages
not available to U.S. producers, such as complete exemption from
Federal income taxes, subsidies, and exemption from Puerto Rico in-
come taxes for a period of 10 to 17 years, depending upon the location
of production.
These facts justify the consideration of employees and establish-
uaents in the isLands on at least a parity with those in the U.S. insofar
as the equitable application of the Fair Labor Standards Act is con-
cerned; and certainly so, in the case of those industries-such as hotels
and restaurants-that have already demonstrated the ability to pay
their workers the U.S. minimum wage, rate without suffering adverse
economic eilects.
With respect to other workers in Puerto Rico and the Virgin
Islands, the bill would provide percentage increases in existing wznge
orders based generally upon increases in the applicable U.S. minimum
wage rates.
An exception to this provision is the case of agricultural employees
whose hourly wages are subsidized by the Government of Puerto Rico.
Subparagraph 3(B) of secticm 105(a) of the bill provides that any
agricultural employee whose hourly wages are subsidized, in whole or
in part, by At Government of Puerto Rico will receive an initial in-
crease of 15.4 percent on the combined amount of the most recent wage
order and the subsidy, Successive increases also include the subsidy
in.deterinin:.ng the revised applicable rate.
This provision affects certain Puerto Rican agricultural workers.
For example,, the most recent wage corder for sugar workers provides
70 cents an hour and the Commonwealth of Puerto Rico subsidizes
the wages paid by their employers at the rate of 30 cents per man
hour. The 30 cents is to be paid on top of the wage order for a total
employee; wage of $1.00 an hour.
Without this provision, the subsidized workers would get little or
no benefit from the minimum wage increases scheduled in H.R. 7935
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because the increase generally provided in the bill or the "60 per cent
provision" in paragraph (8) (contained in section 105(a)) would
be applicable only to the wage order rate of 70 cents an hour.
The provision therefore assures that subsidized agricultural em-
ployees will get the same percentage increase in their government-
prescribed wage as all other covered farm workers.
All percentage increases in wage orders prescribed by the bill (ex-
cept those applicable to subsidized agricultural employees) are sub-
ject to the review procedure first established by the 1961 amendments.
This procedure permits any employer, or group of employers, em-
ploying a majority of the employees in an industry in Puerto Rico
or the Virgin Islands to petition the Secretary for the appointment of
a special industry committee to recommend the minimum wage rate
or rates to be paid such employees in lieu of the rate or rates required
as a result of the percentage increases. The Secretary may then ap-
point a special industry committee if he has reasonable cause to be-
lieve that employment in such industry will otherwise be substantially
curtailed.
In appointing any such special industry committee the Secretary
shall, to the extent possible, appoint persons who were most recently
convened to recommend the minimum rate or rates of wages to be
paid by any such employer or employers in Puerto Rico or the Virgin
Islands. The existing provisions and requirements relating to industry
committees shall be equally applicable to those appointed for the
purpose of reviewing the percentage increases prescribed by the bill.
The bill provides a supplemental requirement of all special industry
committees, in addition to those presently contained in section 8(b)
of the Act. The Act now requires that a special industry committee
recommend "the highest minimum wage rates for the industry which
it determines, having due regard to economic and competitive condi-
tions, will not substantially curtail employment in the industry, and
will not give any industry in Puerto Rico or in the Virgin Islands a
competitive advantage over any industry in the United States outside
of Puerto Rico and the Virgin Islands."
Section 105(b) (1) of the bill would require special industry com-
mittees to recommend the appropriate minimum wage required in
the U.S. mainland to employers unless there is substantial docu-
mentary evidence, including pertinent unabridged profit and loss
statements and balance sheets for a representative period of years,
and other relevant economic data such as prices and productivity, etc.,
which establish that the industry, or a predominant portion thereof, is
unable to pay that wage and the result would be a substantial curtail-
ment of employment.
In establishing the industry committees, Congress intended that
their findings as to the highest minimum a Puerto Rican or Virgin
Islands industry could pay, up to the applicable mainland minimum,
would be based on record-evidence adequate to reveal the financial
and economic condition of the covered employers. However, the com-
mittee has concluded that the industry committees at times are not
provided with the requisite data. As a result, the industry committee
proceedings have on a number of occasions degenerated into a process
by which a majority of the members work their will knowing that the
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record is bare of the facts; necessary to controvert their argument that,
higher wages would substantially curtail employment.
Exactly such a charge was considered by the U.S. Court of Appeals
for the District of Columbia in Sindi.cato Puertorriqueno De Trabaja-
dores V. James D. Hodgson, Secretary of Labor, - F. 2nd-(C.A.
D.C. No. 24,Ob7, July 21; 1971). In that case, the Court of Appeals
overturned the, refusal of an industry committee to increase the mini-
mum wages in the Puerto Ricari general agricultural industry above a
range from 58 cents to $1.10 ar_ hour. The court stated that the indus-
L.r y committee's conclusions were "devoid of a single (supporting) sub-
idiary finding,.,
Section 105 (b) (1) seeks to correct the fault which the Sindicat o
decision exposed and is consistent with the rationale of that case. It
would require the industry cornrniltees to recommend the appropriate
minimum wage required of mainland employers in all cases in which
the documentary evidence demonstrating that there would be substan-
tial curt .aihnent, of employment is lacking. This requirement will pro-
vide a spur to insure that the industry committees will be in a position
to act rationally rather than arbitrarily.
Section 105(b) (2) of the bill provides that in any case in which it
Court of Appeals concludes on review that the evidence required by
section 105 (b) (1) has not been produced before the industry commit-
I've, the. Court may then order the employer to pay the applicable min-
imum wage required of U.S. mainland employers.
This provision also stems from the Sindicato decision of the Court
of Appeals in which the court concluded that it was powerless to es-
tablish a higher minimum on its own. It therefore remanded the pro-
ceeding "to enable petitioner, if so advised, to obtain further consid-
:eration of the matter by on appropriate committee."
Thus, because of the remedial l imitations of the Act, the employers
while losing their legal point gained their practical. objective, the
right to pay the lower: wage set by the industry committee. If this
result were to be allowed to stand, only employers, who could seek to
have the court reinstitute the prior wage order, would have an incen-
tive to appeal. This would be inequitable and inconsistent with the
basic notion that there should be an effective remedy for any substan-
tial wron
The bill.also provides for the establishment of special industry com-
rnittees to recommend minimum wage rates for employees newly cov-
ered by the 1973 amendments i'other than employees described in
section 104 of the bill), including employees of the Government of
Puerto Rico and political subdiNisions thereof who are not now cov-
ered by the Act.
It provides further that, notwithstanding any other provision, no
wage rate for covered employees may be less than 60 per centum of the
minimum wage rate applicable to the same class of employees in the
{Tnited States. This provision essentially represents a subminimum
wage rate for employees in Puerto Rico and the Virgin Islands. It was
included to prohibit the unconscionably low wage rates presently appli-
cable to some categories of employment, such as that applicable ($0.47
an hour) to hand-sewers of fabric gloves.
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FEDERAL, STATE, AND LOCAL GOVERNMENT EMPLOYEES
Section 201 of the bill amends the definitions of "employer", "enter-
prise", and "enterprise engaged in commerce or in the production of
goods for commerce", to include activities of the Government of the
United States or of any State or political subdivision of a State; there-
by extending minimum wage and overtime coverage to employees en-
gaged in the activities of Federal, State, or local governments. The
committee intends such coverage to also encompass any public agency
established under a compact between the States or any other public
agency established jointly by more than one State or political subdi-
vision of a State.
The bill however, establishes an overtime exemption applicable to
Fe era emp ogees (except those covered by the 1966 amendments) and
any emp y eeo of a State or political subdivision of a State engaged
in fire protection or law enforcement activities." Therefore, certain
Federal employees and police and firemen will not be subject to the
overtime requirements of the Act.
Minimum wage coverage would be extended to an estimated 5 mil-
lion public employees. More than 3.4 million public employees are
presently covered by the Act.
In the case of public employees first covered by the 1973 amend-
ments, and State and local government employees covered by the 1966
amendments, the bill would provide a minimum wage rate of not less
than $1.80 an hour effective on the first day of the second full month
after the date of enactment, or August 1, 1973, whichever occurs first,
not less than $2.00 an hour effective July 1,1974, and not less than $2.20
an hour effective July 1, 1975. Federal employees covered by the 1966
amendments would be subject to a minimum wage rate of not less than
$2.00 an hour effective on the first day of the second full month after
the date of enactment, or August 1, 1973, whichever occurs first, and
not less than $2.20 an hour effective July 1, 1974.
The impact of a $2.20 an hour minimum wage rate on all such em-
ployees is illustrated in a preceding section, but. it is significant to
note here that there would he no impact with respect to newly cov-
ered Federal employees
The Department of Labor in 1970 evaluated the feasibility of ex-
tending minimum wage and overtime protection under the Act to non-
supervisory employees in State and local governments, and submitted
its findings to the Congress. The 1966 amendments extended coverage
to public education and hospital institutions.
In a "Summary of Findings," the Department concluded that :
The nationwide survey of State and local governments (ex-
cluding education and hospital institutions) indicates that
wage levels for State and local government employees not
covered by the FLSA are, on the average, substantially
higher than those of workers already covered. Hence, if cov-
erage under the FLSA is extended to these workers, compar-
able minimum wage and overtime standards would not have
as great an impact as did the earlier extension of FLSA cov-
erage to employees of State and local government schools,
hospitals, and residential care establishments.
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The Department estimates that 77,000 of the 3,333,000 State and
local government employees to be covered by the bill would be bene-
fited by the impact of a, $1.80 an hour minimum wage rate; 119,000
would be benefited by the impact of a $2.00 an hour minimum wage
rate effective July 1, 1$74; and. that 157,000 of that total would be
benefited by the impact of a $2.20 an hour minimum wage rate effec-
tive July 1, 1975.
In March :970, the length of the average workweek for nonsuper-
visory employees in State and local governments was 38.1 hours. Na-
tionwide, over three-fifths of the r..onsupervisory employees worked 40
hours during the week surveyed by the Department, but only a tenth
worked over 40 hours.
The Department concluded :
Long workweeks were mos, prevalent among employees in
the public, safety activity, which includes police and fire
departments. A fifth of the public safety employees worked
over 40 hours and they comprised half of the employees on
long weekends. Public works was also significant in this re-
gard, employing 27 percent of the workers on long weekends.
During the survey week, only 2.3 percent of total nonsuper-
visory man-hours in State and local governments represented
hours worked in excess of 40. If a 40-hour Federal overtime
standara. were in effect at the time of the survey, the premium
pay required for these hours would have approximated one
percent oil the weekly wage bill. The actual impact of a 40-
hour standard would have been less because a substantial
proportion of the employees receive premium overtime pay.
This conclusion does not, of course, consider the overtime exemp-
tion contained, in the bill for police and firemen. The actual impact
on State anc local governments then, of a 40-hour standard, will be
virtually non-existent.
Section 202 of the bill reduces the overtime exemption for any
driver, operator, or conductor employed by an employer engaged in
the business of operating a street, suburban, or interurban electric
railway, or local trolley or motorbus carrier, if the rates and services
of such railway or carrier are subject to regulation by a State or local
agency.
The existing overtime exemption applicable to such employees is
modified by requiring the pay mer t of overtime compensation for hours
worked in excess of 48 per week during the first year after the effective
date; for hours worked in excess of 44 per week during the second
year; and thereafter, for hours worked in excess of 42 per week.
In determining the hours of employment of such an employee, hours
employed in "charter activities" shall not be included if (1) the em-
ployee's employment in such activities was pursuant to an agreement
or understanding with his employer arrived at before engaging in
such employment, and, (2) if employment in such activities is not
part of such employee's regular employment. It is to be emphasized
that "charter activities" shall not include any such employment which
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the employee is assigned to perform or which he is otherwise required
to perform as part of his regular workday or workweek.
The modification of the overtime exemption affects about 91,000
employees employed in transit operations.
Some testimony before the committee regarding a proposed repeal
of the exemption, tended to distinguish and isolate the local transit
industry from all other components of American industry by suggest-
ing special and unique problems such as report time, turn-in-time,
meal period, and other similar types of time and work categories.
Such problems as piecework, on-call-time, meal periods, rest periods,
and other pay practices of a special nature, have been considered and
resolved successfully in many differing industries by administrative
procedure. This procedure has led to the development of a body of
law and regulations that, over the years, have won acceptance by the
courts, and by the Congress, which has had an opportunity to review
these practices whenever amendments to the Act have been considered.
One union in the industry has approximately 66,600 of the 91,000
employees organized. A review of the relevant collective bargaining
agreements discloses that 59,000 of those employees-or more than
88%-are covered by a 40-hour workweek and, in many cases, an 8-
hour workday. It is evident then, that the "problems" of the 40-hour
workweek pointed to by some segments of the industry have and are
already being met and resolved by a substantial majority of the in-
dustry. Moreover, the bill permits a 42-hour workweek before
requiring the payment of overtime compensation.
SEASONAL INDUSTRY EMPLOYEES
Section 204 of the bill would gradually phase out the overtime ex-
emptions provided in section 7(c) and 7(d) of the Act for certain in-
dustries which are seasonal in nature and certain other industries
which also perform certain first marketing, first processing, handling,
packing, storing, preparing or canning operations on perishable agri-
cultural and horticultural commodities in their raw or natural state.
This action by the committee is in keeping with the declared inten-
tion of Congress in 1966 and the recommendation of George P. Shultz,
then Secretary of Labor, in 1970.
The Conference Report on the Fair Labor Standards Amend-
ments of 1966 told of the forthcoming repeal of these exemptions. In
it, the conferees of the House of Representatives and the Senate
wrote :
It was the declared intention of the conferees to give notice
that the days of overtime exemptions for employees in the
agricultural processing industry are rapidly drawing to a
close, because advances in technology are making the con-
tinuation of such exemption unjustifiable.
Because of this Congressional action, the Labor Department,
under Secretary Shultz, undertook a lengthy and detailed study of
these and other agricultural processing exemptions. The Secretary
sent to Congress a report in January 1970, consisting of two volumes
with 675 pages of data and findings. The Secretary urged Congress in
his "Findings and Recommendations :"
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The survey findings clearly indicate that consideration
should be given to the phasing out of the overtime exemptions
currently available to the agricultural handling and process-
ing industries * * *. The favored position held for three
decades by agricultural handlers and processors because of
full and partial exemption from the 40-hour weekly overtime
standard applicable to most industries covered by the FLSA
needs reexamination.
Secretary Shultz then gave reasons for his phase-out conclusion.
They include ~ The exemptions are not fully used. Many affected
establishments demonstrate the feasibility of the 40-hour week by
paying time and one-half rates for overtime hours now. Some industries
using the 20 weeks of exemptions are less seasonal than those using
only the 14 weeks. The universal 40-hour standard would remove
mtra-industry inequities. The use of second and third shifts could be
increased. And technological, marketing, and other advances have
lengthened the processing period, extended storage life of perishable
products, and permitted processors to exercise more precise control.
The last reason given by Secretary Shultz for his conclusion is
especially interesting and important :
There was a sharp drop in man-hours over 40 a week
during the periods the exemptions were most likely to be
claimed.- The drop in man hiours over 40 a week generally
occurred before the expiration of the exemption period.
Thus, over the exemption period presently provided-14
weeks or 20 weeks-the exemptions declined in importance
to handlers and processors as man-hours over 40 a week
diminished. This indicates that a gradual annual cut back
in the length of the exemption period would provide for
orderly adjustment to the standard applied in other industries
30 years ago.
The committee was urged by various witnesses to repeal the ex-
emptions immediately. They argued that Secretary Shultz's phase-out
recommendations will already be 4 Years old by the time the 1973
amendments go into effect. They pointed to the low wages and income
of processing workers and the high unemployment rate among rural
workers. Repealing the exemption Would ameliorate both problems,
they said, by providing some overtime pay and by increasing the
number of workers hired. Using the statistics of the Labor Department
study, they calculated that the requirement of time and one-half
rates after 40 hours would increase the annual payroll of the largest
industry listed in the reporr, by only 1.9 percent, or about 5.34 cents
an hour. Despite this and other evidence showing sharp rises in
industry productivity, the committee believed that a three-year
phase-out of this exemption was more desirable than immediate
repeal because it assured a more proper and smoother preparation
for the 40-hour week. However, it is the opinion of the committee that
throughout the phaseout period, the exemption should be strictly
limited to those agricultural coir modities which meet the requirements
of the statute.
The committee has also heard complaints against the phase-out
of the exemptions. However, the committee is not unmindful that
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when it sharply cut back the overtime exemptions in the 1966 amend-
ments, similar-in fact, sometimes the same-arguments against the
action were heard then as now. Yet, not a single instance of harm
caused by the 1966 exemption cutback has been brought to the com-
mittee's attention.
DOMESTIC SERVICE EMPLOYEES EMPLOYED IN HOUSEHOLDS
Section 205 (a) of the bill contains the following Congressional
findings :
The Congress finds that the employment of persons in
domestic service in households directly affects commerce be-
cause the provision of domestic service affects the employ-
ment opportunities of members of households and their
purchasing activities. The minimum wage and overtime pro-
tection of the Fair Labor Standards Act of 1938 should have
been available to such persons since its enactment. It is the
purpose of the amendments made by subsection (b) of this
section to assure that such persons will be afforded such
protection.
Subsection (b) provides a minimum wage rate for such employees
of not less than $1.80 an hour effective on the first day of the second
full month after the date of enactment, or August 1, 1973, whichever
occurs first, not less than $2.00 an hour effective July 1, 1974, and not
less than $2.20 an hour effective July 1, 1975. These rates would be
applicable to a domestic service employee unless "such employee's com-
pensation for such service would not because of Section 209 (g) of the
Social Security Act constitute `wages'." Subsection (b) also applies
the overtime requirements of the Act to such employees.
The bill exempts from both the minimum wage and overtime re-
quirements, however, "any employee who is employed in domestic serv-
ice in a household and who resides in such household."
The bill would extend coverage to an estimated 935,000 employees
employed in domestic service, out of a total of 2,063,000 such employ-
ees. About 661,000 of those proposed to be covered currently earn less
than $1.80 an hour.
According to a special survey of private household workers under-
taken by the Department of Labor, 31 percent of domestic workers in
the U.S. were paid cash wages of less than $.70 an hour; 48 percent
were paid less than $1.00 an hour, and 68 percent were paid less than
$1.50 an hour.
Nationwide, 53 percent of domestic workers worked short work-
weeks (less than 15 hours), more than one-third worked 15 to 40 hours
and nearly one-tenth worked over 40 hours.
These statistics give cause to the reduction by 1 million in the num-
ber of domestic employees during the last decade. Private household
work has become one of the least attractive fields of employment. The
great preponderance of the household workforce is comprised of fe-
male employees; and the median age of the household worker has
climbed to 50, or 10 years older than the average for other female
workers.
In addition to substandard wages and workin conditions, employees
performing domestic service work are generally excluded from mini-
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mum wage laws, unemployme:at compensation, and workmen's com-
pensation. They invariably receive no benefits such as sick leave and
paid vacations, and their, transportation to and from their workplace
often takes up to two hours in one day. And as one witness before the
committee poignantly noted, they have no appeal against the employer
who calls suddenly in the morning, or announces upon arrival, "We
won't need you after all."
Their disabltities are compounded by the fact that domestic service
employees are not covered by the social Security Act unless they earn
at least $50 from one employer in a calendar quarter. For those who
earn that amount, the responsibility to insure that protection rests
with the employer. Often employers of private household workers
fail to comply with the reporting requirements. These workers them,
who earn too Little to adequately survive, much less to save for advan--
ing age or disability, are, also without secured retirement benefits.
The committee expects that extending minimum wage and over-
time protection to domestic workers will not only raise the wages of
these workers but will improve the sorry image of household employ-
ment. The committee is convinced that the sharp decline in household
employment over the last decade reflects not only the prevalence of
low wages and. long hours, but the widespread conviction that these
are dead-end jobs. Including domestic workers under the protection of
the Act should help to raise the status and dignity of this work.
At this point, it is appropra.ate to include the following letter from
women Members of this Congress to the Chairman of the subcommit-
tee, with respect to the coverage of domestic workers under the Act.
HOUSE OF REPRESENTATIVES,
Kaskafagtore, 1).C., April 17, 1973.
Hon. JOHN 1.. DENT,
Chairman, General Subcommittee on Labor,
Rayburn House Office Building,
Washington, D.C.
DEAR MR. CHAIRMAN: We have heard rumors that your Subcom-
rnittee is under pressure to drop the extension of minimum wage cover-
age to domestic workers. As women legislators, this is of great concern
to us. Although we represent a v ariety of political. attitudes and ap-
proaches anti (to not normally vote as a block, we are all very disturbed
about this measure.
As you know, women are at the bottom of the economic ladder. Ac-
cording to the H.E.W. Report. "Work in America," December, 1972, (p.
42), the income profile for American workers is as follows:
Median: -snconae, 1969
All males ------------------------------------------------------------- 56,429
Minority mal.es...------------------------------------------------------- 3.891
2.132
All Yenrales--------------- ----------------- -----------------------
Minority females---------------- ------------------------------------- 1. 084
Contrary to popular; opinion, women work not for "pin money" but
because they have to. They are either the head of the household or con-
tribute substantially to;,their family's income.
For example :
According to the 1970 Census. 11% of all American households are
eaded by women.
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Among Black families, 28% are headed by women.
Further, female headed households are growing. In 1960, 25% of
all marriages ended in divorce or annuiment. By 1970, the figure was
up to 35%
Among married women in 1970, 8 million earned between $4000
and $7,000. '
In addition, the proportion of women and female headed families
with incomes under the poverty line, is a clear reflection of their
economic plight.
According to the 1970 Census, there were still some 25.5 million
poor in the nation (e.g., incomes under $3,969).
Only 21.5% of these families are on welfare.
Of these female heads of households who work, over half worked as
maids in 1970 and had incomes under the Federal poverty line.
The median income for domestics is $1,800.
These women are struggling to make ends meet and keep their fam-
ilies together. They are proud hard workers who are doing their
darndest to stay off the welfare rolls and are getting precious little
help for their efforts. Let's provide some help for those who are try-
ing to help themselves.
The average American voter is indeed fed up with anyone they
perceive to be "loafing" or "getting something for nothing", but they
do support an honest day's wage for an honest day's labor.
We ask that you do everything in your power to see to it that the
extension of minimum wage to domestic workers is not eliminated.
It is time that these hard working women got some help and protec-
tion.
Very truly yours,
SHIRLEY CHISHOLM,
Member of Congress.
MARJORIE S. HOLT.
Member o? Congress.
LEONOR K. SULLIVAN,
Member of Congress.
YVONNE BRATHWAITE BURKE,
Member of Congress.
PATSY T. MINK,
Member of Congress.
JULIA BUTLER HANSEN,
Member of Congress.
EDITH GREEN,
Member of Congress.
MARTHA W. GRIFFITHS,
Member of Congress.
ELLA T. GRASSO,
Member of Congress.
BELLA S. ABZUG,
Member of Congress.
ELIZABETH HOLTZMAN,
Member of Congress.
BARBARA JORDAN,
Member of Congress.
PATRICIA SCHROEDER,
Member of Congress.
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e14
The committee considered and rejected. the idea that the Fair Labor
Standards Act should incorporate a special subminimum. rate for
youth. The rejection was based not only on the fact that this would
violate the basic objective of the Act, but was made with the conviction
that such a standard would contribute to rather than ease the critical
problem of unei:nployment, including unemployment of youths and
minority groups.
The committee recognizes that the Fair Labor Standards Act en-
acted 35 years ago had as its stated objective the elimination of "living
conditions detrimental to the maintenance of the minimum standard
of living necessary for health, efficiency and general well-being of
workers."
Its basic purpose has been and continues to be the raising of wages
of that small proportion of employees at the bottom of the wage scale.
who are in no position to bargain for themselves. It is not a substitute
for collective bargaining or the operation of the free labor market. It
protects the fair employer from unfair competition from chiseling
employers. The, minimum wage set under the Fair Labor Standards
Act is not an ave rage wage. It is the "lowest" wage which may be paid.
employees in activities covered 'by the Act. It is paid to the unskilled.,
untrained, inexperienced worker who frequently is young or black or
a woman.
Except for those years in which it, was increased (and not always in
those years) the minimum wage was always less than half the average
wage in manufacturing.
The minimum wage rate, not unlike the occupational wage rate, is a
wage for a job--not for the age or sax or color of the person doing the,
job. That is the way we view wage-setting in this country.
Those who would recommend imposing or retaining a subminimurn
wage as a solution to the unemployment problem appear to have seri-
ous misconceptions about the minimum wage and, in fact, about the
role of wages in general.
There is no evidence to support the idea that low wages create jobs.,
Actually, what evidence there is points in the opposite direction. Put-
ting money in the hands of low-wage workers is the most direct way
of creating purchasing power-.high-velocity dollars-and hence addi-.
tional jobs.
To imply that, employers would hire workers they did not really
need because wages are low not only ignores the whole concept of
business-for-profit but also omits from consideration all the other
labor-cost factors, such as, employment, recruiting, supervision, social
security, workmen's compensat on, unemployment insurance, pension
plans, hospitalization, medical plans--all of which must be considered
when new jobs are created.
Proponents of a submiiimum -wage rate for youth state their in.-
terest in terms of increasing employment opportunities for young
workers. They point to indepen deny studies, mainly by academicians,
and observations by other= economists, as supporting their contention.
In actual fact, the academic community is at best divided on the ques..
Lion. An equal number of,: independent studies have found that mini..
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mum wage rates have had no adverse effect on employment oppor-
tunities for teenagers.:'
Moreover, the most comprehensive and ambitious recent inquiry
into the subject was conducted by the Department of Labor, which
essentially concluded : "In general, the most important factor explain-
ing changes in teenage employment and unemployment has been gen-
eral business conditions as measured by the adult unemployment rate."
In rejecting the concept of it subminimum wage rate based on age,
the committee was impressed by the findings in the study "Youth
Unemployment and Minimum Wages" Bulletin 1657. This report, pre-
pared by the Department of Labor in 1970, is on the relationship
between minimum wages and youth unemployment. The report states
that the various studies failed to establish any relationship between
youth unemployment and the minimum wage. To quote some of the
major findings in this report :
Not one of the local offices of the Employment Service
(ES) cited the recent hike in the minimum wage or the
extension of coverage under the Federal Fair Labor Stand-
ards Act as responsible for the change between June 1966
and June 1969 in the total number of nonfarm job openings
available to teenagers, or which specified a minimum age of
16-19 years of age or 20 years old or over.
In nearly all of the States covered by the study, differ-
ential minimum wage rates applicable to youth, including
exemptions, appear to have little impact on the employment
of youth in 1969.
On the basis of our examination (with respect to foreign
experience) however, it appears reasonable to conclude that
wage differentials are less important factors than rapid eco-
nomic growth, structural and technological shifts, national
full employment, relatively low mobility rates, and the rela-
tive shortage of young workers. A similar confluence of these
factors in the American economy might well have similar
effects on youth employment regardless of the wage structure.
Proponents of a subminimum wage rate for youth also profess a
special concern for increasing employment opportunities for black
youth, pointing to an exceedingly high unemployment rate among
black teenagers. They view a youth subminimum wage rate mechanism
as the panacea. The committee finds this "remedy" to the problem of
black teenage unemployment devoid of an understanding of the prob-
lem itself.
A few statistical realities point this out.
In April 1973, the unemployment rate for all teenagers (ages 16-19)
was 15.4 percent. For white teenagers, it was 13.3 percent; for black
teenagers, 32.8 percent. For black male teenagers, i$ was 30.7 percent;
i Hugh Folk, "The Problem of Youth Unemployment," in the Transition from Youth to
Work, Princeton. Princeton University Press, 1968: 76-107.
Edward Kalachek, "Determinants of Teenage Employment." The Journal of Human
Resources, vol. iv, No. 1, Winter 1969: 3-21.
Lester C. Thurow, "The Determinants of the Occupational Distribution of Negroes," in
G. Somers, ed., Education and Training of Disadvantaged Minorities. Madison, Wisconsin
University Press, 1969: 187-205.
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for black female teenagers, 35.5 percent. Obviously color appears to
be more important than age.
The committee was particularly struck by the fact that the most
recent data shows the unemployment rate for nonwhite high school
graduates to be 9.6 percent-higher than the 9.2 percent level for
white high school dropouts. The rate for nonwhite high school drop-
outs was 15.5 percent.
These figures convinced the committee that combining unemploy-
ment statistics for nonwhite and white teenagers and labeling the
result a teenage problem, tended to disguise the real problem. And
that is discrimination in employment because of color.
If a special ,youth minimum wage rate is to be justified on the basis
of increasing employment opportunities for black teenagers, perhaps
its proponents should narrow its application and focus precisely on
black teenagers. An extension of this logic would require consideration
then, of another special minimum wage rate for black female teenagers.
Surely, their unemployment rate is even higher than that among black
male teenagers. Finally, and ultimately, this logic demands yet another
subminimum wage rate for black female teenagers living in inner met-
ropolitan areas--for theirs is the highest unemployment rate of all.
Testimony advocating a subminimum wage rate for youth was simi-
larly not convincing in establishing a clear link between that rate and
increased employment opportunities.
The testimony of Saul Hoch, Deputy .Assistant Secretary (of Labor)
for Policy, Evaluation, and Research, appeared hesitant in this
respect:
I think this would assist youth in getting jobs. There are
many other barriers that youth face and it is not clear how
important this will be in their getting jobs, however, I don't
think we will ever know until we actually try it.
The former Secretary of Labor, James D. Hodgson, even while rec-
ommending a subminimum youth wage to the 92d Congress, admitted
in his testimony that "there is no proof" it would generate any youth
employment.
In 1971, before the Senate Labor Subcommittee, Secretary Hodgson
recognized "that; there may be some concern that a lower minimum
wage for young people under age 1S . . . may reduce employment op-
portunities for older workers. There may be some risk in marginal
cases."
These statements are not reassuring in encouraging the committee to
"actually try it". Rather, the more profound consideration is the con-
siderable testimony and evidence pointing to severe detrimental ef-
fects on other workers as the result of a subminimum wage rate for
youth.
Population trends during the 191'0's will ease the youth unemploy.-
ment problem, just as those trends were responsible for much of the
problem during the 1960'x. Projections of the Department of Labor
estimate an increase of teenagers (ages 16 to 19) in the labor force be-
tween 1968 and 1980 of L2 million (an average of 100,000 a year), e
considerable slowdown from the 2.3 million increase over the preced-
ing 12 year period, 1956 to 1968.
Over the decade 1961 to 1971-at a time when coverage of the Fair
Labor Standards Act was being extended to more and more jobs typi.-
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tally held by youth, employment among 16 to 19 year olds was ex-
panding by an average of 210,000 jobs a year. Assuming a continuation
of this expansion, the economy's growth should easily accommodate
the job needs of youth, without special treatment in the Federal min-
imum wage law.
The method for creating even more jobs for teenagers is not through
a subminimum wage exploiting youth and threatening jobs of adult
workers, but by expanding aggregate demand in the economy and con-
tinuing or undertaking programs addressed to the problems of specific
disadvantaged groups. The committee is interested in all programs
which will stimulate the economy in general and generate additional
jobs for all the unemployed. It is opposed to a youth wage or a black
wage or any other such arbitrary subminimum wage under the Fair
Labor Standards Act.
As a sequel to the discussion of the need for and the probable effects
of a subminimum wage for youth, the peripheral question of special
wage rates for full-time students was examined.
The legislative history of section 14(b) and 14(c) of the Act was
studied to determine the Congressional intent in establishing special
rates for students.
The Act currently permits the employment of full-time students on
a part-time basis (or full-time during vacations and holidays) in retail
and service establishments and in agriculture under special certificates
issued pursuant to regulations of the Secretary of Labor at a wage rate
not less than 85 percent of the applicable minimum wage. These certifi-
cates are issued to the extent necessary in order to prevent curtailment
of opportunities for employment.
Prior to the 1961 amendments to the Act, there were no provisions
relating to the employment of full-time students at subminimum rates.
In revising section 14 of the Act to include full-time students, the com-
mittee sought, through the issuance of certificates, to provide an incen-
tive for employers to hire students while providing assurances that
adult workers would not be adversely affected.
This consideration was clearly spelled out in the report accompany-
ing H.R. 3935 (H. Rept. No. 75, 87th Congress, 1st Session, March 13,
1961, p. 11) :
The purpose of this provision is to provide employment
opportunities for students who desire to work part time
outside of their school hours without displacement of adult
workers.
The 1966 amendments to the Act further revised section 14 with
respect to full-time students in retail and service establishments and
added a provision for students in agriculture.
The report accompanying H.R. 13712 (H. Rept. No. 1366, 89th Con-
gress, 2nd Session, March 29, 1966) explained that the full-time student
certificates were to be issued to "students regardless of age (but in
compliance with the applicable child labor laws) ", and repeated the
basic objectives of these provisions-to provide employment opportu-
nities for students outside of school hours without displacement of
adult workers.
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The committee agrees with the statements expressed in the 1961 and
1966 reports and proposes in the bill to expand the scope of section 14
of the Act in order that more occupations not determined to be "par-
ticularly hazardous" may be available as employment opportunities
for students. The committee bill, however, maintains a certification
procedure to ensure that students will not be used to displace job
opportunities for other workers, although the administrative pro-
cedure to be followed by prospective employers of four or fewer stu-
dents is lessened from existing law.
The committee is emphatic in urging the Secretary to be diligent
and attentive to his certification responsibilities. The procedure is not
to be observed in its breach. Special certificates for the employment of
a student by an employer, :are are not to be issued by the Secretary unless
he is satisfied that the employment of any such student will not "create
a substantial probability of reducing the full-time employment oppor-
tunities" of other workers.
The bill delineates a number of occupations for which the special
student rate is not applicable. Generally, these occupations are those
deemed by the Secretary-under existing child labor regulations--to
be "particularly :hazardous" for the employment of minors between 16
and 18 years of age or detrimental 1:o their health or well-being. The
committee intends that the rationale used in determining those occu-
pations be equally applicable in determining the scope of the occupa-
tions listed by the bill, as well as in determining those other occupations
the Secretary may find to be "particularly hazardous" for the employ-
ment of students. The committee does not believe such hazardous occu-
pations should be filled by students-regardless of age-earning less
than the minimum wage rate.
Also, the committee is aware that the Secretary-snider the provi-
sions of existing law-often grants student employment certificates
which each permit the employment of more than one student at the
special rate. In 1972, the average number of students authorized was
nearly 8 per certificate granted. The committee is not opposed to this
en bloc certification procedure, but again urges the Secretary to en-
sure that he is not thereby adversely affecting the employment oppor-
tunities of non-student workers.
Section 2,06 of the bill also provides that the Secretary may (by
regulation or order) waive the minimum wage and overtime provi-
sions of the Act with respect to it student employed by his elementary
or secondary school, where such employment constitutes an. integral
part of the regular educational program provided by the school.
The committee urges the Secretary to be diligent in determining
that the employment is in fact an integral part of the regular educa-
tion program anal. that this provision is not used to circumvent the re-
quirements of the statute.
Section 207 of the bill requires the consideration of establishments
engaged in laundering, cleaning, or repairing clothing or fabrics as
service establishments in the administration of sections 7(i) (relating
to commission employees) and 13(a) (1) (relating to executives and
administrative personnel and outside salesmen) of the Act.
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The committee does not intend that such establishments be con-
sidered service establishments in the administration of sections of the
Act beyond those specified, but clearly intends that they be subject
to the same rules and regulations applicable to service establishments
pursuant to those sections.
This issue essentially involves the exemption of employees of such
establishments from the overtime provisions of the Act when they
qualify as commission salesmen, the exemption of employees of such
establishments from the minimum wage and overtime provisions when
they qualify as outside salesmen, and the ability of such employees to
perform "non-exempt" work in amounts applicable to other employees
of service establishments.
In this connection, it should be clearly understood that the scope of
section 207 of the bill covering laundry and dry cleaning establish-
ments includes wholesale dry cleaning establishments. The commit-
tee expressed concern over a clear misunderstanding with respect to
representations made by the Department of Labor to it and to the
Congress during consideration of the 1966 amendments to the Fair
Labor Standards Act with respect to the status of wholesale dry clean-
ing driver salesmen thereunder. It was at that time represented to the
committee and to the Congress that the driver salesmen in the whole-
sale dry cleaning industry would remain exempt under the section
13(a) (1) exemption covering outside salesmen, but it appears that
the administration of the 1966 amendments has not been consistent
with those representations. See in this connection 112 Congressional
Record, Part 9, at pages 11082 through 11084. The word "establish-
ments", as used in section 207 of the bill, includes the wholesale estab-
lishments to which reference was made in the 1966 exchange with the
result that the driver salesmen within the wholesale dry cleaning in-
dustry will clearly be within the exemption provided by section
13(a) (1) and of section 7(i) if they otherwise qualify for such
exemption.
MAIDS AND CUSTODIAL EMPLOYEES OF HOTELS AND MOTELS
Section 208 of the bill extends the overtime coverage of the Act to
maids and custodial employees of hotels and motels.
The committee intends that a "custodial" employee be one who
guards and protects or maintains the premises, or the hotel or motel
facility, in which he is employed. This would include an employee who
performs janitorial functions, who keeps the facility clean, who tends
the heating system, makes minor repairs, and the like. It would also
include employees of the facility engaged in activities incidental to the
operation of the hotel or motel, such as maids and custodial employees
in the facility's beauty or barber shops, valet, restaurant, and the like.
Overtime protection then, would be afforded to those who have heavy
duties such as laying carpets and rugs and arranging furniture and to
those who have light duties such as making beds, dusting furniture,
and replenishing linen.
CONGLOMERATES
Section 209 of the bill precludes the availability of the minimum
wage and overtime exemptions of section 13 of the Act (with certain
exceptions) to conglomerates, as defined by the bill.
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The committee recognizes the :muiiti-economic advantages associated
with a conglomerate-type Of business enterprise. Advantages of sub-
stantial working capital, the velocity of working capital, purchasing
power, tax write-off considerations, the ability to sustain protracted
losses in one phase of the enterprise, and others, come immediately to
mind. The committee believes these advantages permit conglomerates
to operate in unfair competition with single-business oriented
activities.
The Fair Labor Standards Act has traditionally permitted the ex-
clusion of "mom and pop" establishments from its requirements, in
recognition of the social and economic merits of not aggravating a
competitive, free enterprise market. But the last several years have
witnessed the advent of the conglomerate; the multi-business oriented,
all encompassing mode of operation. Because of the construction of the
Act, and its various exemptions, business activities with gross annual
sales in the hundreds of millions of dollars have enjoyed relief from
its provisions on an equal footing with :individual competitive estab-
lishments which are, in fact, small---and for whom the advantages of
bigness do not apply.
The committee: bill proposes to preclude such activities from the ex-
emptions contained in the Act, by denying them to conglomerates
whose annual gross volume of sales made or business done exceeds
'10,000,000.
The activities of one conglomerate active in agriculture are deserve
ing of mention at this point, in order that the committee's contention
and action may be clear and 'inderstandable. The information was
largely derived from a series of articles on the subject which appeared
during the last Congress:in they Congressional Record. The name of
the conglomerate is not important but its activities symbolize an agri-
cultural revolution that may reshape beyond recognition the Nation's
food supply system. It is like dozens of the largest corporations with
nonagricultural names that have diversified into agriculture. And it
serves as a useful illustration.
This particular concern is that the new breed of conglomerate farm-
ers do not merely grow crops or raise cattle. They think in terms of
"food supply systems," in which they own or control production, proc-
essing, and marketing of food. goal in
One conglomerate reported to its stockholders, ". . . (our) b
:agriculture is :integration from seedling to supermarket." Its resources
to achieve that goal include 1970 sales of $2.5 billion, profits of $324
Million, and assets of $4.3 billion in such fields as oil production, ship-
building, and manufacturing.
The conglomerate. invasion of agriculture comes at a time when mil-
lions of farmer; and faun workers have already been displaced, con-
tributing to the problems of rural wastelands and congested cities.
More than 100,000 farmers a year are quitting the land, and more than
1.5 million of those who remain are earning less than poverty-level
farm incomes.
Although the. U.S. Census counts 2.9 million farmers, 50,000 grow
one-third of tie Nation's food supply and 200,000 produce more than
one-half of ail food. The concentration of production is especially
pronounced in such crops as fruits, vegetables, and cotton.
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In 1965, 3,400 cotton growers accounted for 34 percent of sales,
2,500 fruit growers had 46 percent of sales, and 1,600 vegetable grow-
ers had 61 percent of the market.
The medium to large-size "family farms"-annual sales of $20,000
to $500,000-survived earlier industrial and scientific revolutions in
agriculture. They now face a financial revolution in which traditional
functions of the food supply system are being reordered, combined,
and coordinated by corporate giants.
The new corporate farmers account for only 7 per cent of total food
production, but they have made significant inroads in certain areas.
Twenty large corporations now control poultry production. A dozen
oil companies have invested in cattle feeding. Only three corporations
dominate California lettuce production. The family farmer is still
obvious only in growing corn, wheat, and other grains ; but even here
constantly larger acreage, machinery, credit, and higher prices are
necessary for the family farmer to stay profitably in business.
Even the largest independent farmers question their ability to com-
pete with a corporation which can, at least in theory, own or control
virtually every phase of a food supply system. One large conglomerate
can plant its own vast acreage. It can plow those fields with its own
tractors, which can be fueled with its own oil. It can spray its crops
with its own pesticides and utilize its own food additives. It can then
process its food products in its own plants, package them in its own
containers, and distribute them to grocery stores through its own
marketing system.
Financing the entire operation are the resources of a conglomerate
with billions in assets, hundreds of millions in tax-free oil income, and
interests in banking and insurance companies. The conglomerate,
according to reports filed with the Securities and Exchange Commis-
sion, had 1969 gross income of $464 million and taxable income of
$88.7 million. Yet, due to Federal tax considerations, the conglom-
erate not only paid no taxes on that income, but enjoyed a tax credit
of $13.3 million.
The type of food system being assembled by this and other
conglomerates is of legitimate concern to independent farmers, who
see every element of the food business acquiring market power unto
themselves. On one side, they confront the buying power of giant
food chains. Now they must compete with conglomerates that can
take profits either from production, processing, or marketing. The
individual farmer usually does not have such options. The giant
competitors also benefit most from a variety of government subsidies
on water, crops, and income taxes.
It is significant that, contrary to popular belief, the conglomerate
operation does not generally grow food more inexpensively than the
individual farmer. Numerous Department of Agriculture and univer-
sity studies demonstrate that enormous acreage is not necessary to
farm efficiency.
For example, maximum cost-saving production efficiency is generally
reached at about 1,500 acres for cotton, less than 1,000 acres for corn
and wheat, and 110 acres for peaches. In fact, studies show that the
largest growers incur higher farm production costs as they employ
more workers and layers of administration.
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But conglo.;.ierates have the marketing power to make or break the
market. They can sell below cost, as a loss leader, to secure other
business, and sustain losses that no farmer can afford.
The Nation''s fruit and vegetable growers are no strangers to the
spirited competition of agrib ,siness. They have wrestled with the
market power of chain stores and. major food processors for years,
The conglomerate, however, represents a different kin(! f competi-
tion. The older agribusiness corporations are primarily food companies
and must profit somewhere in the food distribution system. Such is not
necessarily the case with the new conglomerate farmers, for whom
millions of dollars of agribusiness investment may repre ant only a
fraction of total holdings. Only 4 percent, for instance, of the previ-
ously mentioned conglomerate's sales are from agriculture.
In fact, the conglomerates may find their food investments profitable
even without earning anything from them. The profits may be it
derivative of land speculation, Federal crop subsidies, or Federal tax
law. The aforementioned conglomerate received almost $1 million in
1970 cotton and sugar farm subsidies.
The conglomerates also utilise it variety of Federal tax provisions
that permit tl:Le:m to benefit from tax-loss farming and then profit,
again by taking capital gains from land sales. Here again, the afore-
mentioned conglomerate is developing six new California suburban
communities on former farm land.
Other farmers, now removed from the conglomerate farmer phe-
nomenon, fear the activity may soon encompass them.
Midwestern cattle and hog feeders-who now enjoy a satisfactory
income from the business-are aware of the pattern in which inde-
pendent poultry growers were virtually eliminated.
About 20 corporations, including several conglomerates, originally
entered poultry production as a means of developing markets for
their feed. Farmers were enlisted ro grow the agribusiness poultry,
using their feed.
According to Department of Agriculture studies, the poor but once
independent poultry farmers are still poor as contract workers, earning
about 54 cents an hour. A task :force on agriculture called this corpo-
rate farm system "poultry peonage."
The committee believes this discussion-exclusively with respect to
conglomerates in agriculture-serves to highlight a problem which is
critical in nature, and justifies the inclusion of a conglomerate pro-
vision in the bill. This committee is aware that this type of activity
is not unique to agriculture, but exists in a variety of industry cate-
gories. The bill would be equally applicable to all.
The committee's competence and jurisdiction in this area extends
only to its responsibility for the Fair Labor Standards Act; but it is
with respect to that Act, that the committee judgment is consistent
in its support; of the continued exemption of "small business" and
the inclusion thereof of enterprises demonstrably capable of paying to
their employees not less than the minimum wage, rate and overtime
compensation.
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TOBACCO EMPLOYEES
Section 211 of the bill establishes an overtime exemption applicable
to employees engaged in the sale at auction of certain types of green
leaf tobacco, and in the general handling of certain other types of
green leaf or perishable cigar leaf tobacco. The exemption permits the
employment of an employee engaged in any such capacity for up to
ten hours in any workday and forty-eight hours in any workweek
during fourteen workweeks in the aggregate in a calendar year, with-
out requiring the payment of overtime compensation. A similar exemp-
tion is provided in existing law, but section 204 of the bill would
reduce and ultimately repeal such exemption but for this section of
the bill.
ESTIMATE OF COST
Pursuant to the requirements of clause 7 of Rule XIII of the Rules
of the House of Representatives, the committee estimates the cost of
the legislation to be $3 million in each of the five fiscal years succeed-
ing fiscal year 1973. The legislation cannot become effective prior
to fiscal year 1974; therefore there is no cost to be incurred in fiscal
year 1973.
No Government agency has submitted to the committee any cost
estimate by which a comparison can be made with the committee
estimate of the cost of this legislation. The estimate, however, is based
upon the extension of employee coverage under the Fair Labor Stand-
ards Act which the bill provides, in relationship with the number of
employees presently covered by the Act. That relationship is applied
to the current cost of administering and enforcing the Act in deter-
mining the committee estimate.
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SECTION-BY-SECTION nESCRIPrIO\ OF THE BILL AS REPORTED
The following is a description of the changes made in the Fair
Labor Standards Act of 1938 (referred to in the description as the
"Act") by H.R. 7935 as reported by the committee :
Section 1. Shari Title; References to Act.-Subsection (a) provides
that the bill when enacted may be cited as the "Fair Labor Standards
Amendments of 1973". Subsection (b) is a technical provision.
Title I-Increases in Minimum Wage Rates
Section 101. I-rullrease in Minimum Wage Rate for Employees Cov-
ered Before 1966.--This section amends section 6(a) (1) of the Act to
provide an increase in the minimum wage rate for nonagricultural
employees covered by the Act prior to the effective date of the 1966
amendments and for Federal employees covered by the 1960 amend-
ments. The mini nturn wage rate Ior such employees is raised from not
less than $1.60 an hour to (1) not less than $2 an hour beginning on
the first day of the second full month after the date of enactment, or
August 1, 1973, whichever occur:; first, and (2) not less than $2.20 an
hour beginning July 1, 1974.
Section 102. lncrea.se in Minimum Wage Rate for Nonagricultural
6 (b) This section amends section
Employees Covered in 1966 and 1 )73
of the Act to provide an increase in the minimum wage rate for
nonagricultural employees (other than Federal employees) covered by
the 1966 and 1973 amendments to the Act. The minimum wage rate for
such employees is raised from not less than $1.60 an hour to (1) not
less than $1.80 an hour beginning on the first day of the second full
month after the date of enactment;, or August 1, 1973, whichever
occurs first. (2) not less than $4; an hour during the year beginning
July 1, 1974, and (3) not less than $2.21) an hour beginning July 1,
1975.
Section .103. Increase in Minimum Wage Rate for Agricultural
Employees.--This section amends section 6(a) (5) of the Act to pro-
vide an increase in the minimum wage rate for agricultural employees
covered by the Act. The minimum wage rate for such employees is
raised from not less than $1.30 an hour to (1) not less than $1.60 an
hour beginning on the first day of the second full month after the
date of enactment, or August 1. 1973, whichever occurs first, (2) not
less than $1.80 on hour during the year beginning July 1, 1974, (3) not
less than $2 an hour during the year beginning July 1, 1975, and (4) not
less than $2.20 an hour beginning July 1, 1976.
Section 104. Government, Hotel, Motel, Restaurant, Food Service,
and Conglomerate Employees in Puerto Rico and the Virgin
Islands.-This section amends section 5 of the Act to provide that the
minimum wage rate for hotel, motel, restaurant, food service, con-
(4)
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glomerate, Government of the UnitedStates, and Virgin Islands gov-
ernment employees employed in Puerto Rico and the Virgin Islands
shall be determined without regard to the wage order provisions of
section 6(c) of the Act. Thus, the minimum wage rate for such em-
ployees shall be the applicable rate in effect under section 6(a) (1) or
6(b).
Section 105. Increases in Minimum Wage Rates for Other Em loy-
ees in Puerto Rico and the Virgin Islands.-Subsection (a) of this
section amends section 6(c) of the Act to provide for employees in
Puerto Rico and the Virgin Islands covered by wage orders issued
under that section minimum wage rate increases corresponding to
the ones provided mainland United States employees. Except for sub-
sidized agricultural employees (1) the increases are stated in terms
of percentages of the most recent wage rate applicable to the employee
before the effective date of the 1973 amendments, which wage rate is
referred to as the employee's "base rate", and (2) there is continued
the authority (described below) for special review committees to be
established to provide wage rates different from the increased ones
prescribed by section 6 (e) (as amended by this section).
Employees covered before 1966.-Subsection (c) (2) of the Act pro-
vides for an initial 25 percent increase in the base rate applicable to
employees covered by the Act prior to the 1966 amendments. Such
increase shall (unless superseded) take effect 60 days after the effective
date of the 1973 amendments or 1 year from the effective date of the
most recent wage order, whichever is later. One year thereafter, an in-
crease equal to 12.5 percent of the employee's base rate is provided.
Agricultural employees.-Subsection (c) (3) (A) provides for three
15..4 percent increases in the base rate applicable to agricultural em-
ployees covered by the Act. Such increase shall (unless superseded)
take effect 60 days after the effective date of the 1973 amendments or
1 year from the date of the most recent wage order, whichever is later.
One year after the effective date of the first increase an additional
increase equal to 15.4 percent of the employee's base rate will take
effect, and one year thereafter a third 15.4 percent increase will take
effect.
In the case of an agricultural employee whose hourly wage is in-
creased, above that required by a wage order, by a subsidy (or income
supplement) paid, in whole or in part, by the Government of Puerto
Rico, the three 15.4 percent increases shall be applied (as provided in
subsection (c) (3) (B)) to the sum of (1) the employee's base rate and
(2) the amount of the subsidy (or income supplement). The increases
for these employees will take effect at the same time as the increases
for other agricultural employees, but these increases may not be super-
seded by a wage rate recommended by a review committee.
Nonagricultural employees covered in 1966.-Subsection (c) (4) pro-
vides three 12.5 percent increases for nonagricultural employees first
covered in 1966. The first 12.5 percent increase will take effect (unless
superseded) 60 days after the effective date of the 1973 amendments
or 1 year from the effective date of the most recent wage order, which-
ever is later; the second increase 1 year later; and the third increase 1
year thereafter.
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Nonagricultural employees first covered in 1973.-.Subsection (c)
(5) provides for establishment of sp-,cial industry committees to rec-
ommend minimum wage rates for employees newly covered by the 1973
amendments (other than employees subject to the amendment made
by section 104, that is, hotel, motel, restaurant, food service, gov-
erni lent, and conglomerate employees).
Wage floor and ceiling.-rOn and after the effective date of the first
increase prescribed under .subsection (c) (2), (3), (4), or (5), the
minimum wage rate of employees covered by such increase may not be
less than 60 percent of the otherwise applicable rate under section 6 (a)
(pre-1966 mainland employees) or 6(b) (1966 and 1973 nonagricul-
tural employees). In the case of subsidized agricultural employees, the
increase prescribed by subsection (c) (3) (B) may not exceed the ap-
plicable rate unoLer section 6 (a) (t)).
Review procedure.-This procedure (first established by the 1961
amendments) permits any employer, or group of employers, employ-
ing a majority of the employees in an industry in Puerto Rico or the
Virgin Islands to petition the Secretary for the appointment of a spe-
cial industry committee to recommend the minimum wage rate or rates
to be paid such employees in lieu of the rate or rates required as a result
of the increases prescribed by subsection (c) (2), (c) (3) (A), or (c)
(4), whichever is applicable. The Secretary may then appoint a special
industry committee if lie has reasonable cause to believe that employ-
ment in such industry will. otherwise be substantially curtailed.
Other antendm.eats.-Subsection (b) amends section S of the Act
to provide that special industry committees shall recommend the other-
wise applicable rate under section 6(a) (1), 6(a) (5), or 6(b) except
where substantial documentary evidence, including pertinent financial
information, demonstrates an inability to pay such rate. Section 10
(a) of the Act is amended to provide that a court may, in reviewing a
wage order issued under section 8, prescribe an appropriate minimum
wage rate for the employees covered by such order.
Title II-Extension of Coverage; Revision of Exemptions
Section 201. Federal and State Em-ployees.-Section 201 (a) amends
the definitions (in section 3 of the Act) of "employer", "enterpise".,
and "enterprise engaged in commerce or in the production of goods for
commerce" to include the United States and any State or political sub-
division of a State. T amendments result in the extensj n.nf_mini_-
muni wagES aii Overtime roves,et all7e era ,tote, andlocal ~,]ublic
empl s. Una ;r the amendment made to section I (6 _of_the Act,
en
State and local pu- bIic emlToyei tmgaged--itt cc ion or aw
forcement activities a eral employees (other than those covered
by the 1966 amendments) .are exenipt~rom overtime coverage. Section
19 of the Act is amended to mcTtide e F e e.ra emp ogees in the Canal
Zone under the section 6 (a) (1) rate.
Section X02. Transit Employees.-Section 13(b) (7) of the Act is
amended to reduce the overtime exemption currently in effect for any
driver, operator, or conductor employed by an employer engaged in
the business of operating a street, suburban or interurban electric rail-
way, or local trolley or motor bus carrier, whose rates and services are
subject to regulation by a. State or local agency. During the first year
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after the effective date of the 1973 amendments, overtime compensation
must be paid to such employees for hours worked in excess of 48 per
week; during the second year after such effective date, for hours worked
in excess of 44 per week; and beginning in the third year after such ef-
fective date, for hours worked in excess of 42 per week. Section 7 of
the Act is amended to provide that in determining the hours of employ-
ment of such an employee for purposes of determining overtime com-
pensation, hours employed in charter activities shall not be included
if (1) the employee's employment in such activities was pursuant to
an agreement or understanding with his employer arrived at before
engaging in such employment, and (2) employment in such activities
is not part of such employee's regular employment.
Section 203. Nursing Home Employees.-Sections 7 and 13 (b) (8)
of the Act are amended to provide an overtime exemption for nursing
home employees for employment a to 8 hours in any workday and up
to 80 hours in any 14-consecutive-day work period. This exemption is
identical to that for hospital employees in section 7 (j). The present
overtime exemption in section 13 (b) (8)) for nursing home employees
is for employment up to 48 hours in any workweek.
Section 204. Seasonal Industry Employees.-This section reduces
and ultimately repeals the overtime exemption for employees in sea-
sonal industries and agricultural processing. Existing law (section
7(c)) provides an overtime exemption for employment in seasonal
industries up to 10 hours in any workday or 50 hours in any workweek
for not more than 10 workweeks during the calendar year. Existing
law (section 7 (d) ) also provides an overtime exemption for employ-
ment in agricultural processing up to 10 hours in any workday or 48
hours in any workweek for not more than 10 workweeks during the
calendar year. In the case of an employer who does not qualify for the
overtime exemption under both categories, the exemption is extended
to 14 workweeks during the calendar year for the category under
which he does qualify.
The overtime exemption for employees in seasonal industries (pro-
vided by section 7 (c) ) is eliminated as follows :
(1) During the first year after the effective date of the 1973
amendments, overtime is required for employment over 9 hours
(in lieu of 10) in any workday and 48 hours (in lieu of 50) in any
workweek ; and the period of the exemption is reduced from 10
workweeks (or 14 in the case of an employer who qualifies under
only the section 7(c) exemption) in a calendar year to 7 work-
weeks (or 10 in the case of a single exemption) in a calendar
year.
(2) During the second year from such effective date, overtime
is required for employment over 9 hours in any workday and 48
hours in any workweek (note that the hour limits are the same
as the limits for the preceding year) ; and the period of the
exemption is reduced from 7 workweeks (or 10 in the case of a
single exemption) in a calendar year to 5 workweeks (or 7 in the
case of a single exemption) in a calendar year.
(3) After two years after such effective date the exemption
under section 7(c) is repealed.
The overtime exemption for employees in agricultural processing
(provided by section 7 (d) ) is eliminated as follows :
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41;
(1) During the first two years after such effective date, over-
time is recuired for employment over 9 hours (in lieu of 10) in
any workday and 481 hours in any workweek (note that the 48-
hour workweek limitation is the same as existing law).
(2) During the first year from such effective date the period of
the exemption is reduced from 10 workweeks (or 14 in the case of
a single exemption) in a calendar year to 7 workweeks (or 10 in
the case of a single exemption) in a calendar year; and during the
second year from such effective data such period is reduced to 5
and 7 workweeks, respectively.
(3) After two years after such effective date the exemption
under section 7(d) is tepea:Ied..
Section 205. Domestic Service Employees Employed in House
hwlds.-Subsection (a) of this s&et-ion states a finding of Congress that
domestic service in households directly affects commerce and that the
minimum wage and overtime protections of the Act should have been
available to such employees since its enactment.
Subsection (b) amends sections ti and 7 of the Act to provide mini-
mum wage and overtime, protection for employees who (1) are em-
ployed in domestic service in households, and (2) are being paid for
such service wages which will require the payment of the Social Secu-
rity taxes (those imposed under chapter 21 of subtitle C of the Internal
Revenue Code of 1954), and consequently provide Social Security
benefits. Under section 3121 (a) (7) of the Internal Revenue Code of
1954 and section 209 (g) of the Social Security Act wages of less
than $50 in a calendar quarter for domestic service in the private
home of the employer will not require the payment of Social Se-
curity taxes and consequently do not qualify as wages for purposes
of benefits under title II :of the Social Security Act. The minimum
wage rate required for such employees under the amendment to sec-
tion 6 is that required unaer section 6(h), that is, not less than $1.80
an hour beginning on the first day of the second full month after the
date of enactment, or August 1, 1973, whichever occurs first, not less
than $2 an hour beginning July 1, 1974, and not less than $2.20 an
hour beginning July 1, 19175. Under an amendment to section 13 (a),
the minimum wages and overtime is not applicable in the case of any
such employee who resides in the household of his employer.
Section 206. Employment of Stude?nts.--This section amends sections
14(b) and (c) to provide for the. employment of full-time students
(regardless of age but in compliance with applicable child labor laws)
at wage rates less than those prescribed by the Act.
Existing law (section 14(b)) permits the employment at rates
below the applicable minimum wage of full-time students outside their
school hours in retail or service establishments. Such employment is
subject to the foil owing : (1) such employment will be authorized only
to the extent necessary to prevent curtailment of employment oppor-
tunities, (2) the employment must; be in compliance with applicable
child-labor laws and during the school year may not exceed 20 hours
in any workweek, (3) the wage rate may not be less than 85 percent
of the otherwise applicable minimum wage, (4) the proportion of
students hours of employ> ent to total hours of employment of all
employees in any retail or'service establishment may not exceed cer-
tain limitations, and (5) b6fore a spacial certificate for such employ-
ment may be issued, the Secretary must find that the employment
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will not create a substantial probability of reducing the full-time em-
ployment opportunities of persons other than those employed under
the certificate. Existing law (section 14(c)) also permits the employ-
ment of full-time students in agriculture at wage rates below the
applicable minimum wage. Such employment is subject to the condi-
tions described in clauses (1), (2), (3), and (5) of the preceding
sentence.
This section's amendment to section 14 combines the current stu-
dent exemptions for employment in retail-service establishments and in
agriculture into an exemption for employment of students in any
occupation other than one of the hazardous ones listed in section 14
(b) (1) or any other one designated by the Secretary.
Students may be employed at a wage rate of not less than 85 per
centuin of the applicable minimum wage rate or $1.60 an hour ($1.30
an hour in the case of employment in agriculture), whichever is the
higher. As in existing law, the employment is to be under special
certificates issued by the Secretary. Such special certificates shall
provide (as in existing law) that such students shall, except during
vacation periods, be employed on a part-time basis (not to exceed 20
hours in any workweek). In the case of an employer who employs
five or more students under special certificates, the Secretary may
not issue a special certificate for the employment of a number of
students which will cause the total employed under certificates to
exceed five unless he finds the employment of the student "will not
create a substantial probability of reducing the full-time employment
opportunities" of other workers. In the case of an employer who
employs less than five students under special certificates, the Sec-
retary may issue a special certificate if the employer certifies to the
Secretary that lie is not thereby reducing the full-time employment op-
portunities for other workers. Sections 15 (Prohibited Acts) and 16
(Penalties) of the Act would be applicable to an employer who vio-
lated the requirements of the new section 14(b). A summary of the
special certificates issued under this provision is required to be in-
cluded in the Secretary's annual report on the Act.
This section also provides that the Secretary may waive the mini-
mum wage and overtime provisions of the Act with respect to a stu-
dent employed by his elementary or secondary school, where such
employment constitutes an integral part of the regular education
program provided by the school.
Section 207. Laundry and Cleaning Establishments to be Considered
Service Establishments for Certain Purposes.-This section requires
the consideration of laundries and dry cleaning establishments as
service establishments in the administration of sections 7(i) (relating
to commission employees) and 13(a) (1) (relating to executive and
administrative personnel and outside salesmen) of the Act.
Section 208. Maids and C, ustodial J'mployees of Hotels and Motels.-
This section amends section 13(b) (8) to repeal the overtime exemp-
tion for maids and custodial employees of hotels and motels.
Section 20.9. Employees of Conglomerates.-This section amends sec-
tion 13 to preclude the applicability of the minimum wage and over-
time exemptions of subsection (a) and (b) of that section (except
those relating to employees in executive, administrative, or profes-
sional capacities, or in the capacity of outside salesmen, and the over-
time exemptions relating to employees whose hours of service are
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subject to the provisions of the Motor Carrier Act, Interstate Com-
merce Act, or Railway Labor Act) to conglomerates with an annual
gross volume of sales made or business done in excess of $10 million.
A conglomerate is "an establishment (1) which controls, is con
trolled by, or is under common control with, another establish-
ment the activities of whiel. are not related for a common
business purpose to the activities of the establishment employing such
employee.; and (2) whose annual gross volume of sales made or busi-
ness done, when combined with the annual gross volume of sales made
or business done by each estab'] ishraent which controls, is controlled
by, or is under common control with, the establishment employing such
employee, exceeds $10 million t exciusive of excise taxes at the retail
level which are separately stated) ."
A5ection 210. l.'m.ployees of Boat Dealers.-This section amends sec-
tion 13(b) (10) to provide an overtime exemption for any salesman,
partsman, or mechanic primarily engaged in selling or servicing boats
if employed by a, nonmanufactc.ri;ng establishment primarily engagec.
in the business of selling boats to ultimate purchasers. Existing law
provides an overtime exemption for employees engaged in related ac .
tivities and employed by automobile, trailer, truck, farm implement,
or aircraft dealerships.
Section 211. Tobacco Employees.-This section amends section 7 to
retain the existing overtime exemption applicable to certain employ-
ees engaged in activities related to the sale of tobacco. The exemption
would otherwise be reduced and ultimately repealed by amendment
made by section. 204 to section 7(c) of the Act (relating to seasonal
industry employees).
Section 212. Substitute Paronts for Institutionalioed Children.--
This section amends section 13 (a) to establish an exemption from the
minimum wage and overtime compensation provisions of the Act for
an employee Who is employed with his spouse by a nonprofit educa-
tional institution to serve as parents to children who have been placed
in such institution by or through a public agency or by parents or
guardians who are financially unable to care for and educate their
children or children under the-,r guardianship. The substitute parents
must also reside in the facilities of the institution, receive room and
board without cost, and jointly receive cash compensation at an annual
rate of not less than $10,000.
Title III--Conforming Amendments: Effective Date and
Regulations
Section 301. Conforming Ainendmelnte. This section amends section
6(e.) of the Act to eliminate the minimum wage differential for era-
ployees employed under a service contract with the United States.
Currently, certain linen service employees must receive not less than
the section 6(a) (1) rate and the remainder are to receive the section
6('b) rate. Cinder the amendment, all would be required to be paid
not less than the section 6(a) (1) rate. Additionally, technical amend-
ments are macie to section 8.
Section 300. Effective late and I tegulations.-This section provides
that unless otherwise indicated, the effective date of the 1973 Amend-
ments shall be the first day of the second full month which begins after
the date of enactment, or August 1, 1973, whichever occurs first.
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In compliance with clause 3 of Rule XIII of the Rules of the House
of Representatives, changes in existing law made by the bill, H.R. 7935,
as reported, are shown as follows (existing law proposed to be omitted
is enclosed in black brackets, new matter is printed in italics, existing
law in which no change is proposed is shown in roman) :
AN ACT To provide for the establishment of fair labor standards in employments
in and affecting interstate commerce, and for other purposes
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled, That this Act may
be cited as the "Fair Labor Standards Act of 1938."
SEC. 2. (a) The Congress hereby finds that the existence, in in-
dustries engaged in commerce or in the production of goods for com-
merce, of labor conditions detrimental to the maintenance of the
minimum standard of living necessary for health, efficiency, and gen-
eral well-being of workers (1) causes commerce and the channels and
instrumentalities of commerce to be used to spread and perpetuate
such labor conditions among the workers of the several States; (2)
burdens commerce and the free flow of goods in commerce; (3) con-
stitutes an unfair method of competition in commerce; (4) leads to
labor disputes burdening and obstructing commerce and the free flow
of goods in commerce; and (5) interferes with the orderly and fair
marketing of goods in commerce.
(b) It is hereby declared to be the policy of this Act, through the
exercise by Congress of its power to regulate commerce among the
several States and with foreign nations, to correct and as rapidly as
practicable to eliminate the conditions above referred to in such in-
dustries without substantially curtailing employment or earning
power.
SEc. 3. As used in this Act-
(a) "Person" means an individual, partnership, association, cor-
poration, business trust, legal representative, or any organized group
of persons.
(b) "Commerce" means trade, commerce, transportation, trans-
mission, or, communication among the several States or between any
State and any place outside thereof.
(c) "State" means any State of the United States or the District
of Columbia or any Territory or possession of the United States.
(51)
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(d) "Employer" includes any person acting directly or indirectly in
the Interest of an employer in relation to an employee [but shall not
include the United States or any State or political subdivision of a
State (except with respect to employees of a State, or a political sub-
division thereof, employed (1) in a hospital, institution, or school
referred to in the last sentence of subsection (r) of this section, or (2)
in the operation of a railway or carrier referred to in such sentence),
or any labor organization (other than when acting as an employer),
of anyone r:,cting in the capacity of officer or agent of such labor
organization. j and includes the United States or any State or political
subdivision of a State, but toes not include any labor organization
(other than when acting as en employer) or anyone acting in the ca-
pacity of officer or agent of such labor organization.
(e) "Employee" includes any individual employed by an employer,
except that such term' shall not, for the purposes of section 3 (u),
include--
(1) any individual employed by an employer engaged in agri-
culture if such individual is the parent, spouse, child, or other
member of the employer's immediate family, or
(2) any individual who is employed by an employer engaged. in
agriculture if such individual (A) is employed as a hand harvest
laborer and is paid on a -.piece, rate, basis in an operation which has
been, and is customarily and generally recognized as having been,
paid on a piece rate basis in the region of employment, (B) com-
putes daily from his pecmainent residence to the farm on which
he is so employed, and (C) has been employed in agriculture less
than thirteen weeks during t1-e preceding calendar year.
(f) "Agriculture" includes farming in all its branches and among
other things includes the cultivation and tillage of the soil, dairying,
the production, cultivation, growing, and harvesting of any agri-
cultural or horticultural commodities (including commodities defined
as agricultural commodities in section 15(g) of the Agricultural
Marketing Act. as amended), the raising of livestock, bees, furbearing
animals, or poultry, and any practices (including any forestry or
lumbering op(,rations) performed by a farmer or on a farm as an
incident to or in conjunction with. such farming operations, including
preparation for market, delivery :o storage or to market or to carriers
for transportation to market.
(g) "Employ" includes to suffer or permit to work.
(h) "Industry" means a trade, business, industry, or branch thereof,
or group of industries, in which individuals are gainfully employed.
(i) "Goods" means goods (including ships and marine equipment),
wares, products, commodities, merchandise, or articles or subjects of
commerce of any character, or any part or ingredient thereof, but does
not include, goods after their delivery into the actual p hysical posses-
sion of the ultimate consumer thereof other than a producer, manufac-
turer, or processor thereof.
(j) "Produced" means produced, manufactured, mined, handled,
or in any other manner worked on in any State; and for the purposes
of this Act an employee shall be deemed to have been engaged in the
production of goods if such employee was employed in producing,
manufacturing, mining, handling, transporting, or in any other men-
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ner working on such goods, or in any closely related process or occupa-
tion directly essential to the production thereof, in any State.
(k) "Sale" or "sell" includes any sale, exchange, contract to sell,
consignment for sale, shipment for sale, or other disposition.
(1) "Oppressive child labor" means a condition of employment
under which (1) any employee under the age of sixteen years is em-
ployed by an employer (other than a parent or a person standing in
place of a parent employing his own child or a child in his custody
under the age of sixteen years in an occupation other than manufac-
turing or mining or an occupation found by the Secretary of Labor
to be particularly hazardous for the employment of children between
the ages of sixteen and eighteen years or detrimental to their health
or well-being) in any occupation, or (2) any employee between the
ages of sixteen and eighteen years is employed by an employer in any
occupation which the Secretary of Labor shall find and by order
declare to be particularly hazardous for the employment of children
between such ages or detrimental to their health or well-being; but
oppressive child labor shall not be deemed to exist by virtue of the
employment in any occupation of any person with respect to whom
the employer shall have on file an unexpired certificate issued and held
pursuant to regulations of the Secretary of Labor certifying that
such person is above the oppressive child labor age. The Secretary
of Labor shall provide by regulation or by order that the employment
of employees between the ages of fourteen and sixteen years in oc-
cupations other than manufacturing and mining shall not be deemed
to constitute oppressive child labor if and to the extent that the Secre-
tary of Labor determines that such employment is confined to periods
which will not interfere with their schooling and to conditions which
will not interfere with their health and well-being.
(m) "Wage" paid to any employee includes the reasonable cost,
as determined by the Secretary of Labor, to the employer of furnishing
such employee with board, lodging, or other facilities, if such board,
lodging, or other facilities are customarily furnished by such employer
to his employees : Provided, That the cost of board, lodging, or other
facilities shall not be included as a part of the wage paid to any em-
ployee to the extent it is excluded therefrom under the terms of a bona
fide collective-bargaining agreement applicable to the particular em-
ployee: Provided further, That the Secretary is authorized to deter-
mine the fair value of such board, lodging, or other facilities for de-
fined classes of employees and in defined areas, based on average cost to
the employer or to groups of employers similarly situated, or average
value to groups of employees, or other appropriate measures of fair
value. Such evaluations, where applicable and pertinent, shall be
used in lieu of actual measure of cost in determining the wage paid to
any employee. In determining the wage of a tipped employee, the
amount paid such employee by his employer shall be deemed to be
increased on account of tips by an amount determined by the em-
ployer, but not by an amount in excess of 50 per centum of the appli-
cable minimum wage rate, except that in the case of an employee who
(either himself or acting through his representative) shows to the
satisfaction of the Secretary that the actual amount of tips received by
him was less than the amount determined by the employer as the
amount by which the wage paid him was deemed to be increased under
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this sentences the amount paid such employee by his employer shall
be deemed to have been increase(( by such lesser amount.
(n) "Resale" shall not include the sale of goods to be used in resi-
dential or farm building construction, repair, or maintenance : Pro-
vided, That the sale is recognized as a bona fide retail sale in the in-
dustry.
(o) Iloums WORKED.--In determining for the purposes of sections
0 and 7 the hours for which an employee is employed, there shall be
excluded any time spent in changing clothes or washing at the begin-
Ring or end of each workday ,;which was excluded from measured work-
ing time. during the week involved by the express terms of or by custom
or practice under a bona fida, collective-bargaining agreement appli-
cable to the particular employee.
(p) "American vessel" includes any vessel which is documented or
numbered under the lawis of the United States.
(q) "Secretary" means the Secretary of Labor.
(r) "Enterprise" means the related activities performed (either
through unified operation or common control) by any person or persons
for a cornrno-r business purpose, and includes all such activities whether
performed in one or more establishments or by one or more corporate
or other orgaxnizational unit:; including departments of an establish-
inert operated through leasing arrangements, but shall not include
the related activities performed for such enterprise by an independent
contractor: Provided, That, within the meaning of this subsection, a
retail or service establishment which is under independent ownership
shall not be deemed to be so operated or controlled as to be other
than a separate and distinct enterprise by reason of any arrangement,
which includes, but is not necessarily limited to, an agreement, (1)
that it will sell. or sell only, certain goods specified by a particular
manufacturer, distributor, or advertiser, or (2) that it will join with
other such establishments in the same industry for the purpose of
collective purchasing, or (3) that it will have the exclusive right to sell
the goods or use the brand :name of a manufacturer, distributor, or
advertiser within a specified. area, or by reason of the fact that it
occupies premises ]eased to it by a person who also leases premises to
other retail or service establishments. For purposes of this subsection,
the activities performed by any person or persons--
(I) in connection with the operation of a hospital, an institu-
tion primarily engaged in the care of the sick, the aged, the men-
tally ill or defective who reside on the premises of such institu-
tive, a school for mentally or physically handicapped or gifted
children, a preschool, elementary or secondary school, or an insti-
tution of higher education (regardless of whether or not such hos-
pital, institution, or school. _.s public or private or operated for
profit or not for profit)., or
(2) in connection wit1"i the operation of a street, suburban or
interurban electric railway, or local trolley or motorbus carr:Ler,
if the rates and services of such railway or carrier are subject to
regulation by a State or local agency (regardless of whether or
not such railway or carrier is public or private or operated for
profit or riot for profit), or
(3) in connection with tic activities of the Government of the
United A'';".ates or of any State or political subdivision of a State,
shall be deemed to be activities performed for a business purpose.
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55
(s) "Enterprise engaged in commerce or in the production of goods
for commerce" means an enterprise which has employees engaged in
commerce or in the production of goods for commerce, including em-
ployees handling, selling, or otherwise working on goods that have
been moved in or produced for commerce by any person, and which-
(1) during the period February 1, 1967, through January 31,
1969, is an enterprise whose annual gross volume of sales made
or business done is not less than $500,000 (exclusive of excise
taxes at the retail level which are separately stated) or is a gaso-
line service establishment whose annual gross volume of sales
is not less than $250,000 (exclusive of excise taxes at the retail
level which are separately stated), and beginning February 1,
1969, is an enterprise whose annual gross volume of sales made
or business done is not less than $250,000 (exclusive of excise
taxes at the retail level which are separately stated) ;
(2) is engaged in laundering, cleaning, or repairing clothing
or a rics;
(3) is engaged in the business of construction or recon-
struction, or both; [or]
(4) is engaged in the operation of a hospital, an institution
primarily engaged in the care of the sick, the aged, the mentally
ill or defective who reside on the premises of such institution, a
school for mentally or physically handicapped or gifted children,
a preschool, elementary or secondary school, or an institution
of higher education (regardless of whether or not such hos-
pital, institution, or school is public or private or operated for
profit or not for profit) ; or
(6) is an activity o f the Government of the United States or
o f an State or political subdivision o f a State.
Any establishment which has as its only regular employees the owner
thereof or the parent, spouse, child, or other member of the im-
mediate family of such owner shall not be considered to be an enter-
prise engaged in commerce or in the production of goods for com-
merce or a part of such an enterprise, and the sales of such establish-
ment shall not be included for the purpose of determining the annual
gross volume of sales of any enterprise for the purpose of this subsec-
tion.
(t) "Tipped employee" means any employee engaged in an occu-
pation in which he customarily and regularly receives more than
$20 a month in tips.
(u) "Man-day" means any day during which an employee performs
any agricultural labor for not less than one hour.
(v) "Elementary school" means a day or residential school which
provides elementary education, as determined under State law.
(w) "Secondary school" means a day or residential school which
provides secondary education, as determined under State law.
SEC. 4. (a) There is hereby created in the Department of Labor a
Wage and Hour Division which shall be under the direction of an Ad-
ministrator, to be known as the Administrator of the Wage and Hour
Division (in this Act referred to as the "Administrator"). The Ad-
ministrator shall be appointed by the President, by and with the advice
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and consent of the Senate, ar.;d shall receive compensation at the rate of
$20,000 a year.
(b) The Secretary of Labor may, subject to the civil service laws,
appoint such employees as he deems necessary to carry out his fiinc-
tions and duties under this Act and shall fix their compensation in
accordance with the Classification Act of 1949, as amended. The
Secretary znay establish and utilize such regional, local, or other
agencies, and. utilize such voluntary and uncompensated services, as
may from t.inae to time be needed. Attorneys appointed under this sec-
tion may appear for and represent the Secretary in any litigation, but
all such litigation shall be subject to the direction and control of the
Attorney General. In the appointment, selection, classification, and
promotion of officers and employees of the Secretary, no political test
or qualification shall be permitted or given consideration, but all such
appointments and promotions shall be given and made on the basis of
merit and efficiency.
(c) The torincipal office of the Secretary shall be in the District of
Columbia, but he or his duly authorized representative may exercise
any or all of his powers in any place.
(d) The Secretary shall submit annually in January a report to the
Congress covering his activities for the preceding year and including
such information, data, and recommendations for further legislation
in connection with the maters covered by this Act as he may Lind
advisable. Such report shall contain an evaluation and appraisal by
the Secretary of the minimum wages established by this Act, together
with his recommendations to the Congress. In making such evalua-
tion and appraisal, the Secretary shall take into consideration any
changes which may have occurred in the cost of living and in produc-
tivity and the level of wages in manufacturing, the ability of am-
plovers to absorb wage increases, and such other factors as he may
deem pertinent. Such report shall also include a summary of the
special oerti; ii;ates issued under section 14 (b) .
(e) Whenever the Secretary has reason to believe that in any in-
dustry under this Act the competition of foreign producers in United
States markets or in markets abroad, or both, has resulted, or is likely
to result, in :increasedunemplpyment in the United States, he shall
undertake an investigation to gain full information with respect to
the matter. If he determines such increased unemployment has in
fact resulted, or is in fact likely to result, from such competition, he
shall make a full and complete. report of his findings and determina-
tions to the President and to the Congress : Provided, That he may
also include in such report information on the increased employment
resulting from additional exports in any industry under this Act; as
he may determine to be pertinent to such report.
SPECIAL INDUSTRY COMMITTEES FOR PIIERTO RICO AND THE VIRGIN
ISLANDS
SEC. 5. (a.) The Secretary of Labor shall as soon as practicable
appoint a special industry committee to recommend the minimum
rate or rates of wages to be paid under section. 6 to employees in Puerto
Rico or the 'Virgin Islands, or in Puerto Rico and the Virgin Islands,
engaged in commerce or in the production of goods- for commerce
or employed in any enterprise engaged in commerce or in the produc-
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tion of goods for commerce, or the Secretary may appoint separate
industry committees to recommend the minimum rate or rates of wages
to be paid under section 6 to employees therein engaged in commerce or
in the production of goods for commerce or employed in any enter-
prise engaged in commerce or in the production of goods for com-
merce in particular industries. An industry committee appointed
under this subsection shall be composed of residents of such island or
islands where the employees with respect to whom such committee
was appointed are employed and residents of the United States outside
of Puerto Rico and the Virgin Islands. In determining the minimum
rate or rates of wages to be paid, and in determining classifications,
such industry committees shall be subject to the provisions of section 8.
(b) An industry committee shall be appointed by the Secretary
without regard to any other provisions of law regarding the appoint-
ment and compensation of employees of the United States. It shall
include a number of disinterested persons representing the public, one
of whom the Secretary shall designate as chairman, a like number of
persons representing employees in the industry, and a like number
representing employers in the industry. In the appointment of the
persons representing each group, the Secretary shall give due regard to
the geographical regions in which the industry is carried on.
(c) Two-thirds of the members of an industry committee shall con-
stitute a quorum, and the decision of the committee shall require a
vote of not less than a majority of all its members. Members of an
industry committee shall receive as compensation, for their services a
reasonable per diem, which the Secretary shall -by rules and regulations
prescribe, for each day actually spent in the work of the committee,
and shall in addition be reimbursed for their necessary traveling and
other expenses. The Secretary shall furnish the committee with ade-
quate legal, stenographic, clerical, and other assistance, and shall by
rules and regulations prescribe the procedure to be followed by the
committee.
(d) The Secretary shall submit to an industry committee from time
to time such data as he may have available on the matters referred to
it, and shall cause to be brought before it in connection with such
matters any witnesses whom he deems material. An industry commit-
tee may summon other witnesses or call upon the Secretary to furnish
additional information to aid it in its deliberations.
(e) The provisions of this section, section 6(c), and section 8 shall
not apply with respect to the minimum wage rate of any employee
employed in Puerto Rico or the Virgin Islands 'I) by the United
States orb the government o f the Virgin Islands, by an establish-
ment vehicle is a hotel, motel, or restaurant, (3) by any other retail or
service establishment which employs such employee primarily in con-
nection with the preparation or offering o f food or beverages for
human consumption, either on the premises, or by such services as
catering, banquet, box lunch, or curb or counter service, to the public,
to employees, or to members or guests of members of clubs, or .(1) by
an establishment described in section 13(g). The minimum wage rate
of such an employee shall be determined under this Act in the same
manner as the minimum wage rate for employees employed in a State
of the United States is determined under this Act. As used in the pre-
ceding sentence, the term "State" does not include a ter7;itory or pos-
session of the United States.
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Sec. 6. (a) Every employer shall pay to each of his employees who
in any workweek is engaged in commerce or in the production of goods
for commerce, or is employed in an enterprise engaged in commerce
or in the production of !goods for commerce, wages at the following
rates:
{ 1) not less than $1.40] $2 an hour during the [first year from
the effective date of the Fain Labor Standards Amendments of
1966] period ending: June 30, J974, and not less than [$1.60] $2.00
an hour [thereafter] after June 30, 1974, except as otherwise pro-
vided in this section,
(2) if such employee is a home worker in Puerto Rico or the
Virgin Islands, not less than the minimum piece rate prescribed
by regulation or order; or, if no such minimum piece rate is JM
effect, any piece rate adopted by such employer which shall
yield, to the proportion or class of employee prescribed by
regulation or order, not less than the applicable minimum hourly
wage rate. Such minimum piece rates or employer piece rates
shall be commensurate with, and shall be paid in lieu of, the
minimum. hourly wage rate applicable under the provisions of
this section. The Secretary of Labor, or his authorized representa-
tive, shall have power to make such regulations or orders as are
necessary or appropriate to carry out any of the provisions of this
paragraph, including the power without limiting the generality
of the foregoing, to define any operation or occupation which is
performed by such home work employees in Puerto Rico or the
Virgin Islands; to establish minimum piece rates for any opera-
tion or occupation so defined: to prescribe the method and pro-
cedure for ascertaining and promulgating minimum piece rates;
to prescribe standards for employer piece rates, including the
proportion or class of employees who shall receive not less than the
minimum. hourly wage rate; to define the term "home worker";
and to prescribe the conditions under which employers, agents,
contractors, and subcontractors shall cause goods to be produced
by home workers;
(3) if such employee is (3mployed in American Samoa, in lieu of
the rate or rates provided by this subsection or subsection (b), not
less than the applicable rate established by the Secretary of Labor
in accordance with recommendations of ~a special industry com-
mittee or committees which Ii-e shall appoint in the same manner
and pursuant to the same provisions as are applicable to the
special industry committees provided for Puerto Rico and the
Virgin Islands by this Act as amended from time to time. Each
such committee shall have the same powers and duties and shall
apply the same standards with respect to the application of the
provisions of this Act to employees employed in American Samoa
as pertain to special industry committees established under sec-
tion 5 with respect to employees employed in Puerto Rico or the
Virgin Islands. The min:Lmum wage rate thus established shall
not exceed the rate prescribed:Ln paragraph (1) of this subsection;
(4) if such employee is employed as a seaman on an American
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vessel, not less than the rate which will provide to the employee,
for the period covered by the wage payment, wages equal to
compensation at the hourly rate prescribed by paragraph (1) of
this subsection for all hours during such period when he was
actually on duty (including periods aboard ship when the em-
ployee was on watch or was, at the direction of a superior officer ,
performing work or standing by, but not including off-duty
periods which are provided pursuant to the employment agree-
ment) ; or
[(5) if such employee is employed in agriculture, not less than
$1 an hour during the first year from the effective date of the
Fair Labor Standards Amendments of 1966, not less than $1.15
an hour during the second year from such date, and not less than
$1.30 an hour thereafter.]
(5) if such employee is employed in agriculture, not less
than--
(A) $1.60 an hour during the period ending June 30, 1974,
(B) $1.80 an hour during the year beginning July 1, 1974,
(C) $2 an hour during the year beginning July 1, 1975, and
(D) $2.20 an hour after June 30, 1976.
(b) [Every employer] (1) Except as provided in paragraph (2),
every employer shall pay to each of his employees [(other than an
employee to whom subsection (a) (5) applies)] who in any workweek
is engaged in commerce or in the production of goods for commerce,
or is employed in an enterprise engaged in commerce or in the produc-
tion of goods for commerce, and who in such workweek is brought
within the purview of this section by the amendments made to this
Act by the Fair Labor Standards Amendments of 1966 or the Fair
Labor Standards Amendments of 1973 wages at the following rates :
[(1) not less than $1 an hour during the first year from the
effective date of such amendments,
[(2) not less than $1.15 an hour during the second year from
such date,
da[e(3) not less than $1.30 an hour during the third year from such
[(4) not less than $1.45 an hour during the fourth year from
such date, and
[(5) not less than $1.60 an hour thereafter.]
(A) not less than $1.80 an hour during the period ending
June 3071974,
(B) not less than $2 an hour during the year beginning July 1,
1974, and
(C) not less than $2.20 an hour after June 30, 1975.
(2) This subsection does not apply to-
(A) any employee to whom subsection (a) (5) applies,
(B) any employee who was brought within the purview of
this section by the amendments to section 18 made by the Fair
Labor Standards Amendments of 1966, and
(C) any Federal employee employed in connection with the
operation of a hospital, institution, or school described in sec-
tion 3(r) (1).
Subsection (a) (1) applies to the employees described in subpara-
graphs (B) and (C).
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(c) (1) The rate or rates provided by subsections (a) and b) of
this section shall be superseded in the case of any employee in Puerto
Rico or the Virgin Islands only for so long as and insofar as such
employee is covered by a wage order heretofore or hereafter issued
by the Secretary pursuant, to the recommendations of a special industry
committee appointed pursuant to section 5.
[(2) In the case of any such employee who is covered by such
a wage order and to whom the rate- or rates prescribed by subsection
(a) would otherwise apply, the following rates shall apply :
[(A-) The rate or rates applicable under the most recent wage
order issued by the Secretary prior to the effective date of the
Fair Labor Standards Amendments of 1966, increased by 12 per
centum, unless such rate or rates are superseded by the rate or
rates prescribed in a wage order issued by the Secretary pursuant
to the recommendations of a review committee appointed under
paragrapA (C). Such rate or rates shall become effective sixty
days after the effective date of the Fair Labor Standards Amend-
ments of 1966 or one year from the effective date of the most
recent wage order applicable to such employee theretofore issued
by the Secretary pursuant to the recommendations of a special
industry committee appointed under section 5, -whichever is later.
[(B) Beginning one year after the applicable effective date
under parv,graph (A), not less than the rate or rates prescribed
by paragraph (A), increased by an amount equal to 16 per centum
of the rate or rates applicable under the most recent wage order
issued by the Secretary prior to the effective date of the Fair
Labor Standards Amendments of 1966, unless such rate or rates
are superseded by the rate or rates prescribed in a wage order
issued by the Secretary pursuant to the recommendations of a
review committee appointed under paragraph (C).
[(C) Any employer, or group of employers, employing a ma-
j ority of tlce employees in an industry in Puerto RRico or the Virgin
Islands, may apply to the Secretary in writing for the appoint-
ment of a review committee to recommend the minimum rate or
rates to be paid such employees in lieu of the rate or rates provided
by paragraph (A) or (B). Any such application with respect to
any rate or rates provided for under paragraph (A) shall be filed
within sixty days following the enactment of the Fair Labor
Standard.,-, Amendments of 1966 and any such application with
respect to any rate or rates provided for under paragraph (13)
shall be filed not more than one hundred and twenty days and not
less than sixty days prior to the effective date of the applicable rate
or rates under paragraph (B). The Secretary shall promptly
consider such application and may appoint a review committee
if he has reasonable cause to believe, on the basis of financial and
other information contained in the application, that compliance
with any applicable rate or rates prescribed by paragraph (.A )
or (B) will substantially curtail employment in such industry.
The Secretary's decision upon any such application shall be final.
Any wage order issued pir;uant to the recommendations of a
review committee appointed under this paragraph shall take effect
on the applicable effective date provided in paragraph (A) or (B).
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[(D) In the event a wage order has not been issued pursuant
to the recommendation of a review committee prior to the appli-
cable effective date under paragraph (A) or (B), the applicable
percentage increase provided by any such paragraph shall take
effect on the effective date prescribed therein, except with respect
to the employees of an employer who filed an application under
paragraph (G) and who files with the Secretary an undertaking
with a surety or sureties satisfactory to the Secretary for pay-
ment to his employees of an amount sufficient to compensate such
employees for the difference between the wages they actually re-
ceive and the wages to which they are entitled under this subsec-
tion. The Secretary shall be empowered to enforce such under-
taking and any sums recovered by him shall be held in a special
deposit account and shall be paid, on order of the Secretary, di-
rectly to the employee or employees affected. Any such sum not
paid to an employee because of inability to do so within a period
of three years shall be covered into the Treasury of the United
States as miscellaneous receipts.
[(3) In the case of any such employee to whom subsection (a) (5)
or subsection (b) would otherwise apply, the Secretary shall within
sixty days after the effective date of the Fair Labor Standards
Amendments of 1966 appoint a special industry committee in accord-
ance with section 5 to recommend the highest minimum wage rate or
rates in accordance with the standards prescribed by section 8, but not
in excess of the applicable rate provided by subsection (a) (5) or sub-
section (b), to be applicable to such employee in lieu of the rate or
rates prescribed by subsection (a) (5 or subsection (b), as the case
may be. The rate or rates recommended by the special industry com-
mittee shall be effective with respect to such employee upon the effec-
tive date of the wage order issued pursuant to such recommendation
but not before sixty days after the effective date of the Fair Labor
Standards Amendments of 1966.
{(4) The provisions of section 5 and section 8, relating to special
industry committees, shall be applicable to review committees ap-
pointed under this subsection. The appointment of a review committee
shall be in addition to and not in lieu of any special industry com-
mittee required to be appointed pursuant to the provisions of subsec-
tion (a) of section 8, except that no special industry committee shall
hold any hearing within one year after a minimum wage rate or rates
for such industry shall have been recommended to the Secretary by a
review committee to be paid in lieu of the rate or rates provided for
under paragraph (A) or (B). The minimum wage rate or rates pre-
scribed by this subsection shall be in effect only for so long as and in-
sofar as such minimum wage rate or rates have not been superseded
by a wage order fixing a higher minimum wage rate or rates (but not
in excess of the applicable rate prescribed in subsection (a) or sub-
section (b)) hereafter issued by the Secretary pursuant to the recom-
mendation of a special industry committee.]
(2) (A) In the case of any such employee who is covered by such a
wage order and to whom the rate or rates prescribed by subsection
(a) (1) would otherwise apply, the following rates shall apply (unless
superseded by a wage order issued under paragraph (6) and except
as otherwise provided by paragraph (8) ) :
Approved For Release 2000/09/13 : CIA-RDP75B0038OR000600150002-2
 Approved For Release 2000/09/13 : ClA-RDP75B00380R000600150002-2
(i) Effective as prescribed in subparagraph (B), the employee's
base rare, increased by 25 per centum.