FAIR LABOR STANDARDS AMEMDMENTS OF 1974

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP75B00380R000800030003-2
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 106
• Document Creation Date: December 12, 2016
• Document Release Date: January 7, 2002
• Sequence Number: 3
• Publication Date: March 15, 1974
• Content Type: REPORT

P4,, 140 0_11
Approved For Release 2002/01/23 : CIA-RDP75B00380R000806 GO03-2
93D CONGRESS HOUSE OF REPRESENTATIVES I RFrORT
2d Session No. 93-913
FAIR LABOR STANDARDS AMENDMENTS OF 1974
MARCH 15, 1974.-Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
Mr. PERKINS, from the Committee on Education and Labor,
submitted the following
REPORT
together with
SEPARATE AND DISSENTING VIEWS
[To accompany ILR. 12435]
The Committee on Education and Labor, to whom was referred the
bill (H.R. 12435) 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 with an amendment and recommend that the
bill as amended -do pass.
The amendment strikes out all after the enacting clause of the bill
and inserts a now text which appears in italic type in the reported bill.
INTRODUCTORY STATEMENT
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
maintenance 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
conditions among the workers of the several States; (2) bur-
dens commerce and the free flow of goods in commerce; (3)
constitutes an unfair method of competition in commerce;
(4) leads to labor disputes burdening and obstructing com-
merce and the free flow of goods in commerce; and (5) inter-
feres with the orderly and fair marketing of goods in com-
merce.
Approved For Release 2002/01/23 : CIA-RDP75B00380R000800030003-
 Approved For Release 2002/01/23 : CIA-RDP75B0038OR000800030003-2
2
(b) It is hereby declared to be the policy of this Act,
through the exercise by Congress of its power to regulate
commerce among he several States and with foreign nations,
to correct and as rapidly as practicable to eliminate the con-
ditions above referred to in such industries without substan-
tially curtailing employment or earning power.
PunPOSE OF T[3E IIEGISLATION
The bill seeks to implement the policy 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 i n enterprises en-
gaged in commerce of in the prooh tion of goods for commerce.
The bill provides that the minimum- wage rate for nonagricultural
employees covered under the minimum wage provisions of the Act
prior to the effective (late of the 1966 amendments to the Act, and for
Federal employees covered by the 1966 amendments, will be $2.00 an
of the second full month after the date
the first dra
i
y
nning on
hour beg
of enactment, X2.00 an hour beginning January 1, 1975, $2.20 an hour
hour beginning January 1, 1976. The proposed minimum wage rate
for nonagricult1tral employees co cered under the minimum wage pro-
visions of the Act by the 1966 and 1974 amendments will be $ L90 an
hour beginning the first day of the second full month after the date
of enactment, $77 2.00 an hour beginning January 1, 1975,, $2.20 an hour
beginning January 1, 1976, and $2.30 an hour beginning January 1,
1977. For agricultural employees covered under the miuunum wage
provisions of the Act, the minimum wage rate will be $1.60 an horn-
beginning on the firs-, day of the second full month after the date of
enactment, $1.80 an 'sour beginning January 1, 1975, $2.00 an hour
beginning January 1, 1976, S2.20 an Four beginning January 1, 1977,
and $2.30 an hour beginning January 1,1978. The minimum wage rates
for hotel, motel, restaurant, food service, and certain public employees
in Puerto Rico and the V-rgin Islands, will be in accordant e with
those applicable to such employees in the United States. Other em-
ploy ees in Puerto Rico and the Virgin Islands presently covered by
wage orders would be entitled to increases in the wage orders.
The wage increase, provided by the bill were attuned to conside ra-
tions of correcting and as rapidly as practicable eliminating la.hor
conditions detrimental to the maintenance of the minimum sta_kxlard
of living necessary for health, efficiency, and general :vell-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
in recent years, can '~e absorbed by the national economy as easily as
all previous increases in the minimum wage rate.
The bill extends the minimum wage and overtime coverage of the
Act to Federal, State and local government employees (the overtime
exemption is mainta:.ned for policemen, firemen and employees of -.or-
rectional institutions), domest_.c service employees, employees of
retail and service establishments, and telegraph agency employees.
Minimum wage coverage is extended to conglomerate employees in
agriculture, motion picture theatre employees, logging employees, and
Approved For Release 2002/01/23 : CIA-RDP75B0038OR000800030003-2
 Approved For Release 2002/01/23 3 CIA-RDP75B0038OR000800030003-2
shade grown tobacco processing employees. Overtime coverage is ex-
tended to 'seasonal industry and agricultural processing employees,
hotel, motel, and restaurant employees, food service, employees, bowling
establishment employees, nursing home employees, local transit em-
ployees, cotton ginning and sugar processing employees, seafood can-
ning and processing employees, oil pipeline transportation employees,
and partsmen and mechanics in certain vehicle sales establishments.
Employee wage schedules
Hourly
rate
Nonagricultural employees covered underthe minimum wage provisions of the
$2,.00
Fair Labor Standards Act prior to the effective date of the 1966 amendments
(including Federal employees covered by the 1966 amendments).
2. 10
2.30
Nonagricultural employees covered under the minimum wage provisions of
1.90
the Fair Labor Standards Act by the 1966 amendments and 1974 amend-
ments.
2. 00
2.20
2.30
Agricultural employees covered under the minimum wage provisions of the
1.60
Fair Labor Standards Act.
1.80
2.00
2.20
2.30
Effective date
1st day of the 2d full month
after the date of enact-
ment.
Jan. 1, 1975.
Jan. 1, 1976.
1st day of the 2d full month
after the date of enact-
ment.
Jan. 1, 1975.
Jan. 1, 1976.
Jan. 1, 1977.
Ist day of the 2d full month
after the date of enact-
ment.
Jan. 1, 1975.
Jan. 1, 1976.
Jan. 1, 1977.
Jan. 1, 1978.
tended to the following :
Federal employees.
State and local employees.
Domestic service employees.
Retail and service employees.
Conglomerate employees (in
culture).
Telegraph agency employees.
Motion picture theater employees.
Logging employees.
Shade grown tobacco processing em-
ployees.
Overtime coverage will be extended to
the following :
Federal employees.
State and local employees.
Domestic service employees.
Retail and service employees.
Seasonal industry and agricultural
processing employees.
Telegraph agency employees.
Hotel, motel, and restaurant em-
ployees.
Food service employees.
Bowling establishment employees.
Nursing home employees.
Transit (local) employees.
Cotton ginning and sugar processing
employees.
Seafood canning and processing em-
ployees.
Oil pipeline transportation em-
ployees.
Partsmen and mechanics in certain
vehicle sales establishments.
COMMITTEE, CONSIDERATION
Almost four 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-
Approved For Release 2002/01/23 : CIA-RDP75B0038OR000800030003-2
 Approved For Release 2002/01/23 : CIA-RDP75B0038OR000800030003-2
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 Septem',ier 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 1n Puerto Rico and the Virgin Islands. Testimony was
received from. a multitude of witnesses from government, labor, indus-
try, business, and other interested groups and individuals.
After several days of informal discussions and formal mark-up ses-
sions, the subcommittee, by it vote of 9-2, ordered a bill reported. Snlb-
sequently the Committee on Education and Labor considered the bill
in open mark-up meetings and crdered the bill reported to the House
by it vote of 26-7. The bill was Eanended and passed by the House but
failed to be referred to a House-Senate Conference Committee.
The economic urgency for workers the legislation proposed to cover
prompted the General Subcommittee on Labor to begin immediate
consideration of legislation to amend the Fair Labor Standards Act in
the first session of the 93rd Congress. The subcommittee held 4 days of
hearings and received 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 frown Congressional
witnesses, and concluded its hearings on April 10, 1973, with the testi-
mony of Secretary of Labor Peter J. Brennan who presented the
Administration's inimum wage proposals. After several informal
meetings, the subcor,-lmittee marked up H.R. 4757 at it public meeiing
on May 2, 1973, and ordered th,3 bill, amended, reported to the Com-
mittee on Educatior. 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 Committee--aby a vote of 21-9--ordered reported
H.R. 7935, a clean bill. Subsequent to House passage of H.R. 7935,
amended, on June 6. 1973, the bill was further amended and approved
by a House-Senate Conference Committee on July 27, 1973. On Sep-
tember 6, 1973 the conference bill was vetoed by the President and. tine
House sustained the veto on September 19,19 7 3.
Increasing inflation has continued to erode the value of the dollar,
thus further aggravutiing the economic plight of low wage workers. In
recognition of this serious site ation, the General Subcommittee on
Labor again initiated remedial legislation. On February 6, 1974, the
subcommittee by a unanimous voice vote ordered ILP.. 12435, amended,
reported to the Committee on Education and Labor, and on 'Marc'o 13,
1974, the Committee ordered H.R. 1.2435 reported to the House by a
roll call vote of 33-0.
HISTORY OF TiIP ACT
On June 25, 1938, one of the Nation's basic labor laws was enacted-
the Fair Labor Standards Act of 1938. The first statutory rainimum
wage was established at 25 cents an hour for the year beginning
October 24, 1938. It was -lade applicable to all employees, not specif-
ically exempted, who were engaged in commerce or in the produ4ion
of goods for comme -ce.
The original Act provided that the statutory minimum wage mould
be raised to 30 cents an hour beginning October 24, 1939. A procedure
Approved For Release 2002/01/23 : CIA-RDP75B0038OR000800030003-2
 Approved For Release 2002/01/23 5 CIA-RDP75B0038OR000800030003-2
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.
Thus, 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 2 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 extending coverage
to unprotected workers.
The Fair Labor Standards Amendments of 1949 increased the mini-
mum hourly wage rate from 40 cents to 75 cents (to take effect Janu-
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 amend-
ments enlarged the scope of the Act by adding another basis of cover-
age-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.
Approved For Release 2002/01/23 : CIA-RDP75B0038OR000800030003-2
 Approved For Release 2002/01/23 : PIA-RDP75B0038OR000800030003-2
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.=15 an hour beginning February 1,
1970; anti $1.60 an hour beginning February 1, 1971. Newly covered
agricultural employees were provided a minimum wage rate of not
less than ',-,I an hour beginning February 1, 1967; $1.15 an hour be-
ginning February 1, 1968; and 31.30 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
workweei : 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 1906
amendments were particularly notable for their inclusion of public
employees within the parameter of the Act. A significant number of
Federal employees were than 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. Ihi~ tz, S,~r~c'~rry of Labor, et a? 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 Commerce Clause, that the remedial provisions
of the Act, if applied to states. would conflict with the Eleventh
Amendment, and thirt school and hospital enterprises do not have the
statutorily required relationship to interstate commmerce. 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
content ions.
The Supreme Court affirmed the judgment 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-
Approved For Release 2002/01/23 : CIA-RDP75B0038OR000800030003-2
 Approved For Release 2002/01/23 7 CIA-RDP75B0038OR000800030003-2
panics 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 employers 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
appropriate concrete cases.
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 24, 1937, in a message to the Congress, President Franklin
D. Roosevelt, stated that,
Approved For Release 2002/01/23 : CIA-RDP75B0038OR000800030003-2
 Approved For Release 2002/01/23: 8 CIA-RDP75B00380R000800030003-2
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 mist have some control over maxi-
mum 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 cominerce.
Goods produced under conditions which do not meet rudi-
mentary 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 th_e Fair
Labor Standards Amendments of 1949, -President Harry S Truman
staged :
'.This Act, has proved to be wise and progressive remed.al
legislation for the welfare no>; 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 minrnnnn wage
program should cover millions of low-paid workers now
exempted."
In his 1955 report, the President indicated that "the cover-
age of the minimum wage is no less important than its
amount."
In 1956, he stated that "the 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 :
Approved For Release 2002/01/23 : CIA-RDP75B00380R000800030003-,2
 Approved For Release 2002/01/23: CIA-RDP75B0038OR000800030003-2
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 aii upswing in economic growth for the country as a
whole.
However, as President Lyndon B. Johnson stated in his message to
the Congress of May 18, 1965:
Many 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.
'TnE PRESENT ACT
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 49.4 million of the nearly 80.2
million wage and salary workers in the United States. A substantial
number of these 80.2 million are beyond the scope of the Act's practi-
cal, 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 66 million-who might be brought within
the wage and hour guarantees, substantial millions are not in fact
covered.
TABLE 3.-ESTIMATED NUMBER OF NONSUPERVISORY EMPLOYEES COVERED UNDER THE MINIMUM WAGE
PROVISIONS OF THE FAIR LABOR STANDARDS ACT, BY INDUSTRY'
[In thousands]
Industry
Total number
of employees
in industry
Number of
employees
covered
Number of
employees
not covered
or exempt
Agriculture-------------------------------------------------------
1,232
513
719
Mining---------------
573
568
5
Contract construction ----------------------------------------------
3,625
3,608
17
Manufacturing ----------------------------------------------------
17,628
17,524
104
Transportation and public utilities----------------------------------
4,181
4,104
77
Wholesale trade---------------------------------------------------
2,691
2,683
8
Retail trade------------------------------------------------------
11,015
7,149
3,866
Finance, insurance, real estate--------------------------------------
2,813
2,662
151
Service industries (except private households)------------------------
9,626
7,087
2,539
Private households------------------------------------------------
2,060
--------------
2,060
Federal Government-----------------------------------------------
2,308
615
1,693
State and local government-----------------------------------------
6,300
2,914
3,386
-
-- -----------
Total------------------------------------------------------ 64,052 49,427 14,625
Approved For Release 2002/01/23 : CIA-RDP75B0038OR000800030003-2
 Approved For Release 2002/01/23 : CIA-RDP75B0038OR000800030003-2
10
TABLE 4.-ESTIMATED NUMBER OF NONSUPERVISORY EMPLOYEES COVERED UNDER THE OVERTIME PROVISIONS
CF THE FAIR LABOI1 STANDARDS ACT, BY INDUSTRY'
111 thousands
Total number
of employees
in industry
Number of
employees
covered
Numher of
employees not
covered or
exempt
Agriculture--------- ------------------------------------------
Minin
1,232
-------___--_
1,232
g----------------------------------------- ------ -------
Contract construction____________________________________ _ _____-__
Manufacturin
573
3, 625
556
3, 570
17
55
g------
Transportation and puiilic utilities----______-______ ---------------
W
17, 628
4, 181
16, 856
2,407
772
1,774
holesale trade Retail tr
d
2, 6S1
2. 476
215
a
e ---------------------------
11, 015
5, 157
5
858
Finance, insurance, real estate -----------------------
________
2, 813
2, 661
,
152
Service industries (except private households)________
_______________
9, 626
5
511
4
115
Private households
2,060
,
--------------
,
2
060
Federal Government--
2,308
615
,
1,693
State and local government -------------------------
---------------
6, 300
2, 764
3, 536
Total ----------------------------
BRIEF SIIMM,uICY OF PROVISIO- s
SECTIOx 1. A`'hort Title.--Provides that the act may be cited as the
"Fair Labor Standards Amendments of 1974".
SECS. 2 and 3. A'onagricultural F.'nz~~loyees.-Prop ides a mininnun
wage rate for nonagricultural employees covered by the act prior to
the effective date of the 1966 amendments, and Federal employees
covered by the 1966 amendments, of not less than $2 an hour begin-
ning on tfie, first day of the second full month after the date of enact-
ment, not less than $2.10 an hour beginning January 1, 1975, and not
less than $2.30 an hour beginning January 1, 1976.
Provide+s a minimum wage rate for nonagricultural employees cov-
ered by the 1966 and 1974 amendments to the act of not less than $1.90
an hour beginning on the first day of the second full month after the
date of enlctment, not less than 02 an hour beginning January 1, 1975,
not less than $2.20 2.n hour beginning January 1, 1976, and not less
than $2.30 an hour beginning January 1, 1977.
SEC. 4. Agricultu?al Employees.-- Provides a minimum wage rate
for agricultural (and domestic service-see sec. 7) 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, not less than $='L.80
an hour beginning Januam 1, 1975, not less than$2 an hour beginning
January 1, 1976, not. less than $2.20 an hour beginning January 1, 1977,
and not less than $2.30 an hour beginning January 1, 1973.
SEC. 5. (o~,~c~rr~7aeat, hotel, Votel. Restaurant, and Food S~r~r ice
Employees in. Puerto Rico and the Pirgin Islands.-The m-inimuin
wage rate for hotel, ]Hotel, restaurant, food service, and Government
7of the Inited States and the Virgin Islands employees in Puerto Rico
and the Virgin Islands shall be i'1 accordance With the applicable rate
in the United States.
Other Employer's in. Puerto Pico and the Virgin. Island.,.-Provides
for an increase of $0,12 an flour 311 wage orders presently under ';1.40
an hour, and $0.15 an hour on wage orders $1.40 or more an hour,
effective on the first day of the second full month after the date of
Approved For Release 2002/01/23 : CIA-RDP75B0038OR000800030003-2
 Approved For Release 2002/01/23 : CIA-RDP75B0038OR000800030003-2
11
enactment. Provides additional annual increases of identical amounts
until the wage order rates are in conformance with applicable rates
in the United States. In the case of an agricultural' employee whose
hourly wage is increased (above that required by wage order) byn
subsidy paid by the Government of Puerto Rico, the increases shall be
applied to the sum of (1) the wage rate and (2) the amount of the
subsidy.
Provides for the establishment of special industry committees to
recommend minimum wage rates for employees newly covered by the
1974 amendments (including employees of the Government of Puerto
Rico and its political subdivisions). The recommended rates cannot; be
less than 60 per ccntum of the rates applicable to U.S. employees
covered by the 1966 and 1974 amendments, or $1 an hour, whichever is
higher.
With respect to other employees covered under wage orders, the
rates cannot be less than 60 per centum of the otherwise applicable
rates in the United States, or $1 an hour, whichever is higher. Ent-
ployees of the Government of Puerto Rico and its political subdivisiaiis
are subject to this provision only in the initial establishment of wage
order rates pursuant to the recommendations of special industry com-
mittees.
Provides further that, special industry committees recommend the.
minimrun wage rate applicable in the United States except whereper-
tinent financial information demonstrates inability to pray such rate.
Also, that a court of appeals may upon review of a wage order specify
the minimum wage rate Ito be included in the wage order.
Snc. 6. Federal and State E nployecs.-mends definitions of the
act to permit the extension of minimum wage and overtime coverage
to Federal, State, and local public employees. Federal, ;State, and local
public employees engaged in fire protection or law enforcement activ-
ities, however, are exempt from the overtime provision.
SEC. 7. Domestie SC) V?.ce Wordeers.-States a finding of Congress
that domestic service in households affects commerce and that the n7ini-
rnum wage and overtime protections of the act should apply to such
employees. This section prescribes therefore, the minimum wage (not
less than '1.90 an hour beginning on the first day of the second full
month after the date of enactment, not less than '$2.00 an hour begin-
])in-January 1, 1975, not less than $;x:20 an hour beginning January 1,
1976, and not less than $$2.30 an hour beginning January 1, 1977) and
overtime (compensation for hours worked in excess of 40 per week)
rates applicable to such employees. If such employee resides in the
household of the employer, minimum wage compensation only is
required. The provision does not apply to a person who, on an inter-
rnittent basis, provides baby sitting services, or who provides com-
panion services. Domestic service employees are described as those who
are engaged iii domestic service employment more than 8 hairs during
a workweek.
SEc. S. Retail and Service Establish-7rzcnt$.-Reduces and ultimately
repeals the "dollar volume" test for coverage of retail and service
establishments of a "chain" under the minimum wage and overtime
provisions of the act. Effective July 1, 1974, the minimum wage and
overtime provisions of the act will apply to such establishments with
Approved For Release 2002/01/23 : CIA-RDP75B0038OR000800030003-2
 Approved For Release 2002/01/23 : CIA-RDP75B00380R000800030003-2
12
gross annual sales or services of $:5,000 or more; and effective July 1,
1975, gross annual sides or services of $200,000. Beginning July 1, 1976,
all such retail and service establishments will be subject to the mini-
mum wage and overtime provisions of the act.
SEC. 9. Tobacco Employees.-4 etains a limited overtime exemption
for employees engaged in aetivit es related to the sale of tobacco. O veT-
time compensation must be paid for employment in excess of 10 hours
in any workday and 48 hours in any workweek for a period or periods
not to exceed 14 workweeks in the aggregate in any calendar year.
Without this section, the limited overtime exemption would be ulti-
mately repealed by section 1.9.
Also repeals the present minimum wage exemption for employees
enraged in the processing of shade-grown tobacco.
;EC. 10. Telcgraple 9 gene E~np/,o ees.-Reps als the mininm,mr wage
exemption for employees of small telegraph agencies, and reduces end
ultimately repeals the over. time exemption for such employees. During
the first year after the effective date of the 1974 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 4 t per week; and thereafter, for hours worked in excess of
40 per week.
SEC. 11. A'-'eafood Canning and Processing Employees.-Reduces and
ultimately repeals thc overtime exemption for employees engaged in
the processing and canning of seafood. During the first year after the
effective date of the R14 amendments, overtime compensation must be
paid to such e:mployeas for hour;; 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 of 40 per week.
SEC. U. Nursing home Employees.--Amends the overtime exemp-
tion for nursing home employees to provide an overtime exemption
for employment up to 8 hours in my workday and up to 80 hours :iii
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. 13. hotel, Motel, and Pestcurant Employees aud Tipped' Ent-
ployees.---Reduces the overtime exemption for employees (other than
maids and custodial employees in hotels and motels) employed in
hotels, motels, and restaurants. During the first year after the effective
date of the 1974: amencments., overtime compensation must be paid to
such employees for hours worked in excess of 48 per week, and there-
after, for hours worked in excess of 46 per week.
The overtime exemption for maids and custodial employees in hotels
and motels is reduced and ultimately repealed. During the first year
after the effective date of the 1974 amendments, such employees must
be paid overtime compensation for hours worked in excess of 48 per
week; during the accord year, for hours worked in excess of 46 per
week ; during the third year. for hours worked in excess of 44 per week;
and thereafter, for hours worked in excess of 40 per week.
With respect to tipped employees, the tip credit provision o,' the
act is not to apply unless the employer has informed each of his tipped
employees of the tip credit provision and all tips received by a tiupec'.
employee have been retained by the tipped employee (either individ-
ually or through a pooling arrangement).
Approved For Release 2002/01/23 : CIA-RDP75B00380R000800030003-2
 Approved For Release 2002/01/2313CIA-RDP75B0038OR000800030003-2
Src. 14. Salesmen, Partsmen, and Mechanics.-Provides an overtime-
exemption for any salesmen primarily engaged in selling automobi.Tes;,
trailers, trucks, farm implements, boats, or aircraft if employed by a
nonmanufacturing establishment primarily engaged in the business
of selling such vehicles to ultimate purchasers. Also provides an over-
time exemption for partsmen and mechanics of automobile, truck, and
farm implement dealerships.
Sac. 15. Food Service Establishment Employees.-Reduces and ulti-
mately repeals the overtime exemption for employees of food service
establishments. During the first year after the effective date of the 1974
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 of 40 per week.
Src. 16. Bowling Establishment Employees.-Reduces and ulti-
mately repeals the overtime exemption for employees employed in
bowling establishments. Beginning 1 year after the effective date of
the 1974 amendments, such employees must be paid overtime compensa-
tion for hours worked in excess of 44 per week, and beginning 2 years
after the effective date, for hours worked in excess of 40 per week.
Src. 17. Substitute Parents for Institutionalized Children.-Pro-
vides an overtime exemption for couples who serve as houseparents of
children who are institutionalized by reason of being orphaned or hav-
ing one deceased parent. Further provides that such employed couples
must receive cash wages of not less than $10,000 annually, and reside
on the premises of the institution and receive their board and lodging
without cost.
SEc. 18. Employees of Conglomerates.-Precludes the availability
of the minimum wage exemption presently applicable for certain em-
ployees employed in agriculture to a controlling conglomerate with
an annual gross volume of sales made or business done in excess of
$10 million, if the conglomerate materially supports the employing
agricultural entity.
Src. 19. Seasonal Industry Employees.-Existing law provides an
overtime exemption for employment in seasonal industries up to 1?
hours in any workday or 50 hours in any workweek for not more than
10 workweeks during the calendar year. Existing law also provides an.
overtime exemption for employment 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 em-
ployer who does not qualify for the overtime exemption under both.
categories the exemption is extended to 1.4 workweeks during the.
calendar year for the category under which be does qualify.
The overtime exemption for employment in seasonal industries is~
reduced to 48 hours in any workweek for not more than 7 workweeks;
beginning on the effective date of the 1974 amendments, not more than
5 workweeks beginning January 1, 1975, and not more than 3 work-
weeks beginning January 1, 1976. The overtime exemption for em-
ployment in agricultural processing is reduced to not more than 7
workweeks beginning on the effective date of the 1974 amendments,
not more than 5 workweeks beginning January 1, 1975, and not more?
than 3 workweeks beginning January 1, 1976. In the case of an em-
Approved For Release 2002/01/23 : CIA-RDP75B0038OR000800030003-2
 Approved For Release 2002/01/23 : 1CIIA-RDP75B0038OR000800030003-2
plover who does not qualify for the overtime exemption under both
categories, the exemption is reduced from 14 workweeks during the
calendar year to 10 workweeks during 1.974, to 7 workweeks during
1975, and to 5 workweeks during, 1976. Effective December 31, 1976,
the overt-ime exemptions are repealed.
SEC. 20. Cotton Ginning and Sugar Processing Employees.-Repeals
the current overtime exemption and provides a limited overtime ex-
emption for certain employees engaged in cotton ginning and sugar
processing as follow,, :
Hours of work permitted during, each such
workweek without payment of overtime
compensation
1916 and
1974 1975 thereafter
6weeks -------------------------- ------------------ -------------- 72 66 60
4 weeks----------------------------------- ------- -------------- 64 60 56
2 weeks--------------- --------- -------------------------------- 54 50 48
Do ------------------------------------------------------ 48 46 44
Balance of year----------------------------------------------- 48 44 40
SEC. 21. Trari$t Empioyees.-,Reduces and ultimately repeals the
overtime exemption _'or 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.
During the first year after die effective date of the 1974 amendments,
overtin e compensation must be paid to such employees for hours
worked in excess of -18 per week ; daring the second year, for hours
worked in excess of 44 per week; and thereafter, for hours worked in
excess of 40 per week. In determining the hours of employment of
such an employee, hours employed in charter activities shall not be
included if (1) the er.nrployee's employment in such activities was pur-
suant to an agreement or understanding with his employer arrived at
before engaging inmsuch employment and (2) if employment in such
activities is not part, of such employee's regular employment.
SEC.. 2. Cotton a,w77 Sugar Services Employees.-Retains a limited
overtime exemption for certain employees en-aged in cotton ginning
and sugar processing activicies. Overtime compensation must be paid
for employment in excess of 10 hours in any workday and 48 hours in
any workweek for a period or period= not to exceed 14 work-weeks in
the aggl ega,te in any calendar year. Without this section, the limited
overtime exemption would be ultimately repealed by section 19.
Snc. 23 i iotion Picture Theaters, Togging Crews, and Oil Pipeline
Tr ansportation Enip,,'oyees.--Repeals the minimum wage exemption
for employees of mot ion picture theaters, and logging employees, but
r,-twins th.u overtime exemption for such employees. Also repeals the
oy.ertuno exemption for employees of oil pipeline transportation
co 131pailies.
Sr.c. 24 4 nzployme,zt of Students.-Provides for the employment of
flatl time students (regardless of ~agebut in compliance with applicable
child labor laws) at wage rates less than those prescribed by the act in
retails and service establishments, agriculture, and institutions of
lilg her education at which such students are enrolled. Students may be
Approved For Release 2002/01/23 : CIA-RDP75B0038OR000800030003-2
 Approved For Release 2002/01/23 : (Ctj4-RDP75B00380R000800030003-2
employed at a wage rate of not less than 85 per centuin of the appli-
cable minimum wage rate or $1.60 an hour ($1.30 an hour in agricul-
ture), whichever is the higher, pursuant to special certificate issued by
the Secretary. Such special certificates shall provide 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 intends to employ five or more students under this section, the
Secretary may not issue a special certificate unless he finds the employ-
ment of any such student "will not create a substantial probability of
reducing the full-time employment opportunities" of other workers.
In the case of an employer who intends to employ less than five stu-
dents under this section, the Secretary may issue a special certificate if
the employer certifies to the Secretary that he is not thereby reducing
the frill-time employment opportunities of other workers. The certifi-
cation requirements are not applicable to the employment of full-birrie
students by the educational institutions at which they are enrolled.
Sections 15 (Prohibited Acts) and 16 (Penalties) of the act would be
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 24 also provides that the Secretary may waive the minimum
wage and overtime provisions of the act with respect to a student
employed by his elementary or secondary school, where such employ-
ment constitutes an integral part of the regular education program
provided by the school and is in accordance with 'applicable child labor
laws.
SE(,. 25. Child Labor.-The employment of children. under age 12
in agriculture is prohibited unless they are employed on a farm owned
or operated by their parents or guardians, or on a farm exempt from
the minimum wage provisions of the act. Children 12 or 13 years of
age may work in agriculture only with the written consent of their
parents or guardians or if their parents or guardians are employed on
the same farm. For persons 14 years of age or older, prior consent is
not required for employment in agriculture.
Any person who violates the child labor provisions of the act or ap-
plicable regulations, is subject to civil penalties. The Secretary is per-
mitted to require employers to obtain employee's proof of age.
SEC. 26. Suits by the Secretary.--Authorizes the Secretary to site
for back wages (which he can do now) but also to sue for an equal
amount of liquidated damages without requiring a written request
from the employee. The Secretary could also site even though the suit
might involve issues of law that have not been finally settled by the
courts. In the event the Secretary brings such an action, the right of an
employee provided by section 16 (b) of the act to bring an action on
behalf of himself, or to become party to such an action would termi-
nate, unless such action is dismissed without prejudice, on motion by
the Secretary.
Sro. 27. Economic Effects Studies.-In addition to and in further-
ance of the requirements of section 4(d) of the, act, the Secretary is re-
gnired to conduct studies on the justification or lack thereof for each
of the exemptions provided by sections 13(a) and 13(b) of the act.
Such studies shall include an examination of the extent to which em-
Approved For Release 2002/01/23 : CIA-RDP75B0038OR000800030003-2
 Approved For Release 2002/01/23 : CIA-RDP75B0038OR000800030003-2
16
ployees of conglomerates receive the sections 13 (a) and (b) exemp-
tions and the economic effect of their inclusion in such exemptions.
The. report on the study would be due not later than January 1, 1976.
SEC. 28. Nondiseri'i7aiuzation on A,;comnt of Age in Govemrv nwnt Fnz-
pioyment.-Extends the provisions of the Age Discrimination in Em-
ployment Act to an employer with 20 or more employees. Also extends
the provisions of the act to State and local governments and their
related agencies.
States a policy of nondiscrimination on account of age in the Fed-
eral government, and authorizes the U.S. Civil Service Commission
to enforce, that policy.
SEC. 29. Effective Date.-Provides that the effective date of the 1974
amendments shall be the first day of the second full month after the
date of enactment..
INCREASE IN TIIE MINIMUM WAGE RATE FOR EMPLOYEES COVERED UNDEE
THE ACT PRIOR TO THE 1966 AMENDMENTS : JUSTIFICATION FOR IN-
CREASES IN MINTITUD9_ WAGE RATES
More than 37 million nonsupervisory employees at work in Septem-
ber 1973 1 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. Foi- these employees, and the 615,000 Federal employees
covered by the 1966 amendments, the bill proposes increases in the
minimum wage rate to $2.00 an hcur effective on the first day of the
second-full month after the date of enactment, $2.10 an hour effective
January 1, 1975, and $2.30 an hour effective January 1, 1976.
The impact of a $2.00 an hour minimum wage rate would be felt
by 3.8 percent of the 127,124,000 employees covered by the Act prior
to the effective date of the 1966 amendments; or, by an estimated
1,426,000 employees. These are employees who are now earning less
than $2.00 an hour. Only 49,000 of the 615,000 Federal employees
covered by the 1966 amendments would feel the impact of a $2.00 a:--I
hour minimum wage rate.
The impact of a $2.10 an hour minimum wage rate--effective Janu-
ary 1, 1975--would mean wage increases for an estimated 1;564,000
private sector employees (covered by the Act prior to the effective
date of the 1966 amendments) and 51,000 Federal employees (c(Yvered
by the 1966 amendments) who, at shat time, will be earning less than
$2.10 an hour.
A $2.30 an hour mir.imum wage rate-effective January 1, 1976--
would mean wage increases for an estimated 2,187,000 private sector
and 60,000 Federal employees who, at that time, will be earning lees
than $2.30 an hoar.
When the 1966 amendments--increasing the minimum wage rate to
$1.60 an hour-were enacted, they represented a promise that a ful'-
time worker compensated at the minimum wage rate could at least
earn what was considered to be the poverty level of income; which it
Approved For Release 2002/01/23 : CIA-RDP75B0038OR000800030003-2
 Approved For Release 2002/01/23 , CIA-RDP75B0038OR000800030003-2
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 in 1973 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 $1.90 an hour.
For covered agricultural workers, the bill proposes an initial mini-
mum wage increase to $1.00 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 fanmil.y 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
from gainful employment, financial 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 CPI for all items in
January 1974 was 139.7. The base year index of 100 was 1967-the
year the 1966 amendments to the Act became fully effective. For food
and housing, about all a minimum wage earner can hope to afford, the
January 1974 indices were 153.7 and 142.2, respectively.
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 , minimum wage of $1.60 buys less than the $1.25 minimum
wage bought in 1966.
29-93r-74-2
Approved For Release 2002/01/23 : CIA-RDP75B0038OR000800030003-2
 Approved For Release 2002/01/23 : fA-RDP75B00380R000800030003-2
TABLE 5.-BUYING POWER OF MINIMUM WAGE RATES SET BY 1966 AMENDMENTS
Newly covered
Cumulative
Previously covered
(nonfarm)
Farmworkers
percent
-
---
-
----
inflation r
Mini-
Mini-
Mini-
from cate of
mum
mum
mum
enactment
wage
Eff
Buying
wage
Buying
wage
Buying
CPI
September
ective date rate
power
rate
power
rate
power
(1967=100)
1966
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. l0
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
1.25
1.30
1.12
113.9
.
16
1
Feb. 1, 1971----- __ 1.60
1.31
1.60
1.31
1.30
1.07
119.4
.
21
7
Feb. 1, 1972---.-- 1.60
1.27
1.60
1.27
1.30
1.03
123.8
.
26
2
Feb. 1, 1973___.._1.60
1.22
1.60
1.22
1.30
.99
128.6
.
31
1
Jan. 1974 -------- 1.60
1.12
1.60
1.12
1.30
.91
139.7
.
42.4
I CPI =98.1 upon enactment of FLSA Amendments of September 1966.
Stated differently, if a cost-of-living increase lneclianism had been
incorporated into ilia 1966 amendments, the minimum wage rate in
January 1074 would have exceeded $2.23 an hour.
A complete Congressional perspective also compels notice to pay
increa es -ranted 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 $,,.682 annuall;~-
an increase of more tl _an 44.7 per cent. A GS-16 level Federal employee
in 1066 earned. $20,07.3 annually. Today, he earns $32,806-an increase
of 63.t per cent. Generally, if the same cost-of-living and comparabil-
ity increases Congress approved for Federal employees had been ap-
plied to minimum verge earners, today's minnnum wage rate would
well exceed $2.30 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 sim ole
economic fact. Even at tliat level, a full-time worker ;could c urn less
than the poverty threshold and enjoy less buying power than he did
before his wage was increased to as present $1.60 an ]lour rate. An in-
crease in the minimum wage rate to :112.30 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 1936.
One of the traditional charges agl,.inst 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 riot associate that organization with
the charge. At that time, Dr. lZichard S. Landry, Administrative
Director, Economic Analysis and Study Group, U.S. Chamber o' Co1n-
mercez said in response to a, statement by the Chairman of the su.b-
committee :
We do not contend, unlike some of the witnesses that ap-
peared before you apparently, that the minimum wage is i:n-
flationary. Quite the opposite. Inflation is not caused by
minimum wages. " * *
Approved For Release 2002/01/23 : CIA-RDP75B0038OR000800030003-2
 Approved For Release 2002/01/249 CIA-RDP75B00380R000800030003-2
In actual fact, inflation adversely affects the lowest income worker-
including minimum wage earners--more, harshly than any other. Ile 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.
These 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."
Another charge against proposed increases in the minimum wage
rate is that such increases create 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 min-
imum wages established by this Act . . ." Reports by Secretaries of
Labor-in all administrations-have shown substantial benefits and
only rare, isolated instances of adverse effects.
Former Secretary of Labor llodgson, in his January 1,971 report to
the Congress evaluating minimum wage legislation, stated:,
Although the economic indicators just noted increased at
a fairly rapid rate in 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-fared better than industries un-
affected by the statutory escalation in the mini
mum wage.
He concluded his summary with this statement :
In view of 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,
Approved For Release 2002/01/23 : CIA-RDP75B00380R000800030003-2
 Approved For Release 2002/01/23 : CIA-RDP75B0038OR000800030003-2
20
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 )f 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 eccnomic 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 most recent 12-month period, employ-
ment climbed 3.2 percent, from 68.2 million in September
1968 to 70.4 minion in Sep;ember 1969. Employment rose in
all major nonagricultural industry divisions in the 12-month
period between September 1968 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 movement 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 1.966
amendments. T,lere are strong indications that other factors,
although possibly not entirely exclusive of minimum wage
escalations, were major caries 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 :
Approved For Release 2002/01/23 : CIA-RDP75B0038OR000800030003-2
 Approved For Release. 2002/01/23 : CIA-RDP75B0038OR000800030003-2
21
* * * 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, the 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-
matic during the interval.
INCREASE IN TIIE MINIMUM WAGE RATE FOR EMPLOYEES COVERED UNDER
THE ACT BY TIIE 1966 AMENDMENTS
Over 12 million nonsupervisory employees were covered under the
minimum wage provisions of the Act by the 1966 amendments.
With the exception of the 615,000 Federal employees covered, and
the 513,000 agricultural employees covered, the bill would increase the
minimum wage rate for such employees to $1.90 an hour effective on
the first day of the second full, month after the (late of enactment,
$2.00 an hour effective January 1, 1975, $2.20 an hour effective Jan-
uary 1, 1976, and $2.30 an hour effective January 1, 1977. The Fed-
eral employees presently covered would be subject to the same rate
as that applicable to employees covered prior to the 1966 amend-
ments. The proposed minimum wage rate for covered agricultural
employees will. be discussed below.
Of the remaining 11,175,000 employees covered by the 1966 amend-
ments, a $1.90 an hour minimum wage rate would mean wage increases
for an estimated 1,551,000. These are employees who are now earning
less than $1.90 an hour.
The impact of a $2.00 an hour minimum wage rate-effective Jan-
uary 1, 1975-would mean wage increases for an estimated 1,689,000
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 Janu-
v ary 1, 1976-would mean wage increases for an estimated 2,180,000
employees who, at that time, will be earning less than $2.20 an hour.
And, the impact of a $2.30 an hour minimum wage rate-effective
January 1, 1977-would mean wage increases for an estimated 2,180,-.
000 employees who at that time, will be earning less than $2.30 an
hour.
Approved For Release 2002/01/23 : CIA-RDP75B0038OR000800030003-2
 Approved For Release 2002/01/23 : CIA-RDP75B0038OR000800030003-2
22
INCREASE IN TIIE -MIN-1.111 91 WAGE RATE FOR AGRICULTL'EAL EMPLOYEES
COVERED UNDER TIIE ACT
The 1966 amendments extended the minimum wage protection of
the Act to 513.000 employees employed in agriculture. The present
minimum wage rate for such employees is-and has been since 'Feb-
ruary 1, 1960-$1.30 an hour. The bill proposes to increase that rate
to $1.60 an hour effective on the first day of the second full month
after the date of enactment. $1.80 an hour effective January 1, 1975,
$2.00 an hour effective January 1, 1976, $2.20 an hour effective Janu-
ari> 1, 1977, and $2.30 an hour effective Tanuary 1, 1978.
The bill does not propose an extension of minimum wage coverage
to additional agricultural employees. except to the extent presently
exempt agricultural employees are included within the scope of the
conglomerate provisions of section 18 or by modification of the defini-
tion of "employee" provided by section 6. It is interesting to note also,
that, the 513,000 presently covered agricultural employees are em-
ployed on approximately 2 percent of the Nation's farms.
A $1.60 an hoar minimum wage rate would mean wage irereases
for an estimated 90.000 agricui"tural 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 January 1, 1975-
would mean wage increases for an estimated 127,000 agricultural em-
ployees who, at that time, will be earning less than $1.80 an hour.
A 192.00 an hour minimum wage rate-mifeetive January 1, 1976-
would mean wage increases for as estimated 158.000 agricultural e i-
plovees 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 Jan-
uarv 1. 1977--would, mean wage increases for an estimated 184.000
a.!>rricultural employees who, at that time, will be earning less than
$2.20 an hour.
And, a $2.30 an hour minimum wage rate-effective January 1,
1978-would mean wage increases for an estimated 184.000 agrricul-
tural employees who, at that time, will be earning less than $2.30 an
hour.
APPLICATION OF THE 13INIMITM W 1GE RATE TO EMPLOYEES PROPOSED TO
BE COVERED UNDER THE ACT BY THE 1974 AMENDMENTS
The bill would extend the minimum wage protection of the Act to
approximately? million employees.
TABLE 6.-77*tmutted distribution of n.on upnra'isorn omploy(w.e who jr -ild ?'e
brought under the minimum wage protection of the Act by H.R-. 12455
Number of en,nlo-ea j'o
Industry. be covered xu the GTI
Federal, state, and lo^al government--------------------------- 5,
0t0, 000
Domestic service-------------------------------------------- .-- 1,
285. 040
Retail or service establighm(ntp -------------------------------
64, 000
Agriculture ---------------------------------------------------
25,000
Motion picture theaters---------------------------------------
t0, 00!1
Logging ------------------------------------------------------
42.000
Telegraph agencies------------------------------------------
-ii
Shade groti, tobaecn----------------------------------------
Conglomera.tes ----------------------------------------------
(~)
I1)
Total-------------------.----------------------------------- 7,144,000
Approved For Release 2002/01/23 : CIA-RDP75B0038OR000800030003-2
 Approved For Release 2002/01/ : CIA-RDP75B0038OR000800030003-2
For such nonagricultural employees, the bill would require a mini-
mum wage rate of not less than $1.90 an hour effective on the first
day of the second full month after the date of enactment, $2.00 all
hour effective January 1, 1975, $2.20 an hour. effective. January 1, 1976,
and $2.30 an hour effective January 1, 1. 977. Discussion of the. impact
of the minimum wage rate to the limited number of agricultural em-
ployees proposed to be covered by the bill was included above.
The $1.90 an hour rate (for the newly covered nonagricultural em-
ployees) would mean wage increases for all estimated 1,056,000 such
employees. These are employees who are now earning less than $1.90
an hour.
The impact of a $2.00 an hour minimum wage rate-effective, Jan-
uary 1, 197,5-would mean wage increases for an estimated 1,107,000
employees who, at that time, will be earning less than $2.00 an hour.
A $2.20 an hour minimum wage rate-effective January 1, 1976-
would mean wage increases for an estimated 1,217,000 employees who,
at that time, will be earning less than $2.20 an hour.
And, the impact of a $2.30. an hour minimum wage rate-effective
January 1, 1977-would mean wage increases for. an estimated
1,404,000 employees who, at that time, will be earning less than $2.30
an hour.
APPLICATION OF TIIE OVERTIME COMPENSATION PROVISIONS TO EMPLOYEES
PROPOSED TO BE COVERED BY TIIE 1.974 AMENDMENTS
The bill would extend the overtime compensation protection of the
Act to approximately 9.5 million employees.
TABLE 7. Estimated distribittion of wonsulpcrrisory employees who would be
brought under the overtime compensation protection of the act by H.R. 12435
Number of employees to
Industry : be covered by the bill
Federal, State, and local government-------------------------- 4,555,000
Domestic service------------------------------------------ 1,150,000
Retail or service establishments---------------------------- 520, 000
Oil pipeline------------------------------------------------ 15,000
Seafood canning and processing ------------------------------- 40,000
Transit ----------------------------------------------------- 3:=,000
Hotel, motel, and restaurant---------------------------------- 1,52],000
Nursing home------------------------------------------------ 742,000
Salesmen, partsuleu,and niechanics ----------------------------- 11,000
Food service------------------------------------------------- 199,000
Bowling establishments--------------------------------------- 48,000
Seasonal industries------------------------------------------- 041,000
Telegraph agencies------------------------------------------- 22,000
Cotton ginning----------------------------------------------
Sugar processing--------------------------------------------- 20,000
Total ----------------------------------------------------- 9,525,000
1 No estimate available.
NOTE.-with respect to certain hotel, motel, and re'taurant employees, and employees
engaged in cotton ginning and sugar processing activities, the bill does not require the
payment of overtime compensation for hours worked in excess of 40 during a workweek,
but rather, for greater numbers of hours worked clueing a workweek.
PUERTO RICO AND TIIE VIRGIN ISLANDS
Although the Fair Labor Standards Act applies to employees in
Puerto Rico and the Virgin Islands, it does not require the payment
of the minimum wage rate prescribed by section 6(a) (1) ; that is, the
Approved For Release 2002/01/23 : CIA-RDP75B0038OR000800030003-2
 Approved For Release 2002/01/23 : C11 -RDP75B00380R000800030003-2
rate of $1.60 an hour. Instead, the Act provides for industry com-
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 wag, 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 biennial 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.
Each 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 curtal 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
Rico and the Virgin Islands. Whenever the industry committee finds
that a higher minimum wage may be determined for employees en-
gaged in certain activities or in the manufacture of certain products
in the industry than may be determined for other employees ir~ 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, how-
ever, and no minimum wage rate shall be fixed solely on a regional
basis or on the basis of age or sex.
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 re presenting (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 unable 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
Approved For Release 2002/01/23 : CIA-RDP75B0038OR000800030003-2
 Approved For Release 2002/01/23 : CIA-RDP75B0038OR000800030003-2
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).
The bill provides for the gradual achievement of minimum wage
parity for workers in Puerto Rico and the Virgin Islands with workers
on the mainland.
The minimum wage for certain hotel, motel, restaurant and food-
service employees, as well as employees of the Federal and Virgin Is-
lands governments, will be the same as the minimum wage for counter-
part mainland employees on the effective date.
For other covered workers in Puerto Rico and the Virgin Islands,
the bill provides as follows :
(1) Effective on the effective date of the legislation, presently
covered employees are to receive the following increases :
(A) an increase of 12 cents an hour if their wage order rates
are less than $1.40 an hour ; and
(B) an increase of 15 cents an hour if their wage order rates
are $1.40 an hour or higher.
(2) Newly covered employees (including commonwealth and
municipal employees) are to have their wage rates set by special
industry committees and this wage rate may not be less than
60 percent of the otherwise applicable rate under section 6(b) or
$1.00 an hour, whichever is greater.
(3) All employees (other than commonwealth and municipal
employees) will receive, beginning one year after the effective
date of this legislation, yearly increases as follows :
(A) increases of 12 cents an hour per year if their wage
order rates are less than $1.40, and
(B) increases of 15 cents an hour per year if their wage
order rates are $1.40 an hour or higher.
Under this provision, when an employee's wage rate reaches
$1.40 that employee will then receive the 15 cents annual increase.
If such an increase for any employee. will result in a wage order
rate less than 60 percent of the otherwise applicable minimum
wage or $1.00 an. hour, whichever is greater, then the increase for
such employee will. be such greater figure.
(4) If a prescribed increase in the wage order rate of an em-
ployee would result in a rate equal to or greater than the other-
wise applicable minimum wage rate of section 6(a) or (b), the
minimum wage rate for that employee will be governed by such
section and such employee will no longer be covered under a
wage order.
(5) It is made clear that special industry committees may, in
accordance with section 8, also provide increases in wage order
rates (including rates for common
ployees) wealth and municipal em-
( .
6) The authority for hardship review of the increases by spe-
cial committees is discontinued.
The bill also provides that special industry committees shall recom-
mend the otherwise applicable rate under section 6(a) or 6(b) except
Approved For Release 2002/01/23 : CIA-RDP75B0038OR000800030003-2
 Approved For Release 2002/01/23 CIA-RDP75B00380R000800030003-2
26
where substantial documentary evidence, including pertinent Finan-
cial information, demonstrate; an inability to pay such rate.
The bill further provides that a court of appeals may upon review
of a wage order specify the minimum wage rate to be included in
such wage order.
Provisions permitting the setting of lower rates by industry com-
mittee in Puerto Rico and the Virgin Islands were incorporated into
the Act in June 1540, almost l`t years ago. However, from the out-
set a clear intent Las been manifest in the Act to achieve ultimate
parity. Section 8 (a) of the Act sots forth this policy :
The policy of this tact with respect to industries or enterprises
in Puerto Rico and the Virgin Islands engaged in commerce or
ZrI r commerce is to reach as rapidly as
in the production of goods fo
is economically feasible without substantially curtailing employ-
ment the objective of the minimum wage prescribed in paragraph
(1) of Section 6l a) in each such industry.
In the course of various evaluations of the industry committee pro-
cedures, questions have been raisni as to whether a need still exists for
such special industry committee action. The procedure has been criti-
cized as time-consuming, costly and unfair to mainland employers.
Opponents of the present procedure have also noted how little progress
haS been made in raisin? the. wage floor in some industries, despite
unproved economic conditions, and substantial increases in produc-
tivity.
The committee was persuaded to provide for eventual parity for a
a, ide variety of reasons. Consideration was given to the fact that the
cost-of-living has been rising almost as rapidly on the Islands as on
the mainland. For example, the Consumer Price Index (1967=100)
for all items in 1972 was 117.9 in Puerto, Rico and 125.3 on the main-
land. Moreover, the index of food prices was 122.9 in Puerto Rico
as compared with 123.5 on the mainland; the index of transportation
prices was 116.6 in Puerto Rico versus 119.9 on the mainland. And for
personal care, the Puerto Rican index was 118.6 as compared. with
119.8 on the mainland. In addition, profit margins of establishments
in Puerto Rico are usually greater than for their .national counter-
parts, and employers enjoy special advantages, such as exemption
from Federal income taxes, subsidies, and exemption from local in-
come taxes for a period of from 10 to 1i' years, depending on location.
The schedule for achieving parity, as set forth in the bill, makes it.
possible for employers to make long-range plans for adjusting to
the scheduled wage chantres. The increase in wage order rates of 12 to
15 cents in hour on Cie effective elate (for most activities) on the
Islands is less than the increase in -he mainland. It is recognized that
many of the employers in Puerto Rico and the Virgin Islands who
have been covered by the Act sine its inception could adjust to a
$0.40 an hour minimum wage increase on the effective date with
ease. However, a more modest increase was decided upon to insure
that the increases would proceed smoothly and that substandard
wag es would be eliminated by a predetermined target date.
The committee was impressed b-T the extensive financial and tax
incentives designed to .at-tract business to Puerto Rico. In "A National
Profile of Puerto Rico" (March 1971), Ernst and Ernst described in
Approved For Release 2002/01/23 : CIA-RDP75B00380R000800030003-2
 Approved For Release 2002/01/23 : CIA-RDP75B0038OR000800030003-2
detail the various benefits to business of locating in Puerto Rico
ranging from "100 percent exemption from income tax on, industrial
development income for qualified firms" to such special location in-
centives for operations in areas outside of metropolitan San Juan as
offsets for costs of training, salaries, rents and mortgages. The Com-
mittee compared the advantages designed to attract business to Puerto
Rico with wage data in the summary on labor, in Ernst and Ernst. In
this summary, the average hourly wage in 1969.for 20 industry groups
in Puerto Rico is shown at $1.82. The comparable figure for the main-
land is given as $3.10. The committee's intent is to improve the status
of the Puerto Rican worker; parity with mainland workers with
respect to the minimum wage is a necessary first step.
The committee is aware that industry committees meet throughout a
year to recommend increases in relevant wage orders, and further
recognizes that such committees are now convened and that others
have recently discharged their responsibilities. Acknowledging the
inequity involved with mandating across-the-board adjustments in
wage orders which have only recently been increased upon recommen-
dation of appropriate industry committees, the committee intends that
the Secretary consider such increases in applying the statutory adjust.
ments; that is, that increases recommended within a reasonable time
prior to the effective date of the statutory adjustments be compared
to the increases required by the bill so that only the greater of the two
shall initially apply. For purposes of administration, the committee
intends that 3 months be deemed a reasonable time.
FEDERAL, STATE, AND LOCAL GOVERNMENT
Section 6 of the bill extends minimum wage and overtime coverage
to about 5 million non-supervisory employees in the public sector not
now covered by the Act. Approximately 3.5 million public employees,
primarily employees in hospitals, schools, and other institutions, were
covered by the 1966 amendments. The bill will provide that virtually
all non-supervisory government employees will. be covered.
The bill, however, establishes an overtime exemption applicable to
public employees "enga,g?ed in fire protection or law enforcement ac-
tivities (including security personnel in correctional institutions) ".
In the case of public employees first covered by the 1,974 amend-
ments, State and local government employees covered by the 1966
amendments, and Canal Zone employees, the bill would provide a
minimum wage rate of not less than $1.90 an hour effective on the first
day of the second full month after the date of enactment, $2.00 an
hour effective January 1, 1975, $2.20 an hour effective January 1, 1976,
and $2.30 an hour effective January 1, 1977. The minimum wage rates
applicable to Federal employees covered by the 1966 amendments w ere
discussed earlier.
The impact of a $2.30 an hour minimum wage rate on all such em-
ployees is illustrated elsewhere, but it is significant to note here that
there would be no impact with respect to newly cbvcred Federal
employees.
Coverage of Federal employees is extended by the bill to most
employees including wage board employees, non-appropriated fund
Approved For Release 2002/01/23 : CIA-RDP75B0038OR000800030003-2
 Approved For Release 2002/01/23 : CIA-RDP75B0038OR000800030003-2
employees, employees in the Canal Zone who are engaged in employ-
ment of the kind described in sections 5102(c) (7) of title 5, U.S.C.,
and any other civilian employees working for the armed services.
Excluded from coverage are military personnel. Basically, the com-
mittee did not intend to extend coverage to those persons for whom
the tangible bene~Its of government employment are of secondary
significance, for example Peac,~ Corps and VISTA volunteers. By the
same token, the committee intends to cover all employees (except
professional, executive, and administrative personnel who are ex-
empted under seet!on 13 of tic law) in all civilian branches of the
Federal Government.
The Secretary of Labor in 1973, reflected the Civil Service Commis-
sion's view when he recommended against bringing Federal employees
under the coverage of the Fair Labor Standards Act. The. Cowmis-
sion's position was that Federal employees are. already covered by
special pay provisions in title L. United States Code, and that enact-
ment of this legislation would confuse, the administration of these
provisions and could raise jurisdictional problems of administration.
The committee resolved this matter by including Federal employees
within the coverage of the Act and charging the Civil Service Coin-
mission with responsibility for administration of the Act so far as
Federal employees (other than employees of the Postal Service, the
Postal Rate Commission or the Library of Congress) are concerned.
It is the intent of the committee that the Commission will administer
the provisions of the law in such a manner as to assure consistency
with the meaning, scope, and application established by the rulings,
regulations, interpretations, and opinions of the Secretary of Labor
which are applicable in other sectors of the economy. The provisions
of the bill would leave the premium pay provisions of title 5 [united
States Code, in effect to the extent that. then are not inconsistent, with
the Fair Labor Standards Act.
The Department of Labor in 1970 evaluated the feasibility of ex-
tending minimum wage and overt -me 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 in>titutions.
In a "Summary of Findings," the Department concluded that :
The nationwide survey of State and local governments (ex-
eluding 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 exterded to these workers, comnpar-.
able minimum wage and overtnie 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.
The Department estimates that 55,000 of the State and local gov-
ernment employees to be covered l y the bill would be benefited by
the impact of a $1.90 an hour miniinurn wage rate; 104,000 would be
benefited by the impact of a $2.00 an hour minimum wage rate effective
Approved For Release 2002/01/23 : CIA-RDP75B0038OR000800030003-2
 Approved For Release 2002/01/23 : CIA-RDP75B0038OR000800030003-2
January 1, 1975; 138,000 would be benefited by the impact of a $2.20
an hour minimum wage rate effective January 1, 1976; and 138,000 of
that group would be benefited by the impact of a $2.30 an hour mini-
mum wage rate effective January 1, 1977.
In March 1970, 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 nonsupervisory 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 most 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-
vi.sory man-hours in State and local governments represented
hours worked in excess of 40. If a 40-hour Federal overtime
standard were in effect at the time of the survey, the premium
pay required for these hours would have approximated one
percent of the weekly wage bill. The actual impact of a 40-
hour standard woul4 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 and local governments then, of a 40-hour standard, will be
virtually non-existent.
RETAIL TRADE AND SERVICES (EXCEPT DOMESTIC SERVICE)
The bill would extend the minimum wage and overtime provisions
of the Act to employees of individual retail and service establishments
(except "Mom and Pop" stores) which are part of enterprises with
gross annual receipts of $250,000 or more. Under existing law, indi-
vidual establishments which have annual receipts less than $250,000
are exempt even if they are part of a chain which has annual receipts
over $250,000.
Currently, the Act protects about 14.2 million nonsupervisory work-
ers in retail trades and services, The committee bill would increase
coverage in these activities by 713,000 workers, exclusive of domestic
Service employees.
The bill phases out by July 1, 1976, the $250,000 establishment test
for smaller stores of large covered chains. Currently, two stores of
the same chain are treated differently under the Act. For example, if
amulti-million dollar chain has 10. stores, 9 of which have annual
sales in excess of $250,000 and one has receipts of less than $250,000,
the Act currently applies to employees of the 9 stores, but not to the
employees of the smaller store of the same chain. Employees in the
9 stores are currently guaranteed the protection of the Act, but the
employees of the 10th store have no such protection. This inequity
Approved For Release 2002/01/23 : CIA-RDP75B0038OR000800030003-2
 Approved For Release 2002/01/23 : CIA-RDP75B0038OR000800030003-2
would be rectified if all establishments of a covered chain were treated
equally under the law.
The bill would not directly affect franchised or independently
owned small (less than $210,000 annual receipts) retail and service
firms nor would it extend cot erage to the so-called "1 om & . )op"
stores.
This bill would not only protect many of the retail and service em-
ployees who were not benefited by the 1964 and 1906 amendments to
the Act, but it would also protect n:aedium size shopkeepers, who are
covered by the law, from being indecent by retail or service establish-
ments which may be part of multimillion dollar enterprises, yet are
exempt from the Act and pry suhminimum wages.
Once again the committee locked to special reports of the Depart-
ment of Labor which were designed to determine how employers ad-
justed to the extensions of coverage to retail and service activities in
1961 and 1966. Repeatedly these reports, stated that employment in-
creased in activities newly covered by the Act. For example, the De-
partment's nation-w:.de survey of restaurant employees shows that
employment increased by 3,900 workers between October 1966 end
April 1.967, the period spanning the effective date of the initial plisse
of the 1966 amendments to the minimum wage law. The Labor Depart-
ment reported that the "largest employment increase occurred in the
South where the wage impact was greatest." It is apparent from the
various reports that the retail anc service industry has adjusted to the
Act's coverage with relative ease.
Section 21 of the WE repeals the overtime exemption for any
driver, operator, or conductor employed by an employer engaged in
the business of operating a street, suburban, or interurban electmc
railway, or local trolley or n:.otortus carrier, if the rates and services
of such railway or earlier are subject to regulation by a State or local
agency.
The existing overtime exemption applicable to such employees is
modified by requiring the payment 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 40 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
the employee is assigned to perform or which he is otherwise required
to perform as part of his regular workday or workweek.
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.
Approved For Release 2002/01/23 : CIA-RDP75B0038OR000800030003-2
 Approved For Release 2002/01/23 : CIA-RDP75B0038OR000800030003-2
31
Such problems as piecework, on-cull-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 70% of the employees
organized. A review of the relevant collective bargaining agreements
discloses that more than 88% are covered by a 40-hour workweek and,
in many cases, an 8-hour workday. It is evident then, that the "prob-
lems" 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 industry.
Section 19 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 I-louse 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 Con-
gress a report in January 1970, consisting of two volumes with 675
pages of data and findings. The Secretary urged Congress in his "Find-
ings and Recommendations :"
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
Approved For Release 2002/01/23 : CIA-RDP75B0038OR000800030003-2
 Approved For Release 2002/01/23 : C,4-RDP751300380R000800030003-2
paying time and one-half rate, for overtime hours now. Some .indus-
tries using the 20 weeks of exemptions are less seasonal than those using
only the 1_ weeks. The universal 40-hour standard would remove intra
industry inequities. The use of second and third shifts could be in-
creased. 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 tie exemptions were most likely to be
claimed. The drop in man-hours 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 exemp-
tions immediately. They argued that Secretary Shultz's please-out
recommendations will already be 5 years old by the time the 1974
.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 report 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 war more desirable than immediate re-
peal 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 phase-out period, the exemption should be strictly
limited to those agricultural commodities which meet the requirements
of the statute.
The committee has also heard complaints against the phase-cut
of the exemptions. However, the committee is not unmindful that
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 7(a) of the bill contains the following Congressional
finding :
That Congress further finds that the employment of per-
sons in domestic :ervice in households affects commerce.
Approved For Release 2002/01/23 : CIA-RDP75B0038OR000800030003-2
 Approved For Release 2002/01/233RCIA-RDP75B0038OR000800030003-2
Subsection (b) provides a minimum wage rate for such employees
of not less than $1.90 an hour effective on the first day of the second
fall month after the date of enactment, $2.00 an hour* effective Janu-
avy 1, 1975, $2.20 an hour effective January 1, 1976, and $2.30 an hour
effective January 1, 1977. These rates would be applicable to a do-
mestic service employee who in any workweek is employed in domestic
service for more than 8 hours in the aggregate in one or more house-
holds. 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, babysitters employed on a casual basis and em-
ployees employed in the capacity of companion to an individual who,
by reason of older age or infirmity, necessitates a companion. The bill
also exempts from the overtime requirements, domestic service em-
ployees who reside, in the household of their employment.
The bill would extend coverage to an estimated 1,285,000 employees
employed in domestic service, out of a total of about 2 million such
employees. Approximately 935,000 of those proposed to be covered
currently earn less than $1.90 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 -ages and working conditions, employ-
ees performing domestic service work are generally excluded from
minimum wage laws, unemployment compensation, and workmen's
compensation. They invariably receive no benefits such as sick leave
and paid vacations, and their transportation to and from their work-
place often takes up to two hours in one day. And as one witness before
the committee poignantly noted, they have no appeal against the em-
ployer who calls suddenly in the morning, or announces upon arrival,
"fire won't need you, after all.."
Their disabilities 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 then,
who earn too little to adequately survive, much less to save for advanc-
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
29-935-74-3
Approved For Release 2002/01/23 : CIA-RDP75B0038OR000800030003-2
 Approved For Release 2002/01/23 : CIA-RDP75B0038OR000800030003-2
34
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 wanes and long; hours, but the widespread conviction that these
are &2-end jobs. Including domestic workers under the protection of
the Act should help to raise the status and dignity of this wor!i.
At this point, it is appropriate to include the following letter from
women Members of this C'ongr'ess to the Chairman of the subcornnrit-
tee, with respect to the coverage of domestic workers under the Act.
Hon. Jr)IIN 11. DENT,
IIoU SE OF
Rra~rrsr;Z~r.~Trvrs,
TT'ashin.gton, D.C.. April
Chaiem,aa, General Subco-mmit'ee on Labor,
Rayburn tiovse O#.see B'u lding, 1'G' sh;,nytorr, D.C.
Dl_ In Mu. CIAIRTMAN: We have heard rumors that your Snbconi-
mittee 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 variety of political attitudes and ap-
proac.hes and do 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 II.E.W. Report "Work in America," December, 1972,
(p. 42), the income profile for American workers is as follows:
Median, income, 1,969
All nialc"?------------------------------------------------------------- $6,429
Minority males------------ - - 3, 891
All females 2, 132
Minority females - ----------------------------------------- :L,084
Contrary to popular opinior_, women work not for "pin money" but
because they have to. They are either the head of the household or con-
tribute substantial?y to their family's income.
For example:
According to the 1970 Census, 11% of all American households are
headed by women.
Among Black families, 28% are headed by women.
Further, female headed households are growing. In 1960. 2'x%0 of
all marriages ended in divorce, or annulment. By 1970, the figure was
up to 35%.
Among married women in 1970, 8 million earned between .;4.000 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,(909).
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 worsen are struggling to make ends meet and keep their fam-
ilies tor,-ther. They are proud hard workers who are doing their,
Approved For Release 2002/01/23 : CIA-RDP75B0038OR000800030003-2
 Approved For Release 2002/01/25 CIA-RDP75B00380R000800030003-2
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 "ggetting 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 CII1s1IOLl4r,
Member of Congress.
MARJORIE S. HOLT,
Member of Congress.
L1,.oN0R K. SULLIVAN,
Member of Congress.
YVONNE BRATIIWAITE BURKE,
Member of Cogagress.
PATSY T. MINI[,
Member of Congress.
JULIA BUTLER ILiNSEN',
Mewnlber? of Congress.
EDrrII GREEN.
Member of Congress.
MAr,T.r1[A 1V. GRU?FiTns,
Member of
Congress.
I+,LLA T. GRASSO,
Member o l Congress.
BELL A S. ABZuf1,
Member of COm7ress.
E LI Z A BE TII I-IO LTZMA N,
Mem,berr of Congress.
BARBARA JORDAN,
Member of
Congress.
PATRICIA ScI IROI DER,
Member of Congress.
The term "domestic service" employees is not defined in the Act.
However, the generally accepted meaning of domestic service relates
to services of a household nature performed by an employee in or
about a private home of the person by whom he or she is employed.
The domestic service must be performed in a private home which is a
fixed place of abode of the individual or family. A separate and dis-
tinct dwelling maintained by the individual or family in an apart-
ment house or hotel may constitute a private hone. however, a
dwelling house used primarily as a boarding or lodging house for the
purpose of supplying such services to the public, as a business enter-
prise, is not a private hone.
Generally, domestic service in and about a private home includes
services performed by persons employed as cooks, butlers, valets,
maids, housekeepers, P,overnesses. lanrtors, laundresses, caretakers,
handymen, gardeners, footmen, 'rooms, andchauf furs of automobiles
Approved For Release 2002/01/23 : CIA-RDP75B00380R000800030003-2
 Approved For Release 2002/01/23 : CIA-RDP75B0038OR000800030003-2
3G
for family use. The regulations issued under the Social Sec-:ar?it'T Act
also include babysitters. See l.3121(a) (7)-1(a) (2).
It is the intent of the committee to include within the coverage of
the Act all employees whose vocation is domestic service. However, the
exemption reflects the intent of tlu( committee to exclude from cov-
erage babysitters for whom domestic service is a casual form of em.-
ployment and companions for individuals who are unable because of
age and infirmity to care for themselves. But is not intended. that
trained personnel such as nurses, whether registered or practical, shall
be excluded. People who will be employed in the excluded categories
are not regular bread-winners or responsible for their families' sup-
port. The fact that persons performing casual services as babysitters
or services as companions do some incidental household work does not
keep them from being casual 'xibysitters or companions for purposes
of this esclersion.
In cases in which the domestic service employee resides on the
employer's premises, the specific provision of the S cretary's, interpre-
tative bulletin relating to hours worked by such an employee xould
be applicable (see 29 CI R. 785.23). Ordinarily such an employee en-
gages in normal private. pursuits such as eating, sleeping, and enter-
taining. and has other periods of complete freedom. In Such a case it
would be difficult to determine the exact hours worked. Accordingly,
any reasonable agreement of the parties which takes into consideration
all of the pet?tinent facts will be accepted as a proper basis for deter-
mining hours worked. This 1?ule has been applied by the courts in
analogous cases. See, e.g., Skelly Oil Co. v. Jackson, 194 Okla. 183,
148 P.2d 182 (Oklti. Sup. Ct. 1tt144) .
The committee is confider.t that appropriate methods to ensure
compliance can be fashioned within the authority of the Secretary of
Labor under the Act. The committee calls attention, for example,
to the provisions of the law and the Secretary of Labor's regulations
which credit the employer with the reasonable value of board and
lodging furnishec_ to an employee. These provisions, coupled with the
1-1
provision for an overtime exemption for live-in domestics, as provided
in the bill,, will serve to minimize any problems which might arise in
the application of the law.
THE, Y Dune EMPLOYMENT PROJECT
The committee previously considered and rejected the idea that the
Fair Labor Standards Act should incorporate a new special submini-
mum -wage rate for non-school youth. The rejection was based not only
on the majority belief that this would violate the basic objective of
the Act. but also that such a standard would contribute to rather than
ease the critical problem of unemployment, including unemployment
of youths and minority groups.
Bert the committee does not object to the development and implemen-
tation of a limited pilot project in employing establishments in which
wages lower than the mmtmum wage rate applicable under section 6
of the Act; are permitted to determine the effects of such lower wages
on the. employment patterns of young and adult workers.
As an example of a project established administratively, tie com-
mittee notes with interest the Work Experience and Career Esplora-
Approved For Release 2002/01/23 : CIA-RDP75B0038OR000800030003-2
 Approved For Release 2002/01/23 : CIA-RDP75B0038OR000800030003-2
37
tion Program (WECEP), presumably designed for school dropout-
prone 14- and 15-year old youth. The Department of Labor in 1969,
pursuant to a presumption of some authority under the student-
learner provisions of section 14(a) of existing law, created I'ECEP.
Since its inception, it has grown to approximately 17,700 students
working part-time under its scope.
The committee is aware that many of these students are being paid
at a wage rate less than the otherwise applicable minimum wage rate
under certificates issued by the Secretary. The committee is also ad-
vised that about 50 percent of the student-learners employed in non-
public employment under certificates issued by the Secretary, were .
employed, in food related industries; and specifically, in occupations
which seem to require virtually no degree of skill. The committee in-
tends to invesigate WECEP under its oversight authority, but ex-
pects the Secretary to immediately report on all aspects of 11TECEP,
concluding the statutory authority for its existence.
Given recognition of the increasing establishment of such programs
as WECEP in the absence of a clear Congressional mandate, the com-
mittee expects that the Secretary will. establish this limited pilot proj-
ect for the employment of youth within the parameter of the qualifica-
tions set forth below.
The committee intends that the qualifications which follow be
strictly applied to this pilot project:
(1) The number of emploing establishments participating in such
project cannot exceed eight' (8) at any given time and shall, to the
extent feasible, be geographically distributed so as to fairly represent
all regions of the United States;
(2) The Secretary shall designate such establishments, with due re-
gard for avoiding the creation of unfair labor cost advantages and
impairing or depressing wage or working standards established for
experienced workers for work of a like or comparable character in the
industry ;
O The maximum number of workers which any employer may
be authorized by the Secretary to employ by a special certificate
issued under this pilot project shall not exceed the lesser of five per-
cent of the total number of workers in such establishment, or 100;
(4) The special minimum rates of such workers shall be not less
than 80 percent of the otherwise applicable minimum wage rate pre-
scribed by section 6 of the Act ;
(5) The project shall be administered consistent with all purposes
and provisions of the Act;
.(6) The issuance of any such certificate shall be necessary in order
to prevent curtailment of opportunities for employment;
(7) The issuance of any such certificate shall not create a substan-
tial probability of reducing the full-time employment opportunities
for other workers ;
(8) The employment for which such certificates are issued shall
provide a responsible work experience;
(9) The Secretary shall not designate or continue designation as
a participant in this project, any employer who has violated any pro--
vision of the Act which has not been remedied or which provides
reasonable grounds to conclude that the terms and qualifications, of
the project may not be complied with, nor any employing establish-
Approved For Release 2002/01/23 : CIA-RDP75B0038OR000800030003-2
 Approved For Release 2002/01/23 : CIA-RDP75B0038OR000800030003-2
tnent where abnormal labor cond-tions such as a strike, lock-out, or
other similar conditio'l exists; and
(10) This pilot project s4=ill be designed so as to reasonably assure
that, all such workers will continue in the, employment of the employer
after the termination of such prcjcct, at a rate equal to or in excess
of the mmbourn wage rate prescribed by section 6 of the Act, and the
Secretary is expected to obtain in writing satisfactory assurances
from each such employer to that effect.
In order that the Congress may benefit from the knowledge derived
from this project, the committeee intends that the project, conclude
by December 31, 1976, and that the Secretary draw conclusions the' e-
from_ and make a final report to the Congress not earlier than March 1,
1977 , but not later than July 1, 1077. '1'he Secretary may include with
his report reconmenc"ations, if arrv, with respect to appropriate legis-
lative action. The committee also intends that the Secretary provide
it with data. and information with respect to the project on a periodic
basis prior to the submission of his final report.
As a sequel to the discussion oil the flees for and glue probable effects
of a subruinirnnni wage for vour.h, the peripheral question of special
wage rates for full-time students was examined.
The legislative history of section ~4(b) and 14(c) of the Act was
studied to determine the Congressional untent. in establishing special
rates for students.
The Act currently permits the employment of full-time students on
apart-time basis ((r full-time during vacations and holidays) in retail
and service establishments and in agriculture under special certificates
issued pursuant to regulations o the Secretary of Labor at a age rate
not less than 8.i percent of the applicable minimum wage. These cei?t:ifi-
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 subminirnunt rates.
In revising section -4 of the Act to inchtde full-time students, the. cont-
rnittee sought. through the issuance of certificates. to provide a.n ineen-
tive for employers to hire students while providing assurances that
adult workers would not be advarsely affected.
This consideration was clear:y spelled out in the report accompany-
ing II.R. 3935 (11. Iiept. No. 75. 87th Congress, 1st Session, March 13.
1061,p.11):
The purpose of this provision is to provide ernployrnent
opportunities for students Who desir0 to work part time
outside of their school licurs without displacement of adu"t
workers.
The 1966 amendments to the Act further revised section 14 with
respect to full-time students in retail and service establishni ont.s and
added a provision for students in agriculture.
The report accompanying F_.R. 13712 (11. Rcpt. No. 1,366, 89th Con-
gress, 2nd Session, March 29, 1906) explained that the full-time student
certificates were to be issued to "students regardless of age (out in
Approved For Release 2002/01/23 : CIA-RDP75B0038OR000800030003-2
 Approved For Release 2002/01/23 : CIA-RDP75B0038OR000800030003-2
39
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.
The committee agrees with the statements expressed in the 1961
and 196C). reports and proposes in the bill to somewhat expand the
scope of section 14 of the Act. 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 adminis-
trative procedure to be followed by prospective employers of four or
fewer students is lessened from existing law.
Up to four students may be hired without the traditional pre-
certification procedure. (that is, a prior finding of no substantial prob-
ability of job displacement bee issuance (A certificates). Employ
ment of five or more students requires such pro-certification. However,
regardless of the number of students to be hired, the bill deletes the
historical experience test concerning the proportion of student hours
worked during a base year.
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 in employer, 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 employ-
ment opportunities" of other workers.
Also, the, committee is aware that the Secretary-under the pro-
visions 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 ensure
that lie is not thereby adversely affecting the employment oppor-
tunities of non-student workers.
The bill also provides for the employment by institutions of higher
education of full-time students enrolled in such institutions at the
student rate, without regard to the certification requirements, and
authorizes the Secretary to undertake safeguards to assure this pro-
vision is not abused. The bill also provides that the Secretary may
waive the minimum wage and overtime provisions of the Act with
respect to a, student employed by his elementary or secondary school,
where such employment constitutes an integral part of the regular
educational program provided by the school,
HOTELS, MOTELS, AND IiPSTAIIRANTS
The bill eliminates the. complete overtime exemption for employees
employed by hotels, motels, and restaurants and substitutes a limited
overtime exemption as follows :
During the first year of coverage, overtime compensation will be
required for hours of employment in excess of 48 per week, and after
the first year, such compensation will be required for hours of, em-
ployment in excess of 46 per week. For maids and custodial employees
Approved For Release 2002/01/23 : CIA-RDP75B0038OR000800030003-2
 Approved For Release 2002/01/23 i6-'IA-RDP75B00380R000800030003-2
of hotels and motels, the continued phaseout is as follows: 44 hours
in the third year, and 40 hours per week thereafter.
The committee intands 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 fr.nctions, who keeps the facility clean, who tends
the heating system, makes minor repairs, and the like. It would include
housemen and gardeners. 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, rest .grant, and the like. It would include ern-
ployees engaged in laundering, cleaning, or repairing clothing, or fab-
rics. Overtime protection then, would be afforded to those who have
heavy duties such as laying carpets and ruts and arranging furniture
and to those. who have light duties such as making beds, dusting furni-
ture, and replenishing linen.
The bill amends the Age Discrimination in Employment Act cf 1967
to include within the scope of its. coverage Federal, State, and local
government employees (other than elected officials and certain aides
not covered by civil service), and to expand coverage from employers
with 25 or more employees to employers with 20 or more employees.
The annual authorization of appi?opr iations ceiling was raised from
$3 million to $5 million. The Administration has also proposed such
an extension of coverage for State and local government employees.
The amendment is a logical extension of the corntnittee's decision to
extend FLSA coverage to Federal, State, and local government
employees.
The ADEA prohibits discrimination in employment on the basis of
age in matters of hiring, job retew:ion, compensation, and other terrrms,
conditions or privileges of employment. Protection under the Act: is
limited to individuals who are bei:weeit the ages of 40 and 65.
As the President said in his message of March 23, 1972, supporting
such an extension of coverage under the ALFA, "Discrimination
based on age--what some people call `age-ism'-can be as great an
evil in our society as discrimination based on race or religion or any
other characteristic w_7ich ignores a person's unique status as an id.i-
vidual and treats him or her as a member of some arbitrarily-defined
group. Especially in the employment field, discrimination based on
age is creel and self -defeating, it destroys the spirit o f those who want
to work and it denies the National the contribution they could make if
they were working."
The committee was impressed b-,, a press release issued by then Sec-
retary of Labor Hodgson on February 4, 1972 which was headed:
"Voluntary Compliance with Age Disu'rimination Laws Opens Up I
Million Jobs, Secretary of Labor Tells Congress". The release states
that informal talks with some 30,000 employers dispelled "precon-
ceived notions or myths" about the older worker.
The committee expects that expanded coverage under the Age Dis-
crimination in Employment law will remove discriminatory barriers
Approved For Release 2002/01/23 : CIA-RDP75B0038OR000800030003-2
 Approved For Release 2002/01/23 : clA-RDP75B00380R000800030003-2
against employment of older workers in government jobs at the Fed-
eral and local government levels as it has and continues to do in private
employment.
Section 26 of the committee bill amends section 16(c) of the Act to
authorize the Secretary of Labor not only to bring suit to recover un-
paid minimum wages or overtime compensation, a right which the Sec-
retary currently has, but also to sue for an equal amount of liquidated
damages without requiring a written request from an employee. How-
ever, the committee intends that liquidated damages when recovered by
the Secretary, are recovered in behalf of and for the benefit of the em-
ployee. Further, the committee intends that the good faith defense
DDrorisions of Section 11 of the Portal-to-Portal Act of 1947 are not
in any way diminished and are applicable to claims by the Secretary
for liquidated damages.
The committee also acted on an amendment to Section 16(b) of the
Act to make clear the right of individuals employed by state and
local. governments and political subdivisions to bring private actions
to enforce their rights and recover back wages under this Act. This
amendment is necessitated by the decision of the U.S. Supreme Court
in Missouri, et al. (April, 1973) which held that Congress in extend-
ing coverage under the 1966 amendments to school and hospital em-
ployees in state and local governments (lid not explicitly provide the
individual a right of action in the Federal courts although the Secre-
tary of Labor was authorized to bring such suits. In addition the
committee included an amendment. to the Portal-to-Portal Act of 1947
which would preserve existing actions brought by private individuals
whirh would otherwise be barred by the statute of limitations as a
result of the April decision.
Both amendments were included at the request and recommendation
of the Administration and the Secretary of Labor.
Section 9 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
ton 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
exemption is provided in existing law, but section 19 of the bill would
reduce and ultimately repeal such exemption but for this section of
the bill.
Pursuant to the requirements of clause 7 of Rule XITI 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 1974. The cost estimate for fiscal year 1974 is $250,000.
Approved For Release 2002/01/23 : CIA-RDP75B0038OR000800030003-2
 Approved For Release 2002/01/234.2CIA-RDP75B0038OR000800030003-2
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 prop ides, 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, ?ommittee estimate.
Approved For Release 2002/01/23 : CIA-RDP75B0038OR000800030003-2
 Approved For Release 2002/01/23 : CIA-RDP75B0038OR000800030003-2
SECTION-BY-SI.CTION DESCRIPTION OF TIIE BILL AS REPORTED
The following is a description of H.R. 12435 as reported by the
Committee and of the changes made in the Fair Labor Standards
Act of 1938 (referred to in the description as the "Act") by sections
2 through 27 of the bill and the changes made by section 28 to the
Age Discrimination in Employment Act of 1967:
Section 1. Short Title; References to Act.-Subsection (a) provides
that the bill when enacted may be cited as the "Fair Labor Standards
Amendments of 1974". Subsection (b) is a technical provision.
Section 2. Increase 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 employees covered
by the Act prior to the effective date of the 1966 amendments and for
Federal employees covered by the 1966 amendments (wage board
employees and employees of nonappropriated fund instrumentalities
of the Armed Forces). The minimum wage rate for such employees
is raised from not less than $1.60 an hour to (1) not less than $2 an
hour during the period ending December 31, 1974, (2) not less than
$2.10 an hour during the year beginning January 1, 1975, and (3) not
less than $2.30 an hour beginning January 1, 1976.
Section 3. Increase in Minimum Wage Rate for Nonagricultural
Employees Covered in 1966 and 1973.-This section amends section
6(b) of the Act to provide an increase in the minimum wage rate for
nonagricultural employees (other than Federal employees) covered by
the 1966 amendments to the Act and for employees covered by the
1974 amendments. The minimum wage rate for such employees is
raised from not less than $1.60 an hour to (1) not less than $1.90 an
hour during the period ending December 31, 1974, (2) not less than $2
an hour during the year beginning January 1, 1975, (3) not less than
$2.20 an hour during the year beginning January 1, 1976, and (4) not
less than $2.30 an hour beginning January 1, 1977.
Section 4. Increase in Minimum Wage Rate for Agricultural Em-
ployees.-This section amends section 6(a)(5) of the Act to provide
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 during the period ending December 31, 1974, (2) not less than
$1.80 an hour during the year beginning January 1, 1975, (3) not less
than $2 an hour during the year beginning January 1, 1976, (4) not
less than $2.20 an hour beginning January 1, 1977, and (5) not less
than $2.30 an hour during the year beginning January 1, 1978.
Section 5. Increase in Minimum Wage Rate for Employees In Puerto
Rico and the Virgin Islands.-
(A) Government, Hotel, Motel, Restaurant, and Food Service Em-
ployees.---Subsection (a) of this section amends section 5 of the Act
to provide that the minimum wage rate for hotel, motel, restaurant,
(43)
Approved For Release 2002/01/23 : CIA-RDP75B0038OR000800030003-2
 Approved For Release 2002/01/23 : CI,A-RDP75B00380R000800030003-2
food service, and Government of the United States and the Virgin
Islands employees in Puerto Rico and the Virgin Islands shall be
determined as if such employees were employed in one of the 50 States.
Thus, the wage rate for such employees will not be determined
through the wage order process provided in section 6(c) of the Act.
(B) Other Employees in Puerto Rico and the Virgin Islands.--Sub-
section (b) of this section amends section 6(c) of the Act to increase
the minimum wage rate for employees in Puerto Rico and she Virgin
Islands who are subject to the wage orders issued under the Act.
The amended section 6(c) (2) of the Act provides an initial increase
(effective on the first day of the second full month beginning, after the
date of the enactment of the bill) in the wage order rates of emp:.oyees
covered by the Act before the 1974 amendments. The initial increase
is $0.12 an hour for wage order rates which are presently under $1.40
an hour and $0.15 an hour for wage order rates which are presently
$1.40 or more an hour; except that if the prescribed initial increase
will yield a wage order rate less than a rate equal to the higher of
60 percent of the otherwise applicable rate under the Act or S1 an
hour, the initial increase shall be adjusted to yield the higher rate.
Beginning a year after the initial increase, additional annum increases
are authorized until the wage ;'ate is equal to the otherwise applicable
rate under section 6(a) or 6(b) or would be greater than such rate if
.the increase were made. The additional increase shall be $0.12 an
hour for wage order rates under $1.40 and $0.15 for wage order rates
of $1.40 or more. In the case of an agricultural employee whose
hourly wage is increased (above that required by wage order) by a
subsidy paid by the Government of Puerto Rico, the increases
(initial and additional annual) authorized by section 6(c)(2) shall
be applied to the sum of (1) the wage order rate, and (2) the amount
,of the subsidy. When the wage rate of an employee is equal to the
otherwise applicab.e rate under section 6(a) or 6(b) or would be greater
if the authorized increase were made, section 6(c) shall be inapplicable
to such employee and his minimum wage rate shall be determined under
section 6(a) or 6(b), as the case may be.
The amended section 6(c)(3) of the Act provides for the establish-
ment of special industry committees to recommend minimum wage
rates for employees newly covered by the 1974 amendments (including
employees of the Government of Puerto Rico and its political subdivi-
sions). The recommended rates cannot be less than 60 percent of the
otherwise applicable rate under section 6(b) or $1 an hour, whichever
is higher. With the exception of employees of the government of Puerto
Rico or any political subdivisicn thereof, the wage rate of an employee
which is established under the amended section 6(c) (3) will be annually
increased as provided in the amended section 6 (c) (2).
Section S is amended to require that special industry committees,
established to recommend wage order rates, recommend the min:,mum
wage rate that would be applicable under section 6(a) or 6,b) unless
there insubstantial documentary evidence (including pertinent finan-
cial or other appropriate information) that establishes an inability
to pay that rate. Section 10 is amended to authorize a United States
court of appeals, upon review of a wage order issued under section 8,
to specify the minimum wage rate to be included in the wage order.
Section 6. Federal and State Employees.-Through a series of amend-
ments to the definitions in section 3 of the Act the minimum wage
Approved For Release 2002/01/23 : CIA-RDP75B0038OR000800030003-2
 Approved For Release 2002/014%3 : CIA-RDP75B0038OR000800030003-2
and overtime provisions of the Act are extended to the following public
employees not covered by the 1966 amendments: (1) Employees of.
the Government of the United States (who are employed as civilians
in the military departments, or are employed in an Executive depart-
ment, Government corporation, independent establishment, unit of
the legislative or judicial branch which has positions in the competitive
service, or the Library of Congress); (2) employees of the United States
Postal Service or the Postal Rate Commission; and (3) employees of
States, political subdivisions of States, and interstate governmental'
agencies (other than employees not under local civil service laws who
hold elective office or are on the personal staff of such an office holder,
are immediate advisers to him, or are appointed by him to serve on a
policy making level). The Civil Service Commission will administer
the application of the Act to the employees described in clause (1),
except that the Librarian of Congress may be authorized by the
Secretary to administer it with respect to employees under him.
Section 13(b) of the Act is amended to provide an exemption from
overtime for employees of the United States, States and political
subdivisions who are engaged in fire protectoin or law enforcement
activities (including employees who arc security personnel in correc-
tional institutions).
Section 16(b) of the Act is amended to make it clear that suits by
public employees to recover unpaid wages and liquidated damages
under such section may be maintained in a Federal or State court of
competent jurisdiction. This amendment is intended to overcome that
part of the decision of the Supreme Court in Employees of the Depart=
ment of Public Health v. Missouri (93 S. Ct. 1614, April 18, 1973) which
stated that Congress had not explicitly provided in enacting the 1966
amendments that newly covered State and local employees could
bring an action against their employer in a Federal court under section
16. An amendment to the Portal-to-Portal Pay Act of 1947 extends
for six months after the enactment of the bill the statute of limitations
applicable to suits under section 16(b) to permit State and local
public employees who were denied recovery under section 16(b) in
suits brought in Federal courts before April 18, 1973, on grounds
that the Congress had not made it clear that State public employees
could bring suit in a Federal court under section 16(b).
Section 7. Domestic lPorlcers.-Subsection (a) amends section 2 of the
Act to add a finding of Congress that the employment of persons in
domestic service in households affects commerce.
Subsection (b) of this section amends section 6 of the Act to provide
minimum wage coverage at the section 6(b) rate (rate for employees
first covered in 1966 and 1974) for employees for domestic service
employment in one or more households in workweeks in which the
aggregate number of hours of such employment exceeds 8. The
requirements for coverage in any workweek are (1) that the employee
be employed in domestic service in one or more households, and (2)
the aggregate number of hours of such employment must exceed 8.
An employee need not be employed in one household for more than
8 hours in a workweek to be covered under the section 6(b) rate. The
test is the aggregate number of hours employed in household domestic
service in a workweek, not the number of hours employed in a particu-
lar household. Subsection (c) amends section 7 of the Act to provide
that if an employer employs an employee in domestic service in one
Approved For Release 2002/01/23 : CIA-RDP75B0038OR000800030003-2
 Approved For Release 2002/01/23 : CIA-RDP75B0038OR000800030003-2
46
or more households for more than forty hours in any workweek, such
employer shall be required to pay that employee in accordance with
the overtime provisions of section 7(a).
Two exemptions for domestic workers are provided. First, under an
amendment to section 13(a), sections 6 and 7 will not apply to em-
ployees who are employed on a casual basis to provide babysitting
services or to employees employed in domestic service to provide com-
panionship services for persons unable to care for themselves. Second,
under an amendment to section 13(b), section 7 (overtime) will not
apply to an :individual who is employed in domestic service in a house-
hold and who resides in such household.
Section 8. Retail and Service Establishments.-This section amends
section 13(a)(2) which provides an exemption from sections 6 and 7
for employees of certain retail or service establishments with more
than 50 percent intrastate business. If an establishment is within
a section 3(s) enterprise its employees are presently exempt if the
establishment has an annual dollar volume of sales of less than
$250,000. Effective July 1., 1974, the annual dollar volume test is
reduced to $225,000, effective July 1, 1975, it is reduced to 8200,000,
and effective July 1, 1976, it is repealed thus excluding from. the
exemption any retail or service establishment within a section 3(s)
enterprise.
Section 9. Tobacco Employees.-Under the amendments made by
section 19 to section 7(c) of the Act tobacco employees will-in
steps-no longer be exempt from section 7(a). Subsection (a) of this
section amends section 7 to retain a limited overtime exemption for
employees engaged in activities related to the sale of tobacco. For a
period or periods not to exceed 14 workweeks in the aggregate in any
calendar year overtime compensation must be paid only for employ-
ment in excess of 10 hours in any workday and 48 hours in any
workweek.
Subsection (b) of this section amends section 13 of the Act to repeal
the present minimum wage exemption for employees engaged in the
processing of shade-grown tobacco but retains the overtime exemption
for such employees.
Section 10. Telegraph Agency Employees.-This section amends
:section 13(a) (11) to repeal the minimum wage exemption for employees
of small telegraph agencies (an agency which is a section 13(a)(2)
exempt retail or service estab.ishm_ent and which has message rev-
enues of not more than $500 a month), and amends section 13(b) to
reduce and ultimately repeal the overtime exemption for such em-
ployees. During the first year after the effective date of the 1974
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 of 40 per week.
Section 11. Seafood Canning and Processing Employees.---This section
amends section 13(b)(4) of the Act to reduce and ultimately repeal
the overtime exemption for employees engaged in the processing and
canning of seafood. During the first year after the effective date of
the 1974 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 of 40 per week.
Approved For Release 2002/01/23 : CIA-RDP75B0038OR000800030003-2
 Approved For Release 2002/01/24: CIA-RDP75B0038OR000800030003-2
Section 12. Nursing Home Employees.-This section amends section
13 (b) (8) to repeal the limited overtime exemption (overtime required
for hours employed beyond 48 in any workweek) applicable to nursing
home employees and to provide in section 7 an overtime exemption
for such employees identical to that applicable to hospital employees.
The exemption would be pursuant to an employer-employee agreement
and provides an overtime exemption for employment up to 8 hours in
any workday and up to 80 hours in any 14-day consecutive work
period.
Section 13. Hotel, Motel, and Restaurant Employees and Tipped Em-
ployees.-This section amends section 13 (b) (8) of the Act to reduce
the overtime exemption for hotel, motel, and restaurant employees
and to ultimately repeal the overtime exemption for employees of
hotels and motels who perform maid or custodial services. During the
first year after the effective date of the 1974 amendments, overtime
compensation must be paid to all hotel, motel, and restaurant em-
ployees for hours worked in excess of 48 per week. During the next
year and each year thereafter such employees (other than hotel or
motel maids or custodians) shall be paid overtime compensation for
hours worked in excess of 46 per week. In the case of hotel or motel
maids or custodians, overtime compensation is required, during the
second year from such effective date, for hours worked in excess of 46
per week; during the third year from such date, for hours worked in
excess of 44 per week; and thereafter, for hours worked in excess of 40
per week.
Section 3(m) of the Act is amended to provide that with respect to
tipped employees the tip credit provision of the Act (employer re-
ceives credit against his minimum wage obligation to a tipped em-
ployee in an amount not to exceed 50 percent of applicable minimum
wage rate) is not to apply unless the employer has informed each of
his tipped employees of the tip credit provision and all tips received
by a tipped employee have been retained by the tipped employee
(either individually or through a pooling arrangement).
Section 14. Salesmen, Partsmen, and Mechanics.-This section
amends section 13 (b) (10) of the Act to repeal certain overtime exemp-
tions and to add an overtime exemption. The overtime exemption for
partsmen and mechanics in nonmanufacturing establishments pri-
marily engaged in the business of selling aircraft and trailers is re-
pealed and an overtime exemption is provided for salesmen in non-
manufacturing establishments primarily engaged in selling boats. Con-
sequently, under section 13(b) (10) salesmen in n.onmanufacturing
establishments primarily engaged in selling aircraft, automobiles,
trucks, trailers, farm implements, and boats will receive an overtime
exemption, and partsmen and mechanics in nonmanufacturing estab-
lishment primarily engaged in selling automobiles, trucks, or farm
implements will receive such an exemption.
Section 15. Food Service Establishments.-This section amends
section 13(b)(18) to reduce and ultimately repeal the overtime
exemption for employees of food service establishments.. During the
first year after the effective date of the 1974 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 of
40 per week.
Approved For Release 2002/01/23 : CIA-RDP75B0038OR000800030003-2
 Approved For Release 2002/01/23 : 9A-RDP75B0038OR000800030003-2
Section 16. Bowling Establishment Employees.-This section amends
section 13(b)(19) to reduce and ultimately repeal the overtime
exemption for employees employed in bowling establishments. Begin-
ning 1 year after the effective date of the 1974 amendments, such
employees must be paid overtime compensation for hours worked in
excess of 44 per week, and beginning 2 years after the effective date,
for hours worked in excess of 40 per week.
Section 17. Substi'.ute Parents for Institutionalized Children.-This
section amends section 13(b) to provide an overtime exemption for
couples who serve as house parents of children who are institutionalized
in a nonprofit educational institution by reason of being orphaned
or having one deceased parent. To be covered by such exemption such
employed couples must receive cash wages of not less than $10,000
annually, and reside on the premises of the institution and receive
their board and lodging without cost.
Section 18, Employees of Conglomerates.-This section amends
section 13 to provide that the exemption in section 13(a)(6) (agri-
cultural employees) will not apply to employees of establishments
within a conglomerate which has an annual gross volume of business
of more than $10 raillion; and to provide that the exemption in
section 13(a)(2) (certain intrastate retail or service establishments)
will not apply to employees of such establishments beginning July 1,
1976. Such exemption will also not apply to employees of such. est%.b-
lishments beginning on the effective date of the 1974 amendments
unless during the period beginning on the effective date of the 1974
amendments and ending June 3), 1974, the establishment in which
such employee is employed had an annual gross volume of sales of
less than $250,000; (luring the year beginning July 1, 1975, it had
an annual gross volume of sales of less than $225,000; or during he
year beginning July 1, 197:5, the establishment had an annual gross
volume of sales of less than $200,000. A conglomerate is an arrange-
ment between two or more establishments under which one establish-
ment controls, is controlled by, or is under common control with,
another establishment the activities of which are not related for a
common business pu-pose to, but materially support, the activities
of the other establishment.
Section 19. Seasonal Industry 1mployees.--This section amend see c-
tions 7(c) and 7(d) to reduce and ultimately repeal the overtime ex-
emption for employees in seasonal industries and agricultural proc-
essing. 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 over-
time exemption for employment 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 dies qualify.
The overtime exemption for employment in seasonal industries is
reduced to 48 hours in any workweek for not more than 7 workweeks
beginning January 1, 1974, for not more than 5 workweeks beginning
January 1, 1975, and .for not, more than 3 workweeks during the year
Approved For Release 2002/01/23 : CIA-RDP75B0038OR000800030003-2
 Approved For Release 2002/01/2] : CIA-RDP75B0038OR000800030003-2
beginning January 1, 1976. The overtime exemption for employment
in agricultural processing is reduced to not more than 7 workweeks
beginning January 1, 1974, not more than 5 workweeks beginning
January 1, 1975, and not more than 3 workweeks during the year be-
ginning January 1, 1976. In the case of an employer who does not
qualify for the overtime exemption under both categories, the exemp-
tion is reduced from 14 workweeks during the calendar year to 10
workweeks during calendar year 1974, to 7 workweeks during calendar
year 1975, and to 5 workweeks during calendar year 1976. Effective
December 31, 1976, the overtime exemptions are repealed.
Section 20. Cotton Ginning and Sugar Processing .Employees.-This
section amends section 13(b) to limit the existing overtime exemption
applicable to certain cotton ginning employees and to employees en-
gaged in the processing of sugar beets, sugar beet molasses, or sugar
cane into sugar (other than refined sugar) or syrup. Under the new
sections 13(b)(25) and 13(b)(26) overtime compensation will be
required for such employees during the workweeks listed in the first
column of the following table for employment over the hours specified
in the second column of such table:
Hours of work permitted during each such work-
week without payment of overtime
compensation
1974
1975
1976 and
Annual workweeks
thereafter
6 weeks----------------------------------------------------------
72
66
60
4 weeks----------------------------------------------------------
64
60
56
2 weeks----------------------------------------------------------
54
50
48
2 weeks
46
44
Workweeks in balance of year-------------------------------------- 48
44
40
Section 21. Local Transit Employees.-Subsection (a) of this section
amends section 7 of the Act to provide that in determining the hours of
employment of an employee of an employer engaged in the business of
operating a street, suburban or interurban electric railway, or local
trolley or motorbus carrier, 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) if employment
in such activities is not part of such employee's regular employment.
Subsection (b) of this section amends section 13 (b) (7) of the Act to
reduce and ultimately repeal the overtime exemption for any driver,
operator, or conductor employed by an -employer engaged in the busi-
ness of operating a street, suburban or interurban electric railway, or
local trolley or motorbus carrier. During the first year after the effect
tive date of the 1974 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 of 40 per week. -
Section 22. Cotton and Sugar Services Employees.-This section
amends section 13 to retain for certain cotton and sugar employees a
limited overtime exemption. The employees included under this
exemption are employees employed exclusively to provide services
necessary and incidental to (1) cotton ginning in a cotton ginning
29-935-74-4
Approved For Release 2002/01/23 : CIA-RDP75B0038OR000800030003-2
 Approved For Release 2002/01/23 : C3lfk-RDP75B00380R000800030003-2
establishment, (2) the receiving, handling, and storing of raw cotton
and the compressing of raw cotton at a cotton warehouse facility or
compress-warehouse facility, (3) the receiving, handling, storing, and
processing of cottonseed in an establishment primarily engaged in such
activity, or (4) the processing of sugar cane or sugar beets in an estab-
lishment. primarily engaged in such activity. These employees are
presently exempt for a limited period from overtime under section 7 (d)
which is repealed by section 19. Under the exemption provided by this
section in a new section 13(h) of the Act, for a period or periods not to
exceed 14 workweeks in the aggregate in any calendar year, overtime
compensation must be paid such employees only for employment in
excess of 10 hours in any workday and 48 hours in any workweek. An
employee who receives an exemption under the new section 13(h) may
not receive any other exemption under section 7 or 13.
Section,23. Other Exemptions.--Subsection (a) of this section amends
section 13 of the Act to repeal the minimum wage exemption for
employees of motion picture theaters and to retain their overtime
exemption.
Subsection (b) of this section amends section 13 of the Act to repeal
the minimum wage exemption for small logging crews (crews with not
more than eight employees) and to retain their overtime exemption.
Subsection (c) amends section 13(b) (2) to repeal the overtime
exemption for employees of oil transportation companies.
Section 2.1f. Employment of Students.-This section amends section
14 of the Act to revise the provisions respecting the employment of
students in retail or service establishments and in agriculture at less
than the applicable minimum wage and to provide new authority for
employment of students by educational institutions at less than the
applicable minimum wage. The amended section 14(b) of the Act pro-
vides 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 in retail and service establishments, agri-
culture, and institutions of higher education at which such students
are enrolled. Students may be employed at a wage rate of not less than
85 percent of the applicable minimum wage rate or $1.60 an hour
($1.30 an hour in agriculture), whichever is the higher (or in the case
of employment in Puerto Rico or the Virgin Islands, not less than
85 percent of the otherwise applicable rate under section 6(c) pursuant
to special certificates issued by the Secretary. Such special certificates
shall provide 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 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 it substant.,ial probability of reducing the full-time employ-
ment opportunities of other 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 of other workers. The
certification requirements are not applicable to the employment of
full-time students by an educational institution at which they are en-
Approved For Release 2002/01/23 : CIA-RDP75B00380R000800030003-2
 Approved For Release 2002/01/23 : qA-RDP75B0038OR000800030003-2
rolled unless the Secretary determines it is violating the other require-
ments of the section in its employment of students.
Sections 15 (prohibited acts) and 16 (penalties) of the Act will be
applicable to an employer who violates 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.
This section also amends section 14 of the Act to provide that the
Secretary may waive the minimum wage and overtime provisions of
the Act with respect to a student employed by his elementary or
secondary school, where such employment constitutes an integral
part of the regular education program provided by the school and is in
accordance with applicable child labor laws.
Section 25. Child Labor.-Subsection (a) of this section amends
section 12 of the Act to authorize the Secretary to require by regula-
tion that employers obtain from employees proof of their age.
Subsection (b) amends section 13 (c) of the Act to revise the applica-
tion of the child labor prohibitions of section 12 to employment in
agriculture. Presently, such prohibitions do not apply with respect to
any employee employed in agriculture outside of school hours for the
school district where such employee is living while lie is so employed.
Under the amended section 13(c) of the Act the child labor prohibi-
tions of section 12 will not apply to employment in agriculture of an
employee who is employed outside of school hours for the school
district where he is living while he is so employed and-
(1) if under 12, who is employed on a farm owned or operated
by his parents or guardian or with the consent of his parents
or guardian on a farm whose employees are exempt from the mini-
mum wage provisions of the Act;
(2) if 12 or 13, who is employed with the consent of his parents
or guardian or on the same farm with his parents or guardian, or
(3) who is 14 or older.
Subsection (c) of this section amends section 16 of the Act to au-
thorize the imposition of a civil penalty on any person who violates
the child labor prohibitions of section 12 (or regulations thereunder).
The Secretary is to determine the amount of the penalty and his
determination is final unless exception is taken to the determination
within 15 days of notice thereof. If exception is so taken the amount
shall be determined in an adjudicatory proceeding under section 554
of title 5 of the United States Code. In determining the amount of
the penalty the amount of the penalty shall be weighed against the
size of business of the violator and the gravity of the violation.
Section 26. Suits by Secretary.for Back Wages.-This section amends
section 16(c) of the Act (relating to suits by the Secretary). Under
the amendment the Secretary is not required to secure the consent
of an employee with respect to whom a violation of section 6 or 7
occurred before bringing an action under section 16(c) for the unpaid
wages due the employee plus an equal amount as liquidated damages.
In addition, the Secretary may bring such an action even though it
may involve issues of law not finally settled by the courts. If the
Secretary brings such an action, the right of such employee to bring
an action on his own behalf under section 16(b) of the Act is ter-
minated unless the action brought by the Secretary under section
16(c) of the Act is dismissed without prejudice on motion of the
Secretary.
Approved For Release 2002/01/23 : CIA-RDP75B0038OR000800030003-2
 Approved For Release 2002/01/:~3 : CIA-RDP75B0038OR000800030003-2
Section 27. Economic Effects Study.-This section amends section 4
of the Act to require the Secretary to conduct studies on the justifi-
cation or lack thereof fo;? each of the exemptions provided by sections
13 (a) and 13(b) of the Act. Such studies shall include an examination
of the extent to which employees of conglomerates receive the sections
13(a) and (b) exemptions and the economic effect of their inclusion
in such exemptions. The report on the study is due not later than
January 1, 1976.
Section 28. Nondiscrimination on Account of Age in Government
Employment.--This section amends the Age Discrimination in Em-
ployment Act, of 1967. The amendments to the Act (1) change the
number of employees an employer is required to have to be subject
to the Act from 25 employees to 20 employees for each working
day in each of 20 or more calendar weeks in a year; and (2) expand
the coverage of the Act to Federal, State, and local employees. The
Act prohibits discrimination in employment on the basis of age in
matters of hiring, job retention, compensation, and other terms;
conditions or privileges of employment. Protection under the Act is,
limited to individuals who are between the ages of 40 and 65.
Section 29. Effective Date.--Tbe amendments made by the Act;,
except as otherwise specifically provided in the provision making
the amendments, shall take effect on the first day of the second full
month which begins after the date of the enactment of the bill.
Approved For Release 2002/01/23 : CIA-RDP75B0038OR000800030003-2
 Approved For Release 2002/01/23 : CIA-RDP75B00380R000800030003-2
CHANGES IN ExisrlNG LAW I\IADE hY Tin: ISU,L, As Iti'POR1ED
In compliance with clause 3 of I?ule .III of the Rules of the House
of Representatives, changes in existing law made by the bill, as re-
ported, are shown as follows (existing law proposed to be omitted is
enclosed in black brackets, imw matter is printed in italic, existing- law
in which no change is proposed is shown in roman)
FAIR LABOR. STANDARDS ACT OF 1938
As Amended on the Effective. Date of the Fair Labor Standards
Amendments of 1974
Al 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."
FINDING AND DECLARATION OF POLICY
SEC. 2. (a) The Congress hereby finds that the existence, in indus-
tries engaged in commerce or in the production of goods for commerce,
of labor conditions detrimental to the maintenance of the minimum
standard of living necessary for health, efficiency, and general well-
being of workers (1) causes commerce and the channels and instru-
mentalities 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) constitutes 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) interfers with the orderly and fair marketing of
goods in commerce. The Congress further finds that the employment of
persons in domestic service in households affects 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
industries without substantially curtailing employment or earning
power.
DEFINITIONS
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.
(53)
Approved For Release 2002/01/23 : CIA-RDP75B00380R000800030003-2
 Approved For Release 2002/01/23 : C -RDP75B0038OR000800030003-2
(c) ",State" means any Stage of the United States or the District
of Columbia or any Territory or possession of the United States,
(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 cr carrier referred to in such sentence),
or] and includes a public agency, but does not include any labor orga-
nization (other than when acting as an employer) [,] or anyone acting
in the capacity 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 f such individual (A) is employed as a hand har-
vest laborer and is pa. ;d on i piece rate basis in an operation