FAIR LABOR STANDARDS AMENDMENTS OF 1972

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP73B00296R000400140001-2
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 145
• Document Creation Date: December 12, 2016
• Document Release Date: December 17, 2001
• Sequence Number: 1
• Publication Date: June 8, 1972
• Content Type: REPORT

Annrovedt iase.201
-- _ -- - _ - _-- _
; # Zatendar No: SUS
~
92n ?x,Ql!raRLSENATE { REPORT
2&ssion j No. 92-842
FAIR LABOR STANDARDS AMENDMENTS OF 1972
Mr. WILLIAMS, from the Committee on Labor and Public Welfare,
submitted the following
REPORT
together with
INDIVIDUAL AND MINORITY VIEWS
The Committee on Labor and Public Welfare, to which was referred
the bill (S. 1861) to amend the Fair Labor Standards Act of 1938, as
amended, to extend its protection to additional employees, to raise the
minimum wage to $2.25 an hour, to provide for an eight-hour work-
day, and for other purposes, having considered the same, reports
favorably thereon with an amendment in the nature of a substitute
and a title amendment, and recommends that the bill as amended do
pass.
SUMMARY
The purpose of this bill, as amended by the Committee, is to incor-
porate into the Fair Labor Standards Act a sufficient breadth of
coverage and a minimum wage level which will bring the Act closer
than at any time in its 33-year history to meeting its basic, stated
objective-the elimination of "labor conditions detrimental to the
maintenance of the minimum standard of living necessary for the
health, efficiency and general well being of workers."
The bill seeks to achieve this purpose by extending the law beyond
the 45.4 million currently covered employees to 8.4 million additional
workers employed in retail and service industries, Federal, State and
local government activities, on farms and as domestics in private
homes, and by increasing the minimum wage in steps to $2.20 an hour
as follows :
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Effective
date
1 year
later
2 years
later
3 years
later
Pre-1966 coverage -------_-
b
19
Cov
00
$
$
--------------
y
erage
66 and 1972 amendments ........... --
2.0
0
2.20
---
$2 00 ___
- ...... .-------.-_........
1.60
1.80
2.00
$2.20
The Committee bill extends minimum wage coverage to the follow-
ing additional workers :
ESTIMATED NUMBER OF NONSUPERVISORY EMPLOYEES BROUGHT UNDER THE MINIMUM WAGE PROVISIONS OF
THE FAIR LABOR STANDARDS ACT BY S. 1861, UNITED STATES I
]In thousands]
Presently
covered by
the minimum
Exempt or not covered by minimum wage
provisions of the FLSA
Industry sions of the FLSA
Total
S. 1861
S. 1861
All industries---____ 45, 383
14, 713
8,369-8,444
6,269-6,344
Private sector -------- ______-_ 42,056
9,786
3,442-3,517
6,269-6,344
Agriculture--------------- --------------------- 495
Mi
i
741
75-150
591-666
n
ng----------- ----
552
Contract construction
5
- - --- - -
5
------
----------------------
- 3,175
Manufa
t
i
15
____________
15
ur
c
ng------__
16,389
Trans
o
t
ti
107
__
45
62
p
r
a
on, communications , utilities_______________ 3,962
Wholesalele t
d
74
24
50
ra
e ----------------------- 2, 522
Retail trade
8
--------------
8
------- _---------------- 6,222
F
na
c
i
4,002
1,423
2
579
i
n
e,
nsurance, real estate _------------------------ 2,490
Servic
l
di
149
25
,
124
es (exc
u
ng domestic service)________________ 6,249
Do
ti
2,571
617
1
954
mes
c serVice----------- - - - - - - - - - - - - - - - _______________________
2,114
1,233
,
881
Public sector
-------- -- -._ _-- 3,327
4,927
4,927
--------------
-------------------------
Govern Federal ment641 1,726 1,726 --------------
----------------------- State andd local local government-----2,686 3,201 3,201 --------------
Includes all employees brought under the act by lowering the enterprise annual dollar volume test to $150,000 in
four stages and by eliminating the 13(a)(2) establishment exemption.
Note: Estimates exclude 2,015,000 outside salesmen and relate to May 1971 for agriculture, October 1971 for education,
and September 1971 for all other industries.
At present only 3 percent of the Nation's farms are covered by the
Fair Labor Standards Act. Tinder the Committee bill at least 90 per-
cent of all the Nation's farms will remain uncovered by the Act. The
only farms covered will continue to be the relatively large users of
agricultural labor. The shall family farm will continue to be exempt
from coverage under the Act.
The overwhelming majority of retail and service establishments will
remain exempt ender the provisions of S. 1861. Estimates furnished
the Committee indicate that at least 1 million retail and service es-
tablishments will continue to remain exempt from coverage. A com-
plete exemption for the so-called "Mom and Pop" stores will remain.
The present minimum wage of $1.60 an hour was established by
amendments to the Fair Labor Standards Act enacted in 1966. For
most workers the $1.60 rate went into effect on February 1, 1968 (an
interim raise from $1.25 to $1.40 was effective February 1, 1967). For
newly covered non-farm workers, the rate increased from $1.00 per
hour effective February 1, 1967, by 15? per hour per year, until the
$1.60 rate was reached February 1, 1971. For farmworkers, the rate
of $1.00 was established effective February 1, 1967, with increases
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of 15? per year until the present rate of $1.30 was reached, effective
February 1, 1969.
COMMITTEE CONSIDERATION OF LEGISLATION
The pending bill is the result of long and careful study. The Sub-
committee on Labor began public hearings on two bills (S. 1861 and
S. 2259) to amend the Fair Labor Standards Act of 1938 on May 26,
1971. Hearings continued throughout the summer for 17 days, con-
cluding on September 30, 1971. Testimony was received from over
100 witnesses, including Secretary of Labor James D. Hodgson and
other witnesses from government, labor, industry and other interested
groups. In addition, several hundred statements, letters, and addi-
tional pieces of written information were submitted and included in
the official hearing record.
On April 11, 1972, the subcommittee concluded 5 days of considera-
tion of S. 1861 in executive session and reported the bill to the full
committee. After 9 days of executive sessions, the Committee on
Labor and Public Welfare ordered reported to the Senate S. 1861.
The Committee also had before it the hearings on the bill reported out
by the House Committee on Education and Labor together with that
Committee's report dated November 17, 1971. In the later stages of the
Committee's deliberations, the Committee was able to consider S. 1861
in light of the House debates and with knowledge of the provisions in
the House minimum wage bill, H.R. 7130, which was passed by the
House on May 11, 1972.
BACKGROUND
On January 20, 1937 President Roosevelt, in his Second Inaugural
Address said :
"I see one-third of a nation ill-housed, ill-clad, ill-nour-
ished * * * The test of our progress is not whether we add
more to the abundance of those who have much ; it is whether
we provide enough for those who have too little."
The Fair Labor Standards Act of 1938 took effect on October 24,
1938. The Act is frequently referred to as a "depression measure" be-
cause many of its advocates stressed its importance as a tool, to prop
up the economy after the depression. During periods of recession, the
law is looked to as a support for wages ; during periods of prosperity
the law protects the low wage worker who finds himself frozen into a
pocket of low wages. At all times, it protects fair-minded employers
against those who compete unfairly by paying substandard wages.
The original Act provided for a minimum wage of 25 cents an hour,
which was to be increased to 30 cents at the end of a year, and to 40
cents by 1945. Industry Committees were authorized to recommend
rates above 30 cents prior to October 1945. All employees subject to
the minimum wane were required to be paid at least 40 cents an hour
by October 24,1945.
Actually, by virtue of the action of the Industry Committees, a
minimum wage of 40 cents was applicable to all workers covered by
the Act on July 1944, more than a year before the date set by the Fair
Labor Standards Act of 1938.
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The FLSA Amendments of 1949 increased the minimum wage from
40 cents to 75 cents an hour. During World War II and the postwar
period, many employees realized significant gains in purchasing
power. However, just as today, the minimum wage worker saw his
buying power eroded. An increase in the minimum wage from 40 cents
to 75 cents an hour, an increase of 871/2 percent, reflected the recogni-
tion by the Congress of the total inadequacy of the 40 cents rate.
During Congressional consideration of amendments to the FLSA,
culminating in the 1949 amendments to the Fair Labor Stand-
ards Act, numerous bills were introduced to extend the scope of cover-
age of the Act. These were not considered because at that time it was
believed that it would not, be feasible to simultaneously increase the
minimum wage and expand coverage. Although there was considerable
evidence that both were essential if the Act were to accomplish its
basic purposes, the Congress opted for an increase in the level of the
minimum wage and large numbers of low-wage workers remained
outside the scope of the Act.
By 1955, the buying power of the minimum wage of 75 cents an
hour had been severely reduced by the inflation which followed the
outbreak of the Korean War. Bills were introduced to raise the level
of the minimum wage and to expand the coverage of the Act. The
Congress elected to raise the minimum wage to $1.00, a 331/3-percent
increase, an hour but once again deferred consideration of the question
of coverage. In the 1961. amendments the Congress reflected the grow-
ing recognition that both an increase in the minimum wage and exten-
sion of coverage were essential if substandard living conditions were
to be eliminated. The minimum wage was raised to $1.25 an hour and
an additional 31/2 million workers, principally in the retail and con-
struction industries, were brought under the Act for the first time.
The effects of this dual approach to improving the Fair Labor
Standards Act were closely studied by the Department of Labor.
The studies clearly showed that the expansion of coverage under the
Act was of critical importance in reducing poverty among the working
poor. The 1961 amendments also showed that the economy could bene-
fit from an increase in the minimum wage and an expansion of cover-
age.
In his report to the Congress evaluating the effects of the 1961
amendments, Secretary of Labor Wirtz said :
"Two clear conclusions emerge from the studies so far
made. First, the 1961 minimum wage increases had no dis-
cernible effects on average wages in the economy generally.
There is no indication that these increases produced any gen-
eral upward pressure on the wage structure. Second, the 1961
minimum wage increases had no discernible effect on the na-
tionwide level of employment in the industries affected. On
an overall basis, employment has risen in these industries
since the 1961 amendments took effect."
"On balance, the data lead to the conclusion that the changes
in the law which became effective on September 3, 1.961
brought substantial benefits to low paid workers in many
areas of the country, and that. the increases in their incomes
and purchasing power had beneficial effects in the commu-
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Perhaps the most important aspect of the 1961 amendments was
that they reflected the rejection by the Congress of the argument that
substandard wages should be retained in some industries and occupa-
tions so as to provide a pool of low wage jobs.
With the 1966 amendments, the Fair Labor Standards Act came
closer than at any time in its history to achieving its basic goal. Both
in terms of breadth of coverage and the level of the minimum wage,
Congress finally legislated standards which would considerably di-
minish "labor conditions detrimental to the maintenance of a mini-
mum standard of living necessary for health, efficiency and general
wellbeing of workers." The increase in the minimum wage to $1.60
an hour meant that a worker who worked year around could provide
his or her family with something more than the poverty standard of
living as determined by the Federal Government. The extension of
coverage to approximately 11 million additional workers brought fair
labor standards to some of the poorest workers in the economy.
By deleting or narrowing a number of exemptions under the Act
and by revising the definition of "employer" and "enterprise engaged
in commerce" the 1966 amendments extended the protection of the
Act to additional employees in the private sector and, for the first
time, to government employment in State and local hospitals and
schools. The 1966 amendments incorporated other "firsts" in terms of
coverage-laundries (other than industrial), hotels, restaurants and
farms. This meant that workers in some of the lowest paid dead-end
jobs were, after almost 30 years, guaranteed certain minimum labor
standards. It also meant that for the first time in its history, the law
protected almost two-thirds of black workers and almost three-quarters
of women workers.
The goal of the amendments embodied in the committee bill is to
update the level of the minimum wage and to continue the task ini-
tiated in 1961-and further implemented in 1966-to extend the basic
protection of the Fair Labor Standards Act to as many workers within
the reach of Federal authority as is feasible at this time.
NEED FOR THE BILL
We have made substantial progress in eliminating poverty in Amer-
ica since President Roosevelt's 1937 Inaugural Address, but today 26
million Ainericans-13 Je of our population-are still living in pov-
erty by official government standards.
The present minimum wage of $1.60 yields to a full-time working
head of a family of four only $3,200 per year, almost $800 less than
the poverty level and leaves that working-poor family eligible for
welfare. Thus, the standards incorporated in the present law both
in terms of scope of coverage and the level of the minimum wage now
fall short of insuring that every person in this country who works
full-time, year-round will be able to provide his or her family with
the basic necessities of life without reliance upon welfare.
The present minimum wage of $1.60 an hour ($1.30 for farm work-
ers) was set by the Congress in 1966. At that time it was heralded as a
wage rate which would move the working poor above the poverty
threshold. However, economic developments in the last several years
have drastically curtailed the purchasing power of the minimum wage.
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Between 1966, when Congress amended the FLSA to increase
the Federal minimum wage from $1.25 to $1.60 an hour and
April 1972, the consumer price index rose 27%n. Between February 1,
1968, the date the $1.60 rate actually became effective for most work-
ers, and May 1972, the consumer price index rose 21.4%. Thus a sub-
stantial increase in the minimum wage is necessary merely to restore
the purchasing power of low wage workers to the levels established
by Congress in 1966. In addition, average hourly earnings have in-
creased by 34 percent over the same period. Of great significance is
the fact that the number of people living in poverty increased be-
tween 1969 and 1970, the first increase since such records have been
kept.
These facts and figures alone explain the necessity for a minimum
wage increase at this time.
Witnesses before this Committee differed as to how much of an
increase should be legislated, but the testimony was overwhelmingly in
favor of an increase now. The Secretary of Labor, for example, testi-
fied in support of a minimum wage increase and predicated his sup-
port on increases in wage rates generally and on rising prices. He noted
that increasing the minimum wage would increase the purchasing
power of the low-wage sector of the work force. The Committee con-
sidered not only the need for an increase in the minimum wage for
workers now at the minimum but the needs of those workers for whom
no wage floor has been estabished. The benefit which the economy gen-
erally would derive from updating the FLSA was another important
element. Together these pointed to a higher minimum and broader
coverage.
Furthermore, American workers have traditionally shared, through
increased wages and fringe benefits, in rising productivity. Between
1966 and 1972, productivity rose 10.0% and experts from the govern-
ment and the business community have projected an average yearly
increase of about 3% for the decade ahead. The Committee believes
that low wage workers should share in the benefits of increased pro-
ductivity, just as other workers do, and has therefore taken this into
account in establishing the $2.20 ultimate rate in the bill.
Moreover, the minimum wage rate enacted by Congress has tradi-
tionally reflected not only increases in the cost of living and increases
in productivity, but has also reflected increases in the standard of
living enjoyed by most Americans. In 1968 the ratio of the minimum
wage rate to the average manufacturing rate was 55%. Based on
the present average manufacturing wage of $3.77 an hour, main-
tenance of that ratio would justify an immediate increase in the pres-
ent minimum wage rate to $2.07.
Most importantly, as noted above, the poverty level income for an
urban family of four, as estimated by official government agencies, is
now approximately $4,200 per year. In order to earn that income the
head of a four-person household employed full-time would have to be
paid at a rate of approximately $2.02 an hour.
The present bill is an attempt to insure that millions of low wage
workers throughout the nation-workers whom this Act is specifically
designed to protect -will regain the ground they have lost because of
the inflation which we have experienced in recent years. Congress has
previously recognized in the Economic Stabilization Act Amendments
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of 1971 that these low wage workers should not be subject to the wage
controls currently applicable to other workers. As stated in that
legislation :
"(d) Notwithstanding any other provisions of this title,
this title shall be implemented in such a manner that wage
increases to any individual whose earnings are substandard
or who is a member of the working poor shall not be limited
in any manner, until such time as his earnings are no longer
substandard or he is no longer a member of the working
poor..
"(f) The authority conferred by this section shall not be
exercised to preclude the payment of any increase in wages-
"(1) required under the Fair Labor Standards Act of
1938, as amended, or effected as a result of enforcement
action under such Act; ..."
This Committee does not believe that a successful anti-inflation pro-
gram depends upon keeping the income of millions of American work-
ers below officially established poverty levels.
The Committee also believes that by raising the minimum wage rate,
extending minimum wage protection to millions of low wage workers
who do not currently enjoy such protection, and by eliminating over-
time exemptions where they have been shown to be unnecessary, the
economy will be stimulated through the injection of additional con-
sumer spending and the creation of a substantial number of addi-
tional jobs.
Finally, the Committee believes that establishment of a minimum
wage rate at a level which will at least assure the worker of an income
at or above the poverty level is essential to the reduction of the welfare
rolls and overall reform of the welfare system in the United States.
The Committee minimum wage proposal reflects a careful analysis
of the history of previous amendments to the Fair Labor Standards
Act, the economic effects of prior increases and expansions of coverage,
and the latest economic indicators.
Each time Congress has considered minimum increases and expan-
sions of coverage under the law, opponents to such action have raised
the specter of economic doom. Congress was warned on each of those
occasions that the legislation would cause spiralling inflation and in-
creased unemployment. Yet, a close examination of the economic data
shatters this illusion of doom. The simple fact is that the prohecies have
proven false. Every economic effects study by the Department of
Labor, under both Democratic and Republican Administrations, dem-
onstrates this fact. In the words of the most recent report by Secretary
Hodgson :
"On balance, the wage increases granted to 1.6 million workers to
meet the $1.60 minimum wage standard had no discernible adverse
effect on overall employment levels, and relatively little impact on
overall wage or price trends."
The following chart clearly demonstrates that minimum wage in-
creases have never resulted in increased unemployment. On the con-
trary, as the chart indicates, subsequent to the 1949, 1961, and 1967-
1.968 minimum wage increases, unemployment actually decreased, and
in the case of the 1956 minimum wage increase, unemployment re-
mained stable.
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The Minimum Wa,9e Under The Fair Labor Standards Act And
Total Unemployment '&9 Rate And Level, Seasonally
Adjusted By Month, 1971
4,000
2,000
'64 '65 '66 '67 168 '69 '70 '71
1
19491'50 '51 '52
1_ 1_ r -L-10
53 54 55 ;56 '57 '58 '59 '60 '61; '62 '63, '64 '65 '66 '67 '68 '69 '70 '71
0/6 9/61 9/63 207 2/68
1100 11,15 31.25 11.40 11,60
The Committee recognized that a higher minimum wage may mean
increased employer costs, but it also means increased purchasing power
in the hands of the poor and a greater demand for goods and services.
For the worker, it means less hardship and greater dignity. For the
Government, it means lower welfare : costs.
The Committee recognized an economic fact of life. Low wages do
not produce additional jobs. Jobs are created when business is expand-
ing and future prospects are promising. According to the Administra-
tion, such conditions exist today. In addition, money in the hands of
the working poor is one device for further improving the economic
well-being of the country.
According to data submitted to the Congress by the Department of
Labor in 1972, an estimated 45.4 million nonsupervisory workers are
presently subject to the minimum-wage provisions of the FLSA. This
figure represents three-quarters of the employed nonsupervisory labor
force.
The 1.972 report from the Department of Labor noted that significant
coverage gaps still exist,, In the private sector, for example, an esti.-
mated 11.8 million nonsupervisory employees are not protected by the
Federal minimum-wage standard. Of these, almost 7 million are em-
ployed in retail trade and service establishments, more than 2 million
are in domestic service, and about three-quarters of a million are farm
workers. The remainder are outside salesmen or are engaged in certain
miscellaneous activities.
In the public sector, about (i( percent of the nonsupervisory employ-
ees of Federal, State and local governments are not subject to the Fed-
eral minimum wage.
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S. 1861 provides minimum wage protection for an additional 8.4 mil-
lion workers.
The gaps with respect to overtime coverage are even greater than
those with respect to minimum-wage coverage. Approximately 39 mil-
lion nonsupervisory employees are subject to the overtime compensa-
tion provisions of the Act. While three-fourths of all nonsupervisory
workers are required to be paid at least the minimum wage, only two-
thirds are required to be paid time-and-one-half their regular rates
of pay for all hours over 40 in a week. In part, the more limited over-
time coverage reflects the fact that many of the workers who were
covered for the first time by the 1966 amendments to the Act were
guaranteed the minimum wage but were denied overtime protection.
S. 1861 provides overtime protection for an additional 8.1 million
workers.
Reports from the Labor Department make clear that State laws do
little to fill the gaps in the FLSA in the case of the minimum wage and
even less where overtime is concerned.
The bill provides for a statutory minimum wage of $2.20 an hour
for all covered workers but establishes different time schedules for
achieving this standard for various categories of employment, to en-
sure ease of adjustment. Fundamental to the Committee's delibera-
tions was the notion of parity-that all workers should be treated alike
for purposes of minimum wage. However, mindful of the historical
development of the Fair Labor Standards Act and in line with the
need to mitigate the initial impact of expanded coverage, the Com-
mittee provided for staged increases in the minimum wage depending
upon when specific workers were first brought under the Act. All main-
land non-farm workers covered prior to 1966 will attain a $2.20 mini-
muni wage one year after enactment. An additional step is provided
for non-farm workers newly covered under the 1966 and 1972 amend-
rnents. They will. reach parity with other workers at the $2.20 rate two
years after enactment. Farmworkers will achieve parity at the $2.20
rate three years following enactment. In addition, special provision
is made for achieving minimum wage parity for workers in Puerto
Rico and the Virgin Islands.
A. On the effective date (60 days after enactment), the bill requires
that (a) employees in activities covered prior to the 1966 amendments
(and Federal government employees covered by the 1966 amendments,
other than employees of the Canal Zone), will be paid at least $2.00 an
hour, (b) nonfarm employees in activities covered by the 1966 and
the 1972 amendments will be paid $1.80 an hour (including Federal
Government employees in the Canal Zone), and (c) farmworkers will
be paid at least $1.60 an hour.
The implementation of the first stage of the proposed 1972 amend-
ments will mean that 6.1 million workers or less than 12 percent of the
almost 54 million covered workers (including workers covered for the
first time by the 1972 amendments) are to receive wage increases on
the effective date, although the annual wage bill. will be increased by
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only .8 of one percent (or $2.8 billion) in order to comply with the
statute.
13. One year from the effective date, the bill requires that (a) em-
ployees in pre-1966 coverage activities and employees of the Federal
Government (other than Canal Zone employees) will be paid at least
$2.20 an hour, (b) employees covered by the 1966 and 1972 amend-
ments (except farmwork:ers) will be paid at least $2.00 an hour, and
(c) farmworkers will be paid at least $1.80 an hour.
The second stage of the proposed 1972 amendments will mean wage
increases for about 8.4 million workers and will require an increase in
the annual wage bill of only .7 of one percent (or $2.4 billion) one year
after the effective date.
C. Two years from the effective date, the bill requires that the statu-
tory minimum wage of $2.20 an hour apply to all employees (except
farm workers) covered by the Act including employees in 1966 and
1972 coverage activities. Farmworkers are required to be paid at least
$2.00 an hour.
This stage of the proposed 1972 amendments will require wage in-
creases for more than 5.6 million workers and an increase in the annual
wage bill of .5 of one percent (or $1.8 billion).
1). Three years from the effective date the bill requires that a mini-
in um wage of $2.20 apply to farmworkers.
This stage will require increases for approximately 400,000 workers
and an annual wage bill increase of .04 of one percent.
The increase for most covered workers to $2 an hour immediately
is necessary if we are to reverse the recent upward trend in the
number of persons living in poverty. A further increase to $2.20 is
essential if we are to guard against increasing the number of working
poor next year. The Bureau of the Census reports that the number
of poor persons increased by 6 percent between 1969 and 1970. This
is the first time since poverty data were tabulated in 1959 that there
has been a significant increase in the number of poor.
The Bureau of the Census reports that a non-farm family of four
requires an income of $3,968 per year in 1970 dollars, about $4,200 in
present dollars, to begin to lift itself above the government-defined
poverty line. Yet several million families-including those headed by
full-time year-round workers-have lower annual incomes.
If the conditions that poverty breeds in this country are to be
changed, poverty wages must be eliminated. These conditions will not
change unless the FLSA minimum wage is increased, because min-
imum wage workers rarely have the bargaining position or the skills
necessary to increase their wages as the cost of living increases. In
essence, Congress is the bargaining agent for the Nation's working
poor.
Of great importance., the Committee was well aware throughout
its deliberations that workers who toil at the minimum wage level
are poor people by the standards of our society. They are working
full-time, but they are poor. In the 1969 report on the minimum
wage, Secretary of Labor Wirtz stated that: "Poverty" is erroneously
identified in loose thinking with "unemployment." * * * "Whatever
basis there is in any of these criticisms or proposals (of anti-poverty
efforts) commends strongly a first step of seeing to it that when a
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person does work he gets enough for it to support himself and his
family."
The relationship between welfare and minimum wage cannot be
denied. Programs now before Congress, most notably H.R. 1, embody
the concept of governmental. support for working people who
are not paid enough to escape poverty. The Committee was pursuaded
that only a reasonable minimum wage, in keeping with the continued
rise in the cost of living, could end the welfare cycle. Overwhelmingly,
the members believed that an individual, working full-time, ought not
to be forced to rely upon welfare to provide an above-poverty level
existence for his or her family. Under the provisions of H.R. 1 as
passed by the other body, a minimum wage of $2.08 is necessary for
a full-time working head of a family of four to earn enough to escape
eligibility for public assistance, and the indignity that accompanies
such eligibility. In approving an ultimate-stage increase, the Com-
mittee acted to make the sight of a full-time worker on welfare a
thing of the past. Of equal importance, the practice of governmental
subsidization of wages through welfare payments to the working poor
will be at an end, at a tremendous saving to the taxpayers and with a
significant boost to the moral and the dignity of the working poor of
this country.
The following chart dramatically demonstrates the relationship be-
tween welfare and the minimum wage.
Administration's Welfare Supplement (4-Person Family) To Earnings Of
Full-Time Year-Round Workers Paid At Specified Minimum Hourly Rates
Welfare Supplement Welfare Supplement
$1.600 1? -- __._ _... . -_. _.. _- ---- $1,600
41.15 $1.30 $1.45 $1.60 $1.80 31.885 02.00' 02.077
HOURLY EARNINGS EQUIVALENT
--11.000
This legislation will not end poverty. But, at least, we must assure
something more than poverty for those Americans who are willing to
work.
An immediate increase in the minimum wage to more than $2 an
hour is also required by the inflationary rise of living costs and is justi-
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tied by the post-World War II trend of increasing productivity in the
national economy.
As noted previously? between 1966, when Congress amended the
FGSA to increase the Federal minimum wage from $1.25 to $1.60 an
hour, and April 1972 the Consumer Price Index rose 28%. This sharp
rise, has cut the buying power of the $1.60 minimum. Indeed, the buy-
ing power of the $1.60 minimum wage is less today than the buying
power of the $1.25 minimum was in 1966, when Congress decided the
$1.25 rate was too low.
The $2.20 statutory minimum wage does something more than
merely offset the price rises that have occurred since the 1966 amend-
rnent. It reflects the decision of the Committee that the low-wage
worker should share in the increases in productivity. Indeed, all
American workers have an economic and moral right to share in the
economy's rising productivity. This approach to minimum wage deter-
rnination is spelled out in Section 4(d) of the FLSA in which the
Congress directs the Secretary of Labor to "take into consideration
any changes which may have occurred in the cost of living and in
productivity" in evaluating and appraising the minimum wage.
In the course of its deliberations, the Committee rejected, by a 13-4
vote, an attempt to cut; back the increase in the minimum wage. The
Committee believes that the minimum wage worker, who has not had
a. raise for 5 years, should not now be asked to continue to suffer from
the heavy burden of inflation. Even during the strict: controls imposed
during World War fl, a 33-percent increase in the minimum wage was
implemented. Traditionally, exceptions for the working poor have
characterized wage stabilization policies. The current economic con-
trols are no exception, Congress having exempted low-wage workers in
the Economic Stabilization Amendments of 1971. To carry out this
policy, the Cost of Living Council decontrolled the wages of all work-
ers making less than $1.90 an hour. The Pay Board has authorized
annual wage increases of np to 5.5 percent; applying this to a wage of
$1.90 would result in an hourly wage of over $2.00 an hour.
Past experience with changes in the Fair Labor Standards Act would
indicate that the economy can adjust easily to the proposed new wage
rate.
Since 1938, the argument has been advanced that increasing the
minimum wage and expanding, the coverage of the FLSA is both infla-
tionary and a cause of unemployment. These assertions simply have not
been borne out by 1 he facts accumulated after each increase. The over-
whelming weight of the evidence suggests that a raise in wages for the
working poor has no adverse impact on the general economic con-
ditions in the country. In fact, after each increase in the minimum,
there has been an increase in employment levels with no increase in
the rate of inflation, except where other extraneous factors have
intervened.
The cost-impact of the first phase of the bill would be .8 of one per-
cent of the economy's total wage bill. Certainly the economy can afford
to devote at least this amount of its total wage and salary expenditures
to raising the wages of the nation's lowest paid workers.
The Committee recognizes and the bill reflects an awareness that to
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would serve to deny even the minimum benefits of the Act to large
groups of workers who have been denied the protection of the Act for
more than 30 years.
Just as in 1961 and 1966, witnesses before this Committee described
the plight of workers who are excluded from the Act. And, as in 1961
and 1966, the Committee agreed that a further expansion of coverage
was essential if the basic objective of the Act-the elimination of
"labor conditions detrimental to the maintenance of a minimumz stand-
ard of living necessary for health, efficiency and general well-being of
workers" was to be achieved.
The Committee was particularly impressed by the ease with which
the economy adjusted to the 1966 amendments to the Fair Labor
Standards Act which provided for a substantial increase in cover-
age-approximately 11 million workers-as well as an increase in the
minimum wage from $1.25 to $1.60.
The importance of the minimum wage to low wage workers was
described by Secretary of Labor Shultz in his January 30, 1970 report
to the Congress on matters pertaining to fair labor standards. He
stated :
One of the major goals of this Administration is to get
people off the welfare rolls and on to payrolls. Once having
achieved that, unless the worker receives the minimum wage
he is more likely to fall back on the welfare rolls. Accord-
ingly, the, vital and meaningful role of the Wage and Hour
Division continues to be the vigorous and effective enforce-
ment of the FLSA to insure that employees receive at their
work places those rights which the Congress intended for
them.
In 1971 and 1972 Secretary of Labor Hodgson submitted reports
to the Congress in which emphasis was placed on the importance of the
minimum wage increases and thw absence of adverse effects. The re-
port for 1971 stated :
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,
however, is the fact that the 15-cent boost did help two mil-
lion workers recover some of the purchasing power eroded by
the steady upward movement of prices which had started even
before the enactment of the 1966 amendments.
The 1972 Report draws the following conclusions about the effects
of the final phase of the 1966 amendments :
On balance, the wage increases granted to 1.6 million work-
ers to meet the $1.60 minimum wage standard had no discern-
ible adverse effect on overall employment trends, and rela-
tively little impact on overall wage or price trends.
The Committee reviewed present coverage, as well as the gaps there-
in, and determined that a strong need exists for covering domestics
and additional workers in retail and service industries and in govern-
ment. The Committee carefully examined the economic implications
of extending coverage and was ethat wages would go up
for workers on the lowest rung othe wage ladder and that the econ-
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omy could easily absorb these raises. The Committee bill would
expand coverage as follows :
NUMBER OF NONSUPERVISORY EMPLOYEES
[In thousands]
Industry
Expanded
coverage
Present New coverage
coverage under S. 1861
All industries --------------
--------------- _ ____________-
53,752-53,827
45,383 8,369-8,444
Private sector ----------
--------- ----------------
45,498-45,573
42,056 3,442-3,517
Retailtrade__________
---- _.
7
645
-- ----
6
22
----------------------------
Services (except domestic)_.------ ____-._______________ _____
Domestic service-
,
6,866
,
2 1,423
6,249 617
Allother____ ____
1,233
----
------29,754-29,829
- - - - - - 1,233
29,585 169-244
Public sector ________________
___ ------------------- ..--------
8,254
3,327 4,927
-------
2
367
641 1
726
- - - - - - - - - - -
a e an local government.._________________________
,
5,887
,
2,686 3,201
Note: Estimates reflect employment in September 1971, except for agriculture (May 1971) and for education (October
1971). Data exclude 2,015,000 outside salesman. Includes all employees brought under the act by lowering the enterprise
annual dollar volume test to $150,000 and eliminating the 13(n)(2) establishment exemption.
Ii etail trade and services (except domestics)
The Committee bill would extend the Fair Labor Standards Act to
employees of retail and service enterprises with annual receipts of
$150,000 to $250,000 in four steps. In addition, employees of all stores
of chains with $150,000 or more in annual receipts would be covered
in the same four step process. On the effective date, the Act would
apply to employees of retail and service enterprises with $225,000 in
annual receipts. At, the end of a year the receipts test would be
$200,000; at the end of 2 years, $175,000; and $150,000 at the end of
the third year, and thereafter.
Currently, the Act protects about 12.5 million nonsupervisory
workers in retail trade and services. The Committee bill would
increase coverage in these activities by 2 million workers, exclusive
of domestics.
The bill eliminates the special exemption for smaller stores of large
covered chains. Currently, two stores of the same chain are treated
differently under the Act. For example, if a 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 em-
ployees 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, FLSA, but the employees of the 10th store have
no such protection. This inequity would be rectified if all establish-
ments of a covered chain were treated equally under the law.
The bill would gradually add to coverage those enterprises with
annual receipts of `(150,000 to $250,000. The reduction of $25,000 per
year in the enterprise sales-size test was designed to ensure maximum
ease, of adjustment. The bill would not. directly affect small retail and
service firms nor would it extend coverage to the so-called "Mom &
Pon" stores.
This bill would not only protect many of the retail and service em-
ployees who were not benefited by the 1961 and 1966 amendments to
the Fair Labor Standards Act, but it would also protect small shop-
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keepers, who are covered by the law, from being undercut by retail or
service establishments which may be part of multimillion dollar enter-
prises, yet are exempt from the Act and pay subminimum wages.
Once again the Committee looked 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 FLSA. For example, the
Labor Department's nation-wide survey of restaurant employees
shows that employment increased by 3900 workers between October
1966 and April 1967, the period spanning the effective date of the
initial phase of the 1966 amendments to the minimum wage law. The
Labor Department reported that the "largest employment increase oc-
curred in the South where the wage impact was greatest." It is appar-
ent from the various reports that the retail and service industry has
adjusted to FLSA coverage with relative ease.
Domestic service employees in private households
The bill would bring under the minimum wage provisions of the Act
all employees in domestic service, except babysitters, but retains an
overtime exemption for such domestic service employees.
The reasons for extending the minimum wage protection of the Act
to domestics are so compelling and generally recognized as to make it
hardly necessary to cite them. The status of household work is far
down in the scale of acceptable employment. It is not only low-wage
work, but it is highly irregular, has few if any non-wage benefits, is
largely unprotected by unions or by any Federal or State labor
standards.
According to the Bureau of the Census, approximately 340,000
women employed as private household workers worked year-round
full-time in 1969, yet their earnings averaged only $1,926 for the year.
While the situation of day workers, in terms of duties, hours, and
wages has improved somewhat in recent years, the majority of them
continue to lag far behind other workers in terms of pay, fringe bene-
fits, and working conditions, generally.
It is important to note that even in a period of high unemployment
such as exists today, the demand for household workers is not being
met. Bringing domestics under the Fair Labor Standards Act would
not only assure them a minimum wage but would enhance their status
in the community. It is expected that the supply of domestic workers
will increase as their pay and working conditions improve. Minimum
wages should serve to attract skilled workers to these jobs at a time
when the need for skilled domestic employees is greatly increasing.
The Committee took notice of the fact that careers for women have
become increasingly common and that this occurrence is bound to lead
to an increased demand for domestic help in the homes of employed
wives and mothers. If an effective and dignified domestic workforce
is to be developed, a living wage and respectable working conditions
are vital. Now that Congress has sent to the States the constitutional
amendment guaranteeing equal rights to women, it would be hypo-
critical in the extreme to deny an appreciable segment of the female
work force, earning low wages, an opportunity to share in the rewards
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of more meaningful employment under the protection of the Fair
Labor Standards Act.
The Committee is persuaded that objections to covering domestics
on the ground of administrative complexity and difficulty of enforce-
ment are unacceptable reasons for denying the benefits of the Act to
those most in need of such benefits. This committee is convinced that
legislation which clearly expresses the intent of the Congress with
respect to fair labor standards for domestics will be followed by volun-
tary compliance on the part of most housewives. The Committee is
also confident that appropriate methods to ensure compliance can be
fashioned within the authority of the Secretary of Labor under the
FLSA. It is also to be noted that the Social Security law already covers
most domestic workers. Finally, the Committee calls attention 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
furnished to an employee, and which recognize any reasonable agree-
ment between the employer and the employee with respect to what
shall be considered hours worked. These provisions, coupled with the
provision for an oyertime exemption, as provided in the bill, will serve
to minimize any problems which might arise in the application of
the law to live-in domestics.
The Committee concurs with the philosophy expressed by Elizabeth
I)uncan Koontz, Di rector of the Women's Bureau of the Department
of Labor when she said in a speech in Anaheim, California on Nov. 9.
1970 that household employment "needs a decent wage level, good
working conditions, and fringe benefits." She emphasized that "First
in importance is coverage under minimum wage laws."
The additional question of the constitutionality of coverage of do-
inestics was raised. The Committee found that domestics and the equip-
ment that they use in their work are in interstate commerce. For exam-
ple, vacuum cleaners are produced in only six States, and laundry
equipment is produced in only seven States, creating a tremendous
flow in commerce of these items used daily by domestics. Also, it is
common knowledge that every domestic handles such items as soap,
wax, and other household cleaners which have moved in interstate
commerce (cf. Shultz v,. Travis-Edwards, Inc., 64 CCH Labor Cases,
para. 32, 412, 19 Wage. Hour Cases, 806 (W. D. Louisiana, 1970) ;
Shultz v. The Wilson Building, Inc., 63 CCH Labor Cases, para. 32,
383, 19 Wage Hour Cases, 679 (S.D. Texas, 1970). In addition, employ-
ment of domestics in households frees time for the members of the
household to themselves engage in activities in interstate commerce.
In short, the committee is persuaded that coverage of domestic em-
ployees is a vital step in the direction of ensuring that all workers
affecting interstate commerce are protected by the Fair Labor Stand-
ards Act.
`['here can be little doubt that the low wages now paid to domestics
as a group have a substantial effect on the economy and the fiscal and
tax policies of both the Federal Government and the State. According
to estimates of the Department of Labor, the minimum wage rates
proposed for domestics in the Committee bill will place in the hands
of these low-income employees an additional $1.3 billion in each of the
next 3 years. That will represent a substantial increase in purchasing
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power which is bound to have salutary effects on the national economy,
as well as the economy of our central cities, where many domestic em-
ployees live. Furthermore, this additional income will serve to lessen
welfare payments to this category of employees, and should also serve
to upgrade the status and dignity of this type of work.
Over and above the direct impact on interstate commerce which re-
sults from the low wages received by this large group of employees
there can be little doubt that the deplorably low wages received by
domestics contribute substantially to the vicious poverty cycle which
has created such chaos in our central cities.
Our inability to end poverty in America has already had a pervasive
impact on the population characteristics of our cities, and this in turn
has already resulted in profound changes in commercial, economic,
social and educational patterns throughout, the country. These changes,
and the problems they have created, are not localized, and their solu-
tion demands Federal, not merely local action, as Congress has already
recognized in enacting a myriad of programs dealing with such mat-
ters as housing, welfare, education, transportation, manpower train-
ing and public service employment.
Since domestic employment is one of the prime sources of jobs for
poor and unskilled workers, it is clear that there is an important na-
tional interest at stake in insuring that the wages received for such
work do not fall below a minimal standard of decency.
In this vein, the Committee took note of the expanded use of the
interstate commerce clause by the Supreme Court in numerous recent
cases (particularly Katzenbach v. McClung, 379 U.S. 294 (1964)) to
accord Federal protection to persons needing such protection. The
Committee rejected an amendment to strike coverage of domestic em-
ployees by a vote of 13-3, recognizing that domestic workers in house-
holds are in need of this Federal protection. Connections with the flow
of commerce are both tangible and direct, proving a rational basis for
finding the requisite link to interstate commerce.
Federal, State and Local Government Employment,
Most employees of Federal, State and local governments are not now
protected by the Fair Labor Standards Act. S. 1861 would extend
minimum wage and overtime protection to almost five million non-
supervisory employees in the public sector. Currently, 3.3 million gov-
ernment employees are covered by the Act, including wage board
employees of the Federal Government, and employees of schools and
hospitals.
The Committee bill sets a minimum wage for presently covered
Federal employees (except in the Canal Zone) at $2.00 an hour on the
effective date, and provides for an increase in the minimum to $2.20
at the end of one year. For Federal employees newly covered by the
proposed 1972 amendments, for Canal Zone employees, and for em-
ployees of State and local governments, whether currently covered or
newly covered, the bill applies a $1.80 rate on the effective date and
provides for increases to $2.00 at the end of one year, and $2.20 at the
end of the second year.
The bill includes a special overtime standard for law enforcement
and fire protection employees including security personnel in correc-
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tional institutions. For such workers, if there is an agreement or under-
standing with their employers the bill provides for a standard work
period of 28 days instead of the basic standard of a 7-day week for
purposes of determining overtime compensation. Time and one-half
the regular rate of pay is required for all hours over 192 in the 28-day
period during the first year; over 184, during the second year; over
176, during the third year; over 168, during the fourth year; and over
160 hours at the beginning of the fifth year and thereafter.
Coverage of Federal employees is limited by the bill to those in the
competitive service (including wage board employees) non-appropri-
ated fund employees, and any other civilian employees working for
the armed services. Excluded from coverage are military personnel
and employees in non-competitive positions. Basically, the Committee
(lid not intend to extend FLSA coverage to those persons for whom
the general tangible rewards of government employment are of sec-
ondary significance, for example, Peace Corps and VISTA volunteers.
By the same token, the Committee intended to cover all employees in
the competitive service (except professional, executive, and adminis-
trative personnel who are exempted under section 13 of the law) in all
civilian branches of the Federal Government.
The Committee bill also covers all employees of State and local gov-
ernments who hold positions comparable to those in covered Federal
employment.
Many arguments have been advanced for bringing public employees
under the FLSA. A major argument was and continues to be a moral
one. Government should be willing to apply to itself any standard it
deems necessary to apply to private employment. The Senate by an
overwhelming majority has only this session applied this principle to
equal employment opportunity. The need for government workers for
minimum wage and overtime protection is as great as is the need of
employees in private industry. It is unfair to deny employees in either
the public or private sector a wage sufficient to ensure a "minimum
standard of living necessary for health, efficiency and general well-
being." Equity demands that a worker should not be asked to work for
subminimum wages in order to subsidize his employer, whether that
employer is engaged in private business or in government business.
In 1966, the Congress asserted, and the Supreme Court subsequently
sustained, that government business could "constitute an unfair method
of competition in commerce," and such unfair competition must be
eliminated if the basic purpose of the FLSA was to be achieved. The
1966 amendments broadened the Act to extend coverage to, among
others, employees of hospitals, schools and certain other institutions
run by States and local governments. These amendments marked the
first departure from the exemption for State and local governments in-
cluded in the Act when it was passed in 1938. This extension of cover-
age was upheld in :'Maryland v. Wirtz. 392 U.S. 183 (1967). Since that
time, the Congress has enacted the Economic Stabilization Amend-
ments of 1971 which have been applied to State and local government
employment, placing a ceiling on wage increases for such employees.
Certainly, Congress may place a floor on the wages of such employees.
The Committee bill reflects a determination that all State and local
governments should be treated as "enterprises" for the purpose of the
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Act. A clear showing has been made that activities of States and local
governments affect the stream of interstate commerce.
The Supreme Court in Wirtz held that the plenary authority of
Congress to regulate interstate commerce is not to be limited by State
sovereignty. In this case, which upheld the partial removal of the
exemption of State and local governments from the Fair Labor Stand-
ards Act, the Court held that these units of government could be
treated as enterprises for purposes of the Fair Labor Standards Act
and that :
If a State is engaging in economic activities that are validly
regulated by the Federal Government when engaged in by
private persons, the State too may be forced to conform its
activities to Federal regulation. (Id. at p. 197).
The partial removal of the State and local government exemption
is a constitutional exercise of congressional authority to regulate
commerce. The Committee was persuaded that removal of the exemp-
tion was a logical extension of this sanctioned congressional authority.
In January 1971, Secretary of Labor Hodgson submitted to the Con-
gress a special report on Nonsupervisory Employees in State and Local
Governments-which was designed to serve as a basis for evaluating
the feasibility of extending the Act to additional employees in the pub-
lic sector. This study was a follow-up of 1969 studies which evaluated
the effects of extending the Act to schools and hospitals.
In 1970, when reporting on the studies of schools and hospitals, Sec-
retary of Labor Shultz concluded :
Overall it can be stated that the educational and hospital
sectors have had little evident difficulty adjusting to the mini-
mum wages established by the 1966 amendment.
In 1971, Secretary of Labor Hodgson's report states in the opening
section :
An issue associated with the question of extending coverage
under the Fair Labor Standards Act to all State and local
governments is whether the non-covered sector should be
brought under coverage at a lower minimum wage and a
higher hours standard than those which are applicable to gov-
ernment hospitals and public schools, segments which were
covered by the 1966 Amendments to the FLSA. The nation-
wide survey of State and local governments (excluding edu-
cation 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 coverage under the FLSA
is extended to these workers, comparable minimum wage and
overtime standards would not have as great an impact as did
the earlier extension of FLSA coverage to employees of State
and local government schools, hospitals and residential care
establishments.
The 1971 report of the Department of Labor presents data which
show that a minimum wage of $2.00 an hour for noncovered employees
of state and local governments would have required an increase in the
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total wage bill of only 1.1 percent in March 1970, the date of the sur-
vey. Increases in wages since that time have reduced the cost so that
present estimates indicate that S. 1861 would require an increase in the
wage bill for those workers of only .3 of one percent on the effective
date when a minimum wage of $1.80 an hour applies and that sub-
sequent annual increases of only .2 of one percent will be required to
raise the minimum to $2.00 and then to $2.20 an hour.
In developing special overtime standards for law enforcement and
fire protection employees and in providing for a very gradual reduc-
tion in the straight-time workweek for these employees, the Committee
again took its lead from the Department of Labor. The 1971 report,
previously referred to, states with respect to "hours worked," that :
bong workweeks were most prevalent among employees in
the public safety activity, which includes police and fire de-
partments. A fifth of the public safety employees worked over
40-hours and they comprised half of the employees on long
workweeks. Public works was also significant in this regard,
employing 27 percent of the workers on long workweeks.
During the survey week, only 2.3 percent of total nonsuper-
visory man-hours in State and local governments represented
hours worked in excess of 40. If a 40-hour Federal overtime
standard were in effect at the time of the survey, the premium
pay required for excess hours would have approximated 1 per-
cent of the weekly wage bill. The actual impact of a 40-hour
standard would have been less because a substantial propor-
tion of the employees receive premium overtime pay.
The Fair Labor Standards Act currently provides that the mini-
mum wage provisions of the Act apply to employees employed in
agriculture by employers who used more than 500 man-days of hired
labor during any calendar quarter of the preceding year. A man-day
of agricultural labor is defined as "any day during which an employee
performs any agricultural labor for not less than one hour." Presently
exempt from the minimum wage provisions and excluded from the
count for purposes of the man-day test (on large farms) is any em-
ployee employed in agriculture--
(1) if such employee is the parent, spouse, child or other
member of the employer's immediate family; or
(2) if such employee-
(a) is a hand harvest laborer and is paid on a piece
rate basis in an operation which has been, and is cus-
tomarily arid generally recognized as having been paid
on a piece rate basis in the region of employment,
(b) commutes daily from his permanent residence to
the farm on which he is employed, and
(c) has been employed in agriculture less than 13
weeks during the preceding calendar year.
,A-]so exempt under present law from the minimum wage require-
ment, but included in the man-day count, is any employee employed in
agriculture-
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(1) if such employee-
(a) is a migrant 16 years of age and under and is
employed as a hand harvest laborer, is paid on a piece
rate basis in an operation which has been and is cus-
tomarily and generally recognized as having been paid on
a piece rate basis in the region of employment.
(b) is employed on the same farm as his parent or
person standing in place of his parent, and
(c) is paid at the same piece rate as employees over age
16 are paid on the same farm ; or
(2) if such employee is principally engaged in the range
production of livestock.
The Committee bill. retains the basic provisions of the Act with re-
spect to agriculture, including the 500 man-day test for purposes of
determining which farms are covered under the minimum wage pro-
visions of the Act and the overtime exemption for agricultural workers
in section 13(b) (12) of the Act. However, the bill redefines a man-day
of hired labor to include local seasonal hand harvest labor and extends
minimum wage protection to such labor.
The Committee bill also extends minimum wage coverage to a
specific small class of farmworkers-the local seasonal hand' harvest
laborer, and requires days worked by such farmworkers to be counted
in determining whether the farmer meets the 500 man-day test for
coverage under the Act. This change will bring an estimated 75,000-
150,000 additional farmworkers under the Act and some additional
farms within coverage. Approximately 90 percent of the Nation's
farms will remain uncovered.
The Committee has heard no evidence which would justify con-
tinuing to exclude local seasonal hand harvest labor from the minimum
wage benefits of the Fair Labor Standards Act. These workers work
alongside of other farm hands who are guaranteed at least a minimum
wage. They are paid less only because they are hired at peak periods for
relatively short duration. This violates a fundamental principal of
equal pay for equal work.
By its action the Committee bill eliminates the extremely compli-
cated coverage standards that heretofore have caused hardships to
farmworkers, and have made it difficult for farmers and farmworkers
to determine whether coverge existed under the law. The 1966 law, as
applied to agriculture, made enforcement difficult. The result has been
a frustration of Congressional intent. As a consequence of the viola-
tions of the law, many poor farmworkers continue to be cheated of
even a subsistence wage. The streamlining and clarification of the
agricultural coverage language should eliminate the violations stem-
ming from any possible confusion over statutory construction.
The Committee noted the concern of those who feared a massive
increase in agricultural unemployment, would result from advances to
parity. However, the Committee was favorably impressed by a 1968
Labor Department study of agricultural coverage under the Act. The
study showed that although farm employment continued its decline,
"the decline was far greater on noncovered farms than on covered
farms."
The Committee was distressed to learn that one migrant family
traveled throughout the summer from its home in Texas to Wisconsin,
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Minnesota, back to Wisconsin and then home to Texas, receiving for
its labor during the entire summer, a family income of $1400. Upon
further investigation the Committee was appalled to learn that the
entire five member family-including a 6 year old child-worked 15
hours per day, 7 days a week. The Committee calculated each individ-
ual's wage rate to be approximately $.23 an hour.
It is the Committee's understanding, based on information furnished
by the Department of .Labor, that during fiscal year 1971, investi-
gations were made of 692 farm establishments (employers using more
than 500 man-days of farm labor in any calendar quarter). Based
upon those 692 investgiations, the Department found that 6263 em-
ployees had been underpaid, 5487 of whom received less than the
statutory Federal minimum wage of $1.30 an hour.
The Committee finds this rate of noncompliance intolerable. This
situation is further aggravated by the fact that many of these farm
employees are minor children. This shameful exploitation of agricul-
tural labor in violation of the basic purpose of the Act will cease only
when the Department of Labor conducts a searching campaign to
bring all farm employers into compliance. The Committee expects the
Department of Labor to be vigilant in its responsibilities with regard
to enforcement of the agricultural provisions of the Act, and to under-
take a vigorous enforcement effort so that the sight of a family, in-
cluding a 6 year old child earning $.23 an hour in the fields will be a
thing of the past.
CHILD LABOR IN AGRICULTURE
S. 1861 amends the Fair Labor Standards Act to prohibit the em-
ployment of children under age 12 in agriculture except on farms
owned or operated by their parents. Children aged 12 and 13 may
work in agriculture, only if they have the written consent of their
parents or persons standing in place of their parents or if a parent or
a person standing in for the parent is employed on the same farm.
S. 1861 continues current law in permitting the employment of chil-
dren between the ages of 12 and 16 on farms outside of school hours,
except in hazardous occupations.
In 1938, this Nation finally outlawed a practice which had become a
national scandal-industrial child labor-yet today we continue to
tolerate all of the same oppressive practices which deprive a child of
a real childhood in an equally oppressive form-agricultural child
labor. The shameful employment of children in agriculture is one of
the most abhorrent aspects of our present farm labor situation. While
it may be true-as many claim-that farm work can be beneficial to
the young under careful supervision, more often it exposes young peo-
ple to serious hazirds--and involves long hours, negligible pay and
backbreaking work.
The child labor provisions of the Fair Labor Standards Act estab-
lish a minimum age of 16 for agricultural employment. However the
restrictions apply only during the hours schools are in session in the
school district where the child lives while he is employed. Migratory
children, who comprise a major segment of those children employed
in agriculture, are most seriously affected by the lack of a meaningful
child labor law. In many cases, migrant children are not covered by
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State compulsory education laws since they are nonresidents of the
States in which they are employed. As long as school is not in session
where the child lives while he is employed, there are no restrictions
on his employment in agriculture. There are no federal regulations
as to the number of hours a child may work in agriculture. A 1970
study by the American Friends Service Committee found that chil-
dren receiving pay ranging from a small pittance for some piece-
work-such as 12 cents a crate for strawberries-to an average hourly
wage of $1.12 in California.
According to a special survey conducted by the Department of Labor
in 1962, in the Willamette and Tuatation valleys and the Hood River
area in Oregon's strawberry region, at the peak of the harvest season,
there were 66,610 workers employed; 65 percent (44,339) of whom were
under age 14, and 19 percent (12,000) were under age 12. The,
Friends Committee found that in 1970, 75 percent of the seasonal force
of strawberry and bean harvesters in the Willamette valley were
children.
Although it should be intolerable for a major industry to depend
upon child labor, in many cases child labor in agriculture is encour-
aged. Poorer families are encouraged to have their young children
pick crops due to the welfare system. In Marion County, Oregon, for
example, only income from family members over age 16 is deducted
from a family's welfare grant. Thus the more family members under
age 16 who work in the fields, the more money it can keep.
The desperate need to extend the protection of the child labor laws
to agriculture was recognized as early as 1961 when the Senate en-
acted a measure similar to the pending Committee provision. Again in
1963 the Senate passed similar child labor in agriculture legislation.
In filing suppplemental views to the Fair Labor Standards Amend-
ments of 1966, Senators Javits and Williams noted :
We ought not to look away now from the exploitation of
children in agriculture-with all its destructive effects-at
the very time we propose to extend federal minimum wage
protection to other deprived groups in our society.
The Committee strongly believes that there are too few restrictions
on child labor on farms. Legislation must be enacted to protect chil-
dren on farms. Such legislation must be vigorously enforced. Many of
the horror stories which have been insufficiently publicized over the last
few years involve fatal or near fatal accidents involving very young
children. Typically these accident statistics are tabulated and the totals
tend to obscure rather than disclose such tragedies as the 8-year old
boy suffocated when he was sucked into and buried under two feet of
grain in a wheat bin while helping his cousins load wheat, or the 13-
year old boy who lost his left arm just below the shoulder in a potato
harvester.
The rationale that led to the prohibition on industrial child labor
in 1938 is no less compelling now when applied to agricultural labor.
The sight of children, many of whom have missed school, crawling in
100 degree heat for 10 hours a day to harvest crops at below subsist-
ence wages, must be made a thing of the past. _
It is the expectation of Committee members that the new agricul-
tural child labor provisions of S. 1861 will be strictly and widely en-
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forced and that young children will be in school where they belong and
not working on farms.
S. 1861 adds a new subsection to Section 16 of the Fair Labor Stand-
ards Act. This new subsection makes any person who violates the child
labor provisions of the act or any regulation issued under that section
subject to a civil penalty not to exceed $1,000 for each such violation.
This provision, when enforced under the Secretary of Labor's FLSA
enforcement authority, is designed to add teeth to the child labor
provisions of the statute and to make it abundantly clear that child
labor violations are particularly abhorrent to a large cross-section of
the population. The Committee chose this vehicle to emphasize the
critical importance of strict enforcement of the child labor provisions
of the Act.
S. 1861 adds a new subsection to Section 12 of the Act authorizing
the Secretary of Labor to issue regulations requiring employers to ob-
tain from any young worker proof of his age in order to carry out the
objectives of the child labor provisions of the Act.
']'his is designed to serve as a protective tool for employers who
frequently find that t hey have unintentionally violated the child labor
provisions of the A ct. It, will also protect the minor from illegal
employment.
The Committee does not believe that this provision presents any
conflict with the provisions of the Age Discrimination in Employ-
ment Act.
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 government workers, will be the same as
the minimum wage for counterpart mainland employees on the effec-
tive date.
The minimum wage for employees who are covered by industry
committee wage order rates of less than $.80 an hour is raised to $1.00
on the effective date and then is increased by $.20 an hour each year
until parity with the mainland is reached.
The minimum wage for employees who are covered by a minimum
wage order rate of $.80 an hour or more is raised by $.20 on the effec-
tive date, and by $.20 each year thereafter until parity with the main-
land is achieved.
Employees in Puerto Rico and the Virgin Islands newly covered by
this Act will have their minimum rates determined by newly appointed
special industry committees. The recommendations of such committees
will be issued within 60 days of the effective date of the Fair Labor
Standards Amendments of 1972 and shall be effective on the effective
(late of the wage order but. not before 60 days after the effective date
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of the proposed 1972 Amendments. No rate below $1.60 may be set
unless there is substantial documentary evidence covering a period of
years which establishes that the industry is unable to pay the wages.
The Committee calls attention to Section 6(c) (1) of the FLSA which
provides that the rates provided for in Sections 6(a) and 6(b) shall be
superseded only insofar as a wage order has been issued by the Secre-
tary, pursuant to the recommendations of an industry committee.
In no event may an industry committee establish a rate lower than
$1.00 for such newly covered employees.
For agricultural workers in Puerto Rico whose incomes are supple-
mented under Puerto Rican guaranteed income legislation, the bill
provides for an immediate 20 cents an hour increase over their current
wage order rate as supplemented under this legislation. Thus, their
wage rate would be $1.20 an hour during the first year from the effec-
tive date. The Committee understands that it is the intention of the
government of the Commonwealth to change the guaranteed income
program in order to assure a continued subsidy at present levels to
farmers notwithstanding the wage increases proposed by this bill.
After the initial rates are set, increases of $.20 per year are automati-
cally applied until the mainland rates are achieved. In each of the cate-
gories where annual step-ups of $.20 are prescribed, special industry
committees are authorized to raise rates by more than the $.20 per
hour but not by less than that amount. The bill would terminate the
so-called special review committees whose functions have heretofore
been to reduce increases in the minimum rates prescribed by Congress.
Provisions permitting the setting of lower rates by industry com-
mittee in Puerto Rico and the Virgin Islands were incorporated into
the FLSA in June 1940, almost 32 years ago. However, from the out-
set it clear intent has been manifest in the FLSA to achieve ultimate
parity. Section 8(a) of the Act sets forth this policy:
The policy of this Act with respect to industries or enterprises
in Puerto Rico and the Virgin Islands engaged in commerce or
in the production of goods for commerce is to reach as rapidly as
is economically feasible without substantially curtailing employ-
ment the objective of the minimum wage prescribed in paragraph
(1) of Section 6 (a) in each such industry.
In the course of various evaluations of the industry committee pro-
cedures, questions have been raised 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 raising the wage floor in some industries, despite
improved economic conditions, and substantial increases in produc-
tivity.
The Committee was persuaded to provide for eventual parity for
a wide variety of reasons. Consideration was given to the fact that
the cost-of-living is higher on the Islands than on the mainland. For
example, the Consumer Price Index (1957-1959=100) for all items
in 1971 was 144.2 in Puerto Rico and 141.0 on the mainland. Moreover,
the index of food prices was 160.3 in Puerto Rico as compared with
136.4 on the mainland; the index of transportation prices was 142.4
in Puerto Rico versus 137.5 on the mainland. And for personal care,
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the Puerto Rican index was 153.2 as compared with 134.9 on the main-
land. In addition, profit margins of establishments are usually greater
than for their national counterparts, and employers enjoy special ad-
vantages, such as exemption from Federal income taxes, subsidies,
and exemption from local income taxes for a period of from 10 to 17
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 changes. The increase in wage order rates of $.20
on. the effective date (for most activities) on the Islands is equal to
the increase in the mainland for new coverage areas but is only half
as great as the increase set for pre-1966 coverage. It is recognized that
many of the employers in Puerto Rico and the Virgin Islands who
have been covered by the FLSA since its inception could adjust to
a $0.40 minimum wage increase on the effective date with ease. How-
ever, a more modest increase was decided upon to insure that the
increases would proceed smoothly and that substandard wages would
be eliminated by a predetermined target date.
The Committee was impressed by the extensive financial and tax
incentives designed to attract business to Puerto Rico. In A National
Profile of Puerto Rico (March 1971), Ernst and Ernst describe in de-
tail the various benefits to business of locating in Puerto Rico ranging
from "100 percent exemption from income tax on industrial develop-
ment income for qualified firms" to such special location incentives
for operations in areas outside of metropolitan San Juan, as offsets for
costs of training, salaries, rents and mortgages. The Committee com-
pared the advantages designed to attract business to Puerto Rico with
wage data in the summary on labor, in Ernst and Ernst In this sum-
mary, the average hourly wage in 1969 for 20 industry groups in
l'rrerto Rico is shown at $1.82. The comparable figure for the main-
Iand is given as $3.10. '1.'lie Committee's intent is to improve the status
of the Puerto Ricau worker; parity with mainland workers with re-
spect to the minimum wage is a necessary first step.
S. 1861 repeals or modifies a number of the exemptions presently in
corporated in the Fair Labor Standards Act, including some of the
complete minimum wage and overtime exemptions as well as some
which apply only to the overtime standard.
The FLSA is a complex piece of social legislation. In large part the
complexity of the I aw is an outgrowth of compromises entered into
over a 30-year period in order to achieve, to the fullest extent possible,
the basic purposes of the Act.
Careful review led the Committee to conclude that a number of the
exemptions presently incorporated into the Act should now be elimi-
nated. The Committee accepts as simple equity the basic concept that
all workers are entitled to a meaningful. minimum wage and to pre-
mium pay for overtime work. The Committee generally approached
the matter of special exemptions by applying a simple rule. Unless the
proponents of an exemption made the case for continuing the exemp-
tion in its present form, it was modified or removed. The Committee is
aware that the low-wage worker, whose economic status is in large
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part determined by the FLSA, does not typically communicate with
the Congress either by testifying on bills or by writing letters outlining
his position on the legislation. As in the past, the Congress must repre-
sent the public conscience in the matter of the low-wage workers and
minimum wage legislation.
Motion picture theaters
S. 1861 repeals the minimum wage and overtime exemption cur-
rently available for all employees of motion picture theaters. Approxi-
mately 68,000 workers are currently denied the protection of the
FLSA because of this blanket exemption.
A 1966 study of motion picture theaters by the Department of Labor
disclosed the prevalence of extremely low wages in the industry. While
motion picture projectionists were paid well above the minimum wage,
most employees were paid substandard wages. Concession attendants,
cashiers, ushers, and janitors were paid well below the minimum wage.
In 1961, when motion picture theaters received a special minimum
wage and overtime exemption by carrying out a segment of the retail
and service coverage, the poor economic condition of the industry was
cited by industry representatives as a major reason for the exclusion.
This argument was repeated in 1966 when the Congress was con-
sidering amendments to the FLSA which would have eliminated this
exemption. Industry representatives argued against removing the ex-
emption on the basis that increased labor costs could not be passed on
to consumers in the form of higher admission prices by motion pic-
ture theaters because of the depressed state of the industry.
However, the validity of this argument is now open to serious chal-
lenge. Price data published by the Bureau of Labor Statistics of the
Department of Labor indicates that indoor movie admissions have
increased by 39 percent between 1967 and the beginning of 1972. Ad-
missions in drive-in movies have been raised even more-43 percent
since 1967. These increases are far in excess of price increases for prod-
ucts of covered industries and for almost all services covered by the
Act.
The Congress has long recognized the need for minimum wage and
overtime protection for employees in motion picture theaters. Condi-
tions in the industry and the present price structure indicate that re-
moval of this exemption would bring substantial benefits to low-wage
workers and could be easily absorbed by the industry. Furthermore,
the usual hours of business in this industry suggest that it can adapt
to the overtime standard with relative ease.
In short, the case has not been made for continuance of this
exemption.
Small logging crews
The Committee bill removes the minimum wage exemption currently
available to forestry and lumbering operations, with 8 or fewer em-
ployees but retains an overtime exemption for such lumbering opera-
tions.
Prior to the 1966 amendments, the exemption applied to employers
with 12 or fewer employees. In enacting the 1966 amendments the Con-
gress reduced the 12-man test to an 8-man test and the House Com-
mittee report commented on the change as follows :
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The decision on eight employees was made after careful
consideration and investigation of conflicting facts. The Com-
mittee believes the eight-man criterion to be a sound basis for
exemption at the present time, but intends to further investi-
gate these logging operations.
According to the Department of Labor, about 45,000 employees are
currently exempt under this provision. Many of these workers are
paid very low wages and are, in effect, being asked to subsidize their
employers.
The Committee found no adverse effect when minimum wage and
overtime protection was extended to employers with 8-12 workers.
I towever, employees of such loggers did benefit significantly from the
protection of the FI:SA. The Committee is persuaded that all logging
employees should enjoy the minimum wage protection of the Act, and
that this can be accomplished with ease at this time. The Committee
was not satisfied that a. case had been made for a continued minimum
wage exemption. The Committee considered removing the complete
minimum wage and overtime exemption but elected to retain the over-
time exemption at this time. This continues the gradual approach to
fall coverage which has been applied to this industry.
The Committee considered the recordkeeping problems raised by
the industry but concluded that current Department of Labor regula-
tions on this point offered sufficient flexibility to meet the legitimate
needs of this industry. The Committee noted in this regard that small
loggers have been able to keep tax records and complex piece-rate rec-
ords for some time.
Shade-grown tobacco
S. 1861 would remove the special minimum wage and overtime ex-
emption available to employers engaged in the processing of shade
grown tobacco prior to the stemming process for use as cigar wrapper
tobacco.
Prior to the Mitchell v. Budd, 350 U.S. 473 (1956) decision, it had
been held that the processing of shade-grown tobacco was a continua-
tion of the agricultural process and hence came within the scope of the
term "Agriculture." However, the U.S. Supreme Court ruled that
workers engaged in processing leaf tobacco for cigar wrappers after
delivery of the tobacco to bulking plants were not engaged in agricul-
ture and were not exempt as agricultural employees, regardless of
whether (1) the plants were operated exclusively for the processing of
the tobacco grown by the operators, or (2) the employees who worked
on the farms where the tobacco was grown also worked in the plants
processing the tobacco. The Supreme Court decision laid particular
emphasis on the fact that the processing operations substantially
change the natural state of the leaf tobacco and that the farmers who
grow the tobacco do not ordinarily perform the processing. Typically,
this work is done in bulking plants.
The 1961 amendments to the FLSA provided a special exemption
for processing shade-grown tobacco, thus negating the decision of the
Supreme Court.
The Committee bill removes the special exemption because it has
created a situation in which a tobacco processing employee who would
otherwise enjoy the protection of the FLSA, loses such protection solely
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because he had previously worked in the fields where the tobacco was
grown; co-workers who had not worked in the field enjoy "fair labor
standards." In this regard, it should be noted that the Committee re-
tained the overtime exemption for agricultural field-workers. Thus
field work performed in connection with the shade-grown tobacco in-
dustry will continue to operate with an overtime exemption and the
student certification program under section 14 of the Act will still be
applicable.
Agricultural processing industries
The Fair Labor Standards Act currently provides a 14-week partial
overtime exemption for agricultural handling and processing indus-
tries which have been found by the Secretary of Labor to be of a sea-
sonal nature or characterized by marked annually recurring seasonal
peaks of operation, at places of first marketing or first processing of
agricultural or horticultural commodities from farms within the mean-
ing of section 7 (c) or section 7 (d) of the Act. If both sections 7 (c) and
7(d) apply, the exemption period is limited to 20 workweeks, 10 weeks
under each exemption. The exemptions are "partial" in that they are
for limited periods of time and during these exempt periods, employees
must be paid not less than one and one-half times their regular rate of
pay for hours in excess of 10 a day and in excess of 50 or 48 a week,
depending on the basis for the exemption.
S. 1861 eliminates these overtime exemptions. This action was fore-
cast in the Conference Report on the 1966 amendments to the FLSA.
The report states with respect to the agricultural processing industries :
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.
Subsequently the Department of Labor conducted a two-part study
designed
"to provide information on the need for the partial over-
time exemptions available to agricultural processing indus-
tries under section 7 (c) and/or section 7 (d) of the Fair Labor
Standards Act ...
The first part of the Study included eight agricultural
processing industries that qualify for 14 weeks of partial
overtime exemption either under section 7(c) or section 7(d)
of the Act....
The second part of the study included the major agricul-
tural processing industries that qualify for 20 weeks of par-
tial overtime exemption-10 weeks under section 7 (c) and
10 weeks under section 7 (d) ...
Secretary of Labor Shultz, in his Report to the Ninety-first Con-
gress in January 1970 on Minimum Wage and Maximum Hours Stand-
ards under the FLSA, stated :
The study of overtime exemptions available to the agricul-
tural handling and processing industries indicates the need
for re-appraising the favored position which has long been
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given these industries through exemption from the 40-hour
maximum workweek standard. It is my recommendation that
the exemptions currently available under section 7(c) ; 7(d) ;
1.3(b) (14), (15) and (16) be phased out.
The detailed survey which accompanied the Secretary's report out-
lined various reasons for this recommendation. Among these were the
following :
(1) Existing exemptions are not fully utilized.
(2) Many processing establishments are now paying pre-
mium rates for hours over 40 a week.
(3) Currently, some industries which qualify for 20 weeks
of exemption are less seasonal than others which qualify for
14 weeks.
(4) A 40-hour basic straight-time standard would elimi-
nate inequities which currently exist between employers who
now pay premium overtime rates either because they elect to
do so voluntarily or because they are covered by a collective
bargaining agreement and employers who avail themselves of
the overtime exemption.
(5) Additional jobs could be created by second- and third-
shift operations in those industries where large shipments of
raw materials are received in relatively short periods.
(6) Technological advances in recent years have length-
ened the storage life of perishable products.
(7) Grower-processor contracts permit the processor to
specify the time for planting, harvesting and delivery, and
thus make possible better work-scheduling.
While all of these findings were important to the Committee in its
deliberations, two items were of paramount significance. The first was
that there has been a sharp reduction in overtime hours during the
periods when exemptions were likely to be claimed. The second was
the ease with which the processing industries adjusted to the par-
tial cut-backs in overtime exemptions which were made in the 1966
amendments to the Act. Claims of adverse effects advanced during
the 1966 deliberations just did not materialize. There is every indica-
tion that the industry can now make a similar adjustment to the re-
moval of these special exemptions.
Although the Committee did not remove the 13(b) (14) and 13(b)
(16) overtime exemptions for country elevators and transportation
of fruits and vegetables, it was recognized that the same considera-
tions which had resulted in the removal of the other agricultural proc-
essing exemptions could have been applied to the 13 (b) (14) and 13 (b)
(16) exemptions. The Committee chose to retain these exemptions at
this time, but clear evidence of necessity will have to be presented if
these exemptions are to be retained in the future.
Railroad and Pipelines
The Fair Labor Standards Act currently exempts from the overtime
provisions of the Act any employee of an employer subject to the pro-
visions of Part I of the Interstate Commerce Act.
Part I of the Interstate Commerce Act pertains to railroad employ-
ees and employees of oil pipeline transportation companies.
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The Committee bill would retain the overtime exemption for rail-
road employees but would remove the overtime exemption for em-
ployees of oil pipelines.
The Committee, in reviewing the historical basis for this exemption
found that there was no testimony with respect to oil pipeline trans-
portation companies.
This industry was apparently exempted because it is covered along
with railroads under part I of the Interstate Commerce Act and a
case had been made for exempting railroad employees.
The Committee has concluded that there is no basis for continuing
to provide an overtime exemption for employees of oil pipelines. Em-
ployees of gas pipelines are now covered by the overtime provisions
of the FLSA. The action of the Committee eliminates a long-time
competitive inequity between oil pipelines and gas pipelines.
Seafood processing
S. 1861 repeals the overtime exemption currently available in Sec-
tion 13(b) (4) for "any employee employed in the processing, market-
ing, freezing, curing, storing, packing for shipment, or distributing
of any kind of fish, shellfish, or other aquatic forms of animal or vege-
table life, or any product thereof."
The Fair Labor Standards Act as originally enacted provided an
exemption under Section 13 (a) (5) for :
"Any employee employed in the catching, taking, harvesting, culti-
vating, or farming of any kind of fish, shellfish, crustacea, sponges,
seaweeds, or other aquatic forms of animal and vegetable life, includ-
ing the going to and returning from work and including employment
in the loading, unloading, or packing of such products for shipment or
in propagating, processing, marketing, freezing, canning, curing, stor-
ing, or distributing the above products or byproducts thereof."
The 1949 amendments retained the complete exemption for fishing
and Processing, except canning. The minimum wage exemption for
canning was eliminated, but the overtime exemption was retained
under a new Section 13(b) (4).
The 1961 amendments removed the minimum wage exemption for
employees employed in "onshore" operations, such as processing,
marketing, distributing and other fish-handling activities. The over-
time exemption for "onshore" operations was retained by adding such
operations to the exemption already provided for the canning of sea-
food under Section 13(b) (4).
Removal of the overtime exemption for seafood canning and proc-
essing is part of the Committee's effort to achieve parity under the
law for all workers to the maximum extent possible at this time.
Local transit -
Currently, the overtime provisions of the Fair Labor Standards
Act do not apply with respect to any driver, operator, or conductor
employed by an employer engaged in the business of operating a street,
suburban, or interurban electric railway, or local trolley or motorbus
carrier, if the rates and services of such railway and carrier are sub-
ject to regulation by a State or local agency.
The Committee bill would eliminate this overtime exemption in three
steps, except with respect to time spent in "charter activities" under
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specified conditions. The hours of employment will not include hours
spent in charter activities 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. These conditions are set so as to emphasize that the Com-
mittee intends that hours spent in "charter activities" as a part of
the regular workday or workweek are to be included in the definition
of "hours worked" under the Act.
The Committee has been persuaded that the transit industry has
been adjusting to a shorter workweek for some time now. Collective
bargaining agreements typically call for overtime after 40 hours a
week-and in many cases after 8 hours a day. A large segment of the
industry is now covered by such contracts. In addition, an overtime
standard was applied to nonoperating employees of the industry by the
1966 amendments. The Committee bill requires that employees be paid
time-and-one-half their regular rate of pay for all hours over 48 per
week, beginning with the effective date ; after 44 hours, 1 year later ;
and after 40 hours at the end of the second year and thereafter. This
gradual approach ensures ease of adjustment.
It is noted that by virtue of the Committee's action on coverage of
State and local government employment, together with its action on
overtime pay in the local transit industry, operating employees of
publicly and privately owned transit companies will be treated
identically.
A. question was raised concerning the applicability of the overtime
provisions of the Act, in the case of certain collective bargaining agree-
ments involving local transit in the New York area which provide for
straight-time pay for certain off-duty hours. The Committee notes
that section 7(e) (2) of the FLSA provides that "payments made for
periods when no work is performed due to . . . failure of the em-
ployer to provide sufficient work . . . are not made as compensation
for hours of employment." The Committee also notes that the Depart-
ment of Labor's regulations concerning "Hours Worked" contain the
following provision (29 C.F.R. 785.16 (a))
"(a) General. Periods during which an employee is completely re-
lieved from duty and which are long enough to enable him to use the
time effectively for his own purposes are not hours worked. He is not
completely relieved from duty and cannot use the time effectively for
his own purposes unless lie is definitely told in advance that he may
leave the job and that he will not have to commence work until a
definitely specified hour has arrived. Whether the time is long enough
to enable him to use the time effectively for his own purposes de-
pends upon all of the facts and circumstances of the case."
Hotels, motels, and restaurants
S. 1861 eliminates the complete overtime exemption for employees
employed by hotels. motels and restaurants and substitutes a limited
overtime exemption. S. 1861 requires the payment of time and one-half
the regular rate of pay for all hours over 48 in a week on the effective
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date, and for hours after 46 in a week at the end of the first year and
thereafter.
In setting an overtime standard for employees of hotels, motels and
restaurants the Committee recognized that the length of workweeks
have been declining in these activities. It is interesting to note that
when minimum wage coverage was extended to these workers by the
1966 amendments, the Department of Labor reported to the Congress
that there was a reduction in the prevalence of long workweeks in these
industries, even though an overtime exemption was retained.
Tip allowance
S. 1861 modifies section 3 (m) of the Fair Labor Standards Act by
reducing the tip allowance against the minimum wage from 50 per-
cent to 40 percent of the minimum wage, by requiring employer ex-
planation to employees of the tip credit provisions, and by requiring
that all tips received be paid out to tipped employees.
Currently, the law provides that an employer may determine the
amount of tips received by a "tipped employee" and may credit that
amount against the applicable minimum wage, but amount so credited
may not exceed 50 percent of the minimum rate. Thus, a tip credit of up
to $.80 an hour may currently be deducted from the minimum wage of
a tipped employee. (A tipped employee is defined as an employee who
customarily and regularly receives more than $20 a month in tips.)
The Committee was concerned with the entire problem of tips as
wages and the concept of allowing tips to be counted as part of the
minimum wage. The Committee reviewed the study of tips presented
to the Congress by the Department of Labor in 1971. The Committee
also examined provisions of State minimum wage laws which permit
the counting of tips toward a minimum wage.
The Committee was impressed by the extent to which customer tips
contributed to the earnings of some restaurant and hotel employees in
March 1970 (the date of the Labor Department survey). After re-
viewing estimates of tips in this report, the Committee was persuaded
that the tip allowance could not be eliminated at this time as proposed
in S. 1861, but that it should be reduced.
The Labor Department study showed that about one-third of the
tipped employees in hotels and motels and one-quarter of the tipped
employees in restaurants received less than 80 cents an hour in tips.
Also, the Committee found that in February 1971 not a single State
which provided for a tip allowance against the minimum wage, al-
lowed more than 80 cents per hour to be counted.
The 40-percent rule under S. 1861 would retain the 80 cents-allow-
ance (88 cents when the minimum rate goes to $2.20) but does not ex-
pand the reliance on tips to supply the minimum wage.
The Committee tip credit provision is designed to Insure employer
responsibility for proper computation of the tip allowance and to
make clear that the employer is responsible for informing the tipped
employee of how his wage is calculated. Also the bill requires that the
employer must explain the tip provision of the Act to the employee
and that. all tips received by tipped employees must be retained by
tipped employees. This latter provision is not intended to discourage
the practice of pooling tips or sharing tips with busboys and counter-
men, but rather to require that the total amount of tips received by
all tipped employees be paid out to such tipped employees.
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Nursing Homes
The Fair Labor Standards Act currently' provides a partial over-
time exemption for employees of nursing homes. The Act provides an
overtime exemption for any employee of a nursing home who receives
compensation for employment at time and one-half his regular rate
of pay for all hours in excess of 48 in a week.
The Committee bill would reduce the straight time workweek to
46 hours one year after the effective date and to 44 hours a year later.
This gradual reduction in the basic workweek should present no prob-
lem to the industry.
According to a 1969 report of the Department of Labor there had
been a marked decline in average hours per week of nonsupervisory
employees of nursing homes between April 1965 and October 1967.
The report indicates that the application of a 48-hour workweek stand-
ard to nursing homes on February 1, 1967 had very little effect as only
a small proportion of the workers worked over 48 hours a week even
before the Act was extended to the industry. In April 1968, less than
15 percent of all nursing home employees worked over 44 hours in a
week.
Salesmen, Partsmen, and Mechanics
S. 1861 repeals the overtime exemption currently available under
section 13(b) (10) for partsmen and mechanics in nonmanufacturing
establishments primarily engaged in selling or servicing automobiles,
trailers or trucks, but retains the overtime exemption for salesmen in
these establishments.
S. 1861 also repeals the overtime exemption for salesmen, partsmen
and mechanics in nonmanufacturing establishments primarily engaged
i n selling or servicing aircraft.
S. 1861 retains the overtime exemption in Sec. 13(b) (10) for sales-
rrren, partsmen, and mechanics in nonmanufacturing establishments
primarily engaged in selling or servicing farm implements.
The Committee was persuaded that the application of an overtime
standard to partsmen and mechanics in auto, truck and trailer dealer-
ships, and to the presently exempt employees in aircraft dealerships
would be likely to generate additional jobs, and to promote the train-
ing of workers to fill the job. If the industry continues to expand serv-
ice hours, as recent, trends indicate, the overtime penalty should pro-
vide considerable stimulus to the creation of new jobs at a time when
our economy is experiencing high unemployment rates and the training
necessary for meaningful employment in this industry is or should be
readily available.
(lotton Ginning and Sugar Processing Workers
S. 1861 repeals the year-round overtime exemption for cotton gin-
ning and sugar processing employees in section 13(b) (15) of the Fair
Labor Standards Act, but retains the exemption for employees engaged
in processing maple sap into maple syrup or sugar.
The 1970 Report of the Department of Labor on the Agricultural
Handling and Processing Industries includes the recommendation of
the Secretary of Labor that "consideration should be given to the
phasing out of the overtime exemptions currently available to the
agricultural handling and processing industries under section 7(c)
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and 7 (d) of the Fair Labor Standards Act.. ... Although focusing
primarily on sections 7(c) and 7(d) of the Act, the survey data also
indicate that there is no sound basis for the continuation of the year-
round exemptions available under sections 13(b) .... (15) of the
Act. ,,
The Committee is impressed by the various types of government
protection enjoyed by employers in the cotton ginning and sugar proc-
essing industries. The Federal Government has reduced employer risks
in these activities through subsidies. Federal controls, and quotas. Thus,
the committee can find no justification for denying overtime protec-
tion to the employees in these industries, who are typically paid no
more than the minimum wage, and who work extremely long hours.
Catering and Food Service Employees
S. 1861 phases out the complete overtime exemption for employees
of retail and service establishments who are employed primarily in
connection with the preparation or offering of food or beverages either
on the premises or by such services as catering, banquet, box lunch, or
curb or counter service, to the public, to employees, or to members or
guests of members of clubs.
S. 1861 requires that catering and food service employees be paid
time and one half their regular rate of pay, for hours over 48 per week
on the effective date, for hours over 44, after 1 year, and for hours
over 40, after the second year.
The elimination of the special exemption for food service employees
in retail service establishments eliminates a disparity in work stand-
ards for employees of the same establishment. For example, food serv-
ice employees in covered retail establishments are now exempt from
the overtime provisions of the Act while retail clerks, in the same
establishments, are covered by both the minimum wage and overtime
standard. This has been a major source of friction.
It is expected that the gradual phasing out of the overtime exemp-
tion will eliminate excessively long hours in food service and catering
activities and thus generate additional jobs. Also treatment of food
service employees in this manner permits a similar phasing out of the
overtime exemptions for bowling establishments, an exemption predi-
cated in large part upon the food service aspects of such establish-
ments.
Bowlin,q Establishments
The Fair Labor Standards Act currently exempts from the over-
time provisions of the Act any employee of a bowling establishment
if such employee receives compensation for hours in excess of 48 in a
workweek at time and one-half the employee's regular rate of pay.
The Committee bill would reduce the straight-time workweek to
44 hours, 1 year after the effective date and to 40 hours, 1 year later.
The Committee notes that bowling fees have advanced by 18 percent
since 1967. At the same time, pinsetting machine technology has im-
proved and automatic pinsetters have replaced hand pinsetters
throughout the industry. Overtime coverage is easily compatible with
the operative characteristics of the industry. The use of automatic pin-
setters has eliminated problems which had previously resulted from
daily hourly fluctuations in patronage.
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Resident Employee. of Apartment Buildings
S. 1861 adds a new overtime exemption to the Fair Labor Standards
Act for any employee employed by an owner of an apartment building
or by a management agent on behalf of the owner provided that (A)
such employee resides in that apartment building and (B) the gross
annual rentals of such building are less than the gross annual sales
specified in Section 3 (s) of this Act.
The Committee recognizes that the Department of Labor has issued
regulations and interpretations regarding hours of work for employ-
ees residing on employer's premises. These state that an employee who
resides on his employer's premises on a permanent basis or for ex-
tended period of time is not considered as working all the time while
on the premises. The Department of Labor agrees that it is difficult
under these circumstances to determine the exact hours worked and,
therefore, accepts any reasonable agreement of the parties which takes
into account all of the relevant facts.
The Committee, in enacting this overtime exemption, expects that
this exemption will not encourage overtime work at straight-time
rates. Rather, this exemption is designed to indicate that the Com-
mittee accepts as reasonable the present interpretation that "hours
worked" for employees residing on employer's premises may be deter-
mined by the employer and employees.
Dry Cleaning Dri~,er-Salesmen
The Committee bill creates a separate overtime exemption for whole-
sale dry cleaning driver-salesmen who customarily work irregular
hours in performing, services for establishments offering dry cleaning
services to the public. In order to qualify for the exemption, more
than one-half of such employee's annual compensation must repre-
sent commissions based on performing such services.
The Committee amendment involves only a small number of driver-
salesmen in the wholesale dry cleaning business who provide the im-
portant, linkage between the retail tailor shops and the large wholesale
dry cleaning establishments. It should be emphasized, however, that
the amendment provides for an overtime exemption only. The amend-
ment is consistent with the exemption currently applied to outside
salesmen generally. The Committee wishes to affirm its view that the
amendment is designed to meet a unique situation concerning these
particular outside driver-salesmen and should not be construed as a
limitation on FLS A coverage of other laundry and dry cleaning
employees.
House Parents for, Orphans
S. 1861 provides a new overtime exemption for any employee who
is employed with his spouse by a private nonprofit educational insti-
tution to serve as the parents of children-
A. Who are orphans or one of whose natural parents is deceased,
and
R. Who are enrolled in such institution and reside in residential
facilities of the institution, while such children are in residence at
such institution, if such employee and his spouse reside in such facili-
t:.i.es, receive without cost, board and lodging from such institution, and
are together compensated, on a cash basis at an annual rate of not
less than $10,000.
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The Committee, in enacting this amendment, was primarily inter-
ested in insuring that couples who serve as house parents for orphans
in educational institutions would be assured sufficient flexibility in
work standards to protect the interest of the orphans during the pe-
riods when such orphans reside in such institutions.
The Milton Hershey School in Hershey, Pennsylvania is one such
institution. The Hershey school is a residential vocational school for
orphan boys. The students live in 103 separate cottages of 10 to 15
boys each. A married couple lives in each cottage, serving as house-
parents to the boys therein. The Committee felt that imposition of
overtime coverage in this very special employment situation would
result in an especially difficult financial and recordkeeping situation
for such institutions. Above all, this would impinge on the intimate
child-parent relationship that these institutions seek to foster.
The Committee considered, but did not approve, a minimum wage
as well as an overtime exemption for such employees. Thus these
house parents are subject to the minimum wage provisions of the
Act. It would appear that an employee and his spouse who serve as
house parents of orphans in a nonprofit educational institution, who
are paid not less than $10,000 a year in cash wages, and who receive
without cost, board and lodging from such institutions would probably
be found to be paid in compliance with the minimum wage require-
ments of the Act. However, the Committee wishes to reaffirm that these
house parents are not so much hourly workers as they are substitute
parents whose duties could occur at any time.
The Committee recognizes that the Labor Department has issued
special rules for calculating "hours worked" for employees residing
on employer's premises, including such house parents.
It is the Committee's understanding and intent that as to hours
worked by such resident employees, the Labor Department will accept
any reasonable agreement of the parties which takes into consideration
all the, pertinent facts surrounding such employment.
Newspaper delivery boys are presently exempt from the child labor
restrictions of the FLSA. Under regulations issued by the Labor De-
partment, however, those newsboys who deliver daily papers are treated
differently from those who deliver newspapers one or perhaps two
days a week and deliver supplements (in the form of circulars or ad-
vertising materials published by the newspaper) on the remaining
days. Under the present regulations, only newsboys delivering daily
newspapers are considered eligible for the child labor exemption.
Newsboys who deliver newspapers on other than a daily basis and de-
liver other printed materials such as shopping guides, handbills, or
other type of advertising material on non-newspaper days lose the
exemption.
In an effort to eliminate this inequity, the Committee bill includes
an amendment extending the child labor exemption, though not the
minimum wage and overtime exemptions, to newsboys who deliver
shopping news advertising, and other similar supplements published
by the newspaper, on non-newspaper days.
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YOUTH AND FULL-TIME STUDENTS
The present Act contains a number of provisions which provide
flexibility in the application of minimum wage rates to youth. Thus,
under the present law :
1. Under special certificates, full-time students may be employed at
85 per cent of the applicable minimum wage in covered retail and serv-
ice establishments and on covered farms.
2. No minimum wage or overtime standard applies to workers in sea-
sonal recreational and amusement establishments. This is an industry
which employs many young people and such employment continues to
be outside the scope of the Fair Labor Standards Act.
3. For non-covered retail and service enterprises, no wage-hour
standards apply.
4. In agriculture, youths 16 and under may be paid less than the
applicable minimum hourly wage, provided that they are paid at the
same piece rates as adults.
5. The Act continues to provide for a certification program for learn-
ers, apprentices, and messengers at less than the minimum wage pur-
suant to regulations issued by the Secretary of Labor.
This is not intended as an exhaustive list. It is designed to show
the wide assortment of activities that will remain either outside the
scope of the Act or for which student or learner rates are allowed
under a certification procedure.
The Committee gave the most careful consideration to these provi-
sions of the law, and to proposals to establish an across-the-board
youth differential.
The Committee agreed to add educational institutions to those activ-
ities which are currently permitted to employ full-time students under
special certificates issued pursuant to regulations of the Secretary of
Labor at a rate not less than 85 percent of the applicable minimum
wage, only after reviewing the entire situation with respect to youth
unemployment and subminimum wages and afer rejecting by a vote of
13-4, a motion to amend the law to provide for a general youth
differential.
The Act currently permits the employment of full-time students on a
part-time basis (or full-time during vacations and holidays) in retail
and service establishments and in agriculture under special certificates
issued pursuant to regulations of the Secretary of Labor at a wage rate
not less than 85 percent of the applicable minimum wage. These certifi-
cates are issued to the extent necessary in order to prevent curtailment
of opportunities for employment.
Prior to the 1961 amendments to the Act, there were no provisions
relating to the employment of full-time students at subminimum rates.
In revising section 14 of the Act to include full-time students, the Con-
gress sought, through the issuance of certificates, to provide an incen-
tive for employers to hire students while providing assurances that
adult workers would not be adversely affected.
This consideration was clearly spelled out in the report accompany-
ing H.R. 3935 (H. Rept. No. 75, 87th Congress, 1st Session, March 13,
1961, p. 11)
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"The purpose of this provision is to provide employment oppor-
tunities for students who desire to work part-time outside of their
school hours without displacement of adult workers."
The 1966 amendments to the Act further revised section 14 with
respect to full-time students in retail and service establishments and
added a provision for students in agriculture.
The report accompanying H.R. 13712 (II. Rept. No. 1366, 89th
Congress, 2nd Session, March 29, 1966) explained that the full-time
student certificates were to be issued to "students regardless of age
(but in compliance with the applicable child labor laws) ", and re-
peated the basic objectives of these provisions-to provide employ-
ment opportunities for students outside of school hours without dis-
placement of adult workers.
The Committee agrees with the statements expressed in the 1961 and
1966 reports and proposes in S. 1861 to expand the scope of section 14
of the Act in order that educational institutions may be available as
employment opportunities for students. The committee bill, however,
retains the certification procedure, as it now exists, to insure that stu-
dents will not be used to displace other workers. It bears noting that
educational institutions should be able to meet the requirements of the
certification program with relative ease, because students have tradi-
tionally been employed in the type of jobs for which certification will
be requested. Thus the likelihood of adult displacement is diminished.
The Committee rejected a proposal that the FLSA be amended by
repealing the special student certification program and replace it with
a blanket subminimum wage of $1.60 or 80% of the statutory rate for
young people below the age of eighteen and for full-time students up
to the age of 21.
The Committee's rejection of this special subminimum rate was
based on the conviction that this would violate the basic objective of
the Act and that such a standard would contribute to rather than ease
the critical problem of unemployment because it would encourage the
displacement of older workers.
The Committee was disturbed by the following statement of Secre-
tary of Labor Hodgson in his prepared testimony :
"I recognize that there may be some concern that a lower
minimum wage for young people under age 18, for full-time
students, and for young job-starters may reduce employment
opportunities for older workers. There may be some risk in
marginal cases. (Italics added.)
The Committee is aware that the minimum wage worker is typi-
cally regarded as a "marginal" worker. Therefore, the Secretary's
statement was not reassuring.
The Committee was also unconvinced that an increase in the mini-
mum wage rate would result in aggravating youth unemployment.
Indeed, Secretary Hodgson's testimony echoed the conclusion of the
Labor Department study of youth unemployment that no relationship
has been established between the minimum wage and youth unem-
ployment :
"Well, if you are asking for proof, as that document sets forth,
there is no proof. There have been a great many economists and a
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great many studies on this that recommend this change and indi-
cate that it would stimulate employment.
"What we have here is, until we actually try this arrangement
in this country and see what it will accomplish, proof in the tradi-
tional sense of that term is simply not available."
The Committee also rejected the theory, advanced during the hear-
ings, that it should ignore the possible consequences of a subminimum
rate for youth on employment opportunities for adults because of the
availability of public assistance or welfare programs for unemployed
adults.
The Fair Labor Standards Act enacted 33 years ago had as its stated
objective the elimination of "living conditions detrimental to the main-
tenance of the. minimum standard of living necessary for health, effi-
ciency and general well-being of workers."
Its basic purpose has been and continues to be the raising of wages
of that small proportion. of employees at the bottom of the wage scale
who are in no position to bargain for themselves. It is not a substitute
for collective bargaining or the operation of the free labor market. It
protects the fair employer from unfair competition from employers
willing to pay substandard wages. The minimum wage set under the.
Fair Labor Standards Act is not an average wage. By definition, it
is the "lowest" wage which may be paid employees in activities covered
by the Act. It is paid to the unskilled, untrained, inexperienced worker
who frequently is Young or black or a woman.
The minimum wage rate, not unlike the occupational wage rate,
is a wage fora job- not for the age or sex or color of the person doing
the job. That has been the way that wage determinations have tradi-
tionally been made in this country.
Those who recommend a, subminimurn wage as a solution to the un-
eanployment probleru appear to have serious misconceptions about the
minimum wage and, in fact, about the role of wages in general.
There is no evidence to support the idea that low wages create jobs.
.Actually, what evidence there is points in the opposite direction.
Put.- ng money in the hands of low-wage workers is the most direct way
of creating purchasing power-high-velocity dollars-and hence addi-
tional jobs.
I'o conclude that employers would hire workers whom they didn't
really need because wages are low not only ignores the whole concept
of business-for-profit but also omits from consideration all the other
labor-cost factors such as employment, recruiting, supervision, social
security, workmen's compensation, unemployment insurance, pension
plans, hospitalization. medical plans-all of which are considered
before new jobs are created.
Not only is it clear that a subminimum wage is not the solution to
the teenage unemployment, problem. there is considerable doubt as to
whether the problem being discussed is teenage unemployment or dis-
crimination in employment because of race.
A few fimures will hell) to show that the color problem overshadows
the age Problem.
in 1971. there were more than 6 million employed teenagers aged 16
to 19. This was 2 million. more than in 1961 and represented a .50 Per-
cent increase over the decade. Teenagers held almost 8% of all jobs
in 1971 as compared with 6%r in 1961. The single most important
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reason for the relatively high unemployment rate for teenagers is the
dramatic 41% increase in the teenage population during the decade
of the 60's.
As far as teenagers are concerned, the decade of the 70's should ease
the problem. In contrast to a 41% population growth of teenagers in
the 60's, a modest 12% is the outlook of the 70's.
Actually, the rate of teenage unemployment was approximately the
same in 1971 as in 1961 and was higher in 1963 than in 1971. Also, the
teenage unemployment rate vis-a-vis the adult rate (20 and over) was
better in 1971 than in any year since 1962.
, While overall employment of teenagers was significantly higher in
1969 than in 1968 and continued to increase in 1970 and in 1971, non-
white teenagers lost jobs in both 1970 and 1971. Between 1969 and 1971
there was a 3 percent increase in white teenage employment but a
12 percent drop in nonwhite teenage employment.
In 1971, the unemployment rate for nonwhite teenagers was 31.7%;
for white teenagers, 15.1%. For nonwhite adults (20-24) the rate was
15.2%. As reflected in these figures color is more significant than age.
The committee was particulary struck by the fact that the unem-
ployment rate in 1970 for nonwhite high school graduates (age 16
to 24) was 34.3% as compared with 24.9% for white high school
dropouts.
Even these few figures convinced the committee that combining un-
employment statistics for nonwhite and white teenagers and labelling
the result a teenage problem, tended to disguise the real problem facing
us today. And that is discrimination in employment because of color.
In rejecting the concept of a subminimum wage rate based on age,
the committee was impressed by the findings in the Department of
Labor study "Youth Unemployment and Minimum Wages" Bulletin
1657. This report, prepared by the Department of Labor in 1970, is a
comprehensive report on the relationship between minimum wages
and youth unemployment. The report states that the various studies
o, f ailed to establish any relationship between youth unemployment and
the minimum wage. To quote some of the major findings in this report :
In general, the most important factor explaining changes
in teenage employment and unemployment has been general
business conditions as measured by adult unemployment rate.
Not one of the local offices of the Employment Service
(ES) cited the recent hike in the minimum wage or the
extension of coverage under the Federal. Fair Labor Stand-
ards Act as responsible for the change between June 1966
and Time 1969 in the total number of nonfarm job openings
available to teenagers, or which specified a minimum age of
16-19 years of age or 20 years old or over.
In nearly all of the States covered by the study, differential
minimum wage rates applicable to youth, including exemp-
tions, appear to have little impact on the employment of
,youth in 1969.
On the basis of our examination (with respect to foreign
experience) however, it appears reasonable to conclude that
wage differentials are less important factors than rapid eco-
nomic growth, structural and technological shifts, national
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full employment, relatively low mobility rates,'and the rela-
tive shortage of young workers. A similar confluence of these
factors in the American economy might well have similar
effects on youth employment regardless of the wage structure.
This same study provides information on the failure of employers
who are now authorized to employ students at less than the minimum
wage to make full use of this authorization. Only 42% of the hours
authorized were actually used, which belies the argument that certifi-
cates are too difficult to obtain. A significant number of employers
rioted that teenagers were unwilling to work at less than the minimum
wage. Many employers noted they were fully staffed. They indicated
no interest in creating additional jobs at subminimum rates.
Furthermore, our experience following previous raises in the mini-
mum wage rate does not show any connection between minimum wage
levels and youth unemployment.
The Committee thus rejected the efforts to legislate wage discrimi-
nation solely on the basis of age. It did so for all of the previously
stated reasons. It was also very cognizant, however, of the ultimate
recognition by society of the necessity and propriety for equal treat-
ment of young adults. It would be entirely inconsistent with the recent
granting of the right to vote to 18 years olds to make second class wage
earners out of this large working population. It is also entirely incon-
sistent with the Nation's goal of reducing unemployment among heads
of families to create a massive pool of workers at substandard wages.
it was considered unacceptable to this Committee to freeze young
adults, many of whom are heads of households or the sole support of
families, at substandard and subpoverty wages.
The committee is vitally interested. in all programs which will stim-
ulate the economy and generate additional jobs for all the unemployed.
A healthy, thriving economy is the best antidote to unemployment.
Wage-cutting is not and has never been a route to economic prosperity.
The Committee is opposed to a youth wage or a black wage or any
other such arbitrary subminimum wage under the Fair Labor Stand-
ards Act.
The Committee continues to be concerned with the high level of un-
employment. The May 1972 report of the Bureau of Labor Statistics
(released 6/2/72) states that the overall unemployment rate remained
unchanged at 5.9 percent. It continues :
"Although the overall jobless rate was unchanged over the
month, there were some diverse movements among the maj or labor
force groups. The rate of unemployment for adult women rose
from 5.4 to 5.9 percent, a return to the levels prevailing late last
fall ; most of this increase occurred among those 20-24 years of
age. The teenage unemployment rate, on the other hand, dropped
from 17.3 to 15.7 and was at its lowest point in almost 2 years."
(Emphasis added)
The May 1972 report of the Bureau of Labor Statistics contains
many other figures which challenge the position of those who would
concentrate on only one facet of the unemployment problem-youth un-
employment-rather than facing up to the overall unemployment
crisis.
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The report shows that the unemployment rate for white workers de-
clined from 5.4 percent to 5.3 percent over the month while the rate
for black workers increased from 9.6 to 10.7 percent, higher than a year
ago. Other groups for which unemployment was higher in May 1972
than in May 1971 included adult men, adult women, household heads,
married men and full-time workers.
The economy needs to be stimulated to create additional jobs. It does
not need subminimum wages and job substitution.
The Committee amended the FLSA to impose a penalty for the
"knowing" employment of illegal aliens. The amendment has three
aspects as follows :
A. It adds to the criminal penalties already found in the Act for
other violations, a misdemeanor criminal penalty ($1,000 fine, or one
year imprisonment for each alien) for the knowing employment of
an illegal alien by any employer covered by the FLSA. This is in-
tended only to equalize the risk so that employers may find less incen-
tive to employ illegals and less opportunity to use such employment
as a way around the laws the Congress has enacted to protect labor
standards.
B. It adds another disincentive to the employment of illegals by
providing that government contracts subject to the customary pre-
vailing wage and safe and healthful working conditions clauses of
the Davis-Bacon, Walsh-Healey and McNamara-O'Hara Acts, must
also contain assurances that illegal aliens will not be employed on the
contract work or the employer may face contract cancellation and the
other penalties of the relevant Act.
C. It limits the right of the Secretary or the Attorney General to
make blanket "class" exemptions to this part of the Act. Without
eliminating any existing right to make exceptions or exemptions, by
rule and regulation, it does provide that as far as this provision
is concerned each exemption must be granted on its own individual
merits and exemptions may not be granted for entire industries, com-
munities or seasons. It is not intended that the ban on the employment
of illegals or the punishment for such employment should be waived
simply because in the past it may have been the custom to look the
other way in particular cases.
Estimates of the number of job-holding illegal aliens in the United
States vary substantially from 1,500,000 to as high as 10,000,000. The
official records of the Immigration and Naturalization Service, which
are limited only to those illegals who have been apprehended, show
420,126 illegals were apprehended in the United States in F.Y. 1971,
an increase in apprehensions of over 300 percent in the past five years.
The impact on labor standards of the "illegal alien" has long con-
cerned this Committee, and particularly the Migratory Labor Subcom-
mittee, for many illegals are employed in agriculture along our border
areas with Mexico. The number of illegals in the job market creates
a serious diminution of job possibilities for our already swollen
ranks of unemployed and underemployed and for returning Viet Nam
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veterans. Too often the presence of illegals permits employers to ex-
ploit workers, for their "illegal" status makes it unlikely that they
will complain about substandard conditions. Especially at a time when
unemployment levels are high. there is no justification for permitting
the continuous use of illegal foreign workers to undercut this coun-
try's job market.
By "Illegal aliens" the Committee is referring to a person who
enters the United States unlawfully and finds work here or a person
who enters the country lawfully and then violates the conditions of
his admission with respect to employment. Insofar as any alien in
arr illegal or temporary status is authorized by the Attorney General
to accept employment, then his employment by an employer would
not be affected by this proposed provision.
More important is that insofar as.an alien who is illegally present
in this country had concealed his status from his employer, the em-
ployer would not be affected by the amendment. Such cases are covered
iii large measure by our immigration laws, over which the Committee
has no jurisdiction.
It is the intent of the Committee that the amendment apply to em-
ployers covered by the Act who knowingly employ illegals. In a
great many cases, the employer and the illegal alien closely collaborate
in a venture in which the risks and prospective profits are quite un-
equally shared. Specifically, the knowing employer of illegal alien
labor stands to gain in terms of not having to pay standard wages or
fringe benefits, while he risks absolutely nothing. Because of the very
nature of the worker's illegal status, he is subject not only to exploita-
tion while on the job, but if he complains about his treatment, law
enforcement authorities may be called upon to deport him back to
his home country. Many times, in such situations, the employer loses
only the time it takes him to find the next illegal alien.
It is very important to note that the Committee intends that this
provision be enforced in a manner which prohibits the harassment of
Mexican-Americans and the denial of basic human rights. In this way,
employers would no longer be able to create two classes of employees-
illegal alien laborers who are paid less and subjected to miserable
housing and other working conditions, and domestic citizens who re-
ceive slightly better pay and treatment. By so doing, we have elimi-
nated the economic incentive for exploitation. of alien laborers and
dindnished the likelihood of employers playing off one class of workers
against another.
EQTrAL PAY FOR EQT?AL WORK
The bill extends equal pay protection to workers employed in execu-
tive, administrative and professional capacities, as well as elementary
and secondary school teachers, academic administrative personnel, and
outside salesmen.
The Equal Pay Act, which was enacted in 1963 and became effective
on .June 11, 1964, outlaws wage discrimination because of sex. The cate-
gories of employees who are presently outside the scope of the equal
pay standard are excluded primarily because the Act did not remain
a separate statute as initially contemplated, but was incorporated into
the FLSA complete with FLSA exclusions and exemptions. These
exclusions were developed for reasons unrelated to wage discrimina-
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tion and to apply them to an anti-wage discrimination standard was
based on the fact that it would be simpler to administer if it was co-
extensive with minimum wage coverage.
Equal pay is now a well-recognized and accepted standard and
the time has come to end exclusions which were at best "transitional"
in nature.
The need for an equal-pay standard is at least as great or greater in
the areas to which the standard is now inapplicable as in the areas to
which it applies. The statistical evidence is persuasive that the more
education and experience a woman worker has, the greater the earn-
ings gap between her and a man with the same amount of education
and experience. Furthermore, there is a considerable body of informa-
tion which indicates that prohibitions against all forms of discrimina-
tion on account of sex under Title VII of the Civil Rights Act of 1964
has had little impact on insuring equal pay for equal work in execu-
tive, administrative, and professional categories.
The equal pay provision of the FLSA has proven to be an effective
means of eliminating wage discrimination based solely on sex in activi-
ties covered by the standard. It is expected that extending the stand-
ard to other activities will be equally effective in eliminating the re-
maining areas of wage discrimination.
NONDISCRIMINATION ON ACCOUNT OF AGE IN GOVERNMENT
EMPLOYMENT
S. 1861 amends the Age Discrimination in Employment Act of 1967
(PL 90-202) to include within the scope of coverage, Federal, State
and local government employees. This amendment is similar to a pro-
posal first introduced by Senator Bentsen as S. 3318, and then as an
amendment to S. 1861. The amendment is a logical extension of the
Committee'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 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.
The Committee recognizes that the omission of government workers
from the Age Discrimination in Employment Act did not represent a
conscious decision by the Congress to limit the ADEA to employment
in the private sector. It reflects the fact, that in 1967, when ADEA was
enacted, most government employees were outside the scope of the
FLSA and the Wage Hour and Public Contracts Divisions of the
Department of Labor, which enforces the Fair Labor Standards Act,
were assigned responsibility for enforcing the Age Discrimination in
Employment Act.
As the President said in his message of March 23, 1972, supporting
such an extension of coverage under the ADEA, "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 which ignores a person's unique status as an indi-
vidual and treats him or her as a member of some arbitrarily-defined
J
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group. Especially in the employment field, discrimination based on age
is cruel and self-defeating; it destroys the spirit of those who want to
work and it denies the Nation the contribution they could make if they
were working."
The Committee was impressed by a press release issued by Secretary
of Labor Hodgson on February 4, 1972 which was headed: "Voluntary
Compliance with Age Discrimination Laws Opens Up 1 Million Jobs,
Secretary of Labor Tells Congress". The release states that informal
talks with some 30,000 employers dispelled "preconceived 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
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 8 of the Committee bill amends section 16(c) to authorize
the Secretary of Labor not only to bring suit to recover unpaid mini-
mum wages or overtime compensation, a right which he currently has,
but also to sue for an equal amount of liquidated damages without re-
quiring a written request from an employee. The addition of liqui-
dated damages is a necessary penalty to assure compliance with the
Fair Labor Standards Act. Currently, all that is required of the em-
ployer is that he pay the wages that should have been paid in the first
place, without any penalty for violating the Act. This is not a deterrent
to future violations.
This Section would also allow the Secretary of Labor to bring suit
even though the suit might involve issues of law that have not been
finally settled by the courts. At the present time, many of the protec-
tions that are written into this Act are not being extended to workers
because of the current restrictions on the Secretary in bringing suits in
areas that have not been finally settled by the courts. The Act places
the primary responsibility for the enforcement of this Act on the Sec-
retary of Labor; he should have the right to bring suits directly in
order to resolve issues of law.
The Committee is concerned that the Employment Standards Ad-
ministration of the Department of Labor which now has responsibility
for administering the Fair Labor Standards Act appears to be con-
sidering reordering its priorities in such a way as to downgrade en-
forcement of this Act. The Committee wishes to reemphasize that it
expects the Department to maintain a vigorous enforcement program
under this Act; that coverage should be interpreted broadly; and that
every effort should be made to insure that those employees who have
been the victims of violations of this Act are made whole.
It is to be noted that information furnished to the Committee by
the Department of Labor shows that violations of the FLSA are still
widespread, and that an intensified program of inspections is fully
warranted by the results achieved by the present enforcement pro-
gram. Low-wage employees, who desperately need a decent wage to
provide themselves and their families with the rudiments of life, are
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being cheated out of millions of dollars each year; and violations of
child labor laws are so widespread as to constitute a national scandal.
The Department of Labor must, of course, encourage voluntary com-
pliance with the law and furnish technical assistance to employers
who may not fully understand its complexities; but we have not yet
reached the point where we can place primary reliance on these ap-
proaches; a vigorous and tough enforcement program remains a nec-
essity to guarantee that American workers receive the full protection
that the FLSA is designed and intended to provide to them.
TABULATION OF VOTES IN COMMITTEE
Pursuant to section 133 (b) of the Legislative Reorganization Act
of 1946, as amended, the following tabulation of votes in committee is
provided.
1. Senator Dominick's amendment to strike from the bill coverage
of domestics (defeated 13-3) :
Mr. Dominick
Mr. Packwood
Mr. Taft
NAYS-13
Mr. Williams Mr. Javits
Mr. Randolph Mr. Schweiker
Mr. Pell Mr. Stafford
Mr. Kennedy
Mr. Nelson
Mr. Mondale
Mr. Eagleton
Mr. Cranston
Mr. Hughes
Mr. Stevenson
2. Senator Stevenson's amendment to provide for a criminal penalty
for the knowing employment of illegal aliens (adopted 10-3)
YEAS-10
Mr. Williams Mr. Schwciker
Mr. Randolph Mr. Stafford
Mr. Kennedy
Mr. Mondale
Mr. Eagleton
Mr. Cranston
Mr. Hughes
Mr. Stevenson
Mr. Dominick
Mr. Packwood
Mr. Taft,
3. Senator Dominick's amendment to retain the dollar-volume test
for retail and service establishments at $250,000 (defeated 10-6) :
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Mr. Randolph
Mr. Dominick
Mr. Packwood
Mr. Taft
Mr. Beall
Mr. Stafford
NAYS-10
Mr. Williams Mr. Davits
Mr. Pell Mr. Schweiker
M r. Kennedy
Mr. Nelson
Mr. Mondale
Mr. Cranston
Alf r. Hughes
Mr. Stevenson
1. Senator Williams' amendment to reduce the dollar-volume test
i'ronr $250,000 to $150,000 in four $25,000 annual stages (adopted
t3-3):
Y EA S-13
Al r. Williams Mr. Davits
1'I r. Randolph Mr. Schweiker
Mr. Pell Mr. Beall
I -NJ r. Kennedy Mr. Stafford
M r. Nelson
M r. Mondale
Mr. Cranston
Mr. If ughes
M r. Stevenson
Mr. Dominick
NI r. Packwood
Al r. Taft
5. Senator 1'ackwood's amendment to retain the overtime exemption
in the present law for automobile mechanics (defeated'9-6) :
Ylr. Dominick
A r. Schweiker
,A] r. Packwood
Mr. Taft
Mr. Beall
Mr?. Stafford
Mr. Williams
Mr. Randolph
Mr. Pell
Mr. Kennedy
M r. Mondale
D'Ir. Eagleton
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50
9. Senator Dominick's amendment to set the minimum rates as
follows-for non-agricultural employees covered prior to 1966, $1.80
the first year and $2.00 thereafter, for non-agricultural empoyees cov-
$1.70 the first year, $1.80 the
ered by the 1966 or the 1972 amendments,
second year and $2.00 thereafter, for agricultural employees, $1.50 the
first, year and $1.70 thereafter (defeated 13-4) :
Mr. Dominick
Mr. Packwood
Mr. Taft
Mr. Beall
NAYS-13
Mr. Williams Mr. Javits
Mr. Randolph Mr. Schweiker
Mr. Pell Mr. Stafford
Mr. Kennedy
Mr. Nelson
Mr. Mondale
Mr. Eagleton
Mr. Cranston
Mr. Hughes
Mr. Stevenson
10. Senator Taft's amendment to strike from the bill coverage of
Federal employees (defeated 13-4) :
YEAS--4
Mr. Dominick
Mr. Packwood
Mr. Taft
Mr. Beall
NAYS-13
Mr. Williams Mr. Javits
Mr. Randolph Mr. Schweiker
Mr. Pell Mr. Stafford
Mr. Kennedy
Mr. Nelson
Mr. Mondale
Mr. Eagleton
Mr. Cranston
Mr. Hughes
Mr. Stevenson
11. Senator Williams'' motion that the committee favorably report
S. 1801, as amended (adopted 14-3) :
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Mr. Williams
Mr. Randolph
Mr. Pell
Mr. Kennedy
Mr. Nelson
Mr. Mondale
Mr. Eagleton
Mr. Cranston
Mr. Hughes
Mr. Stevenson
Mr. Dominick
Mr. Packwood
Mr. Taft
Mr. Javits
Mr. Schweiker
Mr. Beall
Mr. Stafford
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SECTION-BY-SECTION ANALYSIS
SECTION 1. The popular name of this bill is the "Fair Labor Stand-
ards Amendments of 1972."
SEC. 2. Amends sections 3(d) and 3(e) of the Fair Labor Standards
Act of 1938, as amended, to include under the definitions, of "employer"
and "employee" the United States and any State or political sub-
division of a State. This will expand the coverage of the existing law to
include agencies and activities of the United States (except the armed
forces and certain employees not in the competitive service), and to
similar employees in the States and their political subdivisions, not
just hospitals, nursing homes, schools, and local transit as at present.
This amendment would add to coverage an estimated 4.9 million
workers (1.7 million Federal, 3.2 million State and local government).
Amends section 3 (e) to also include under the definition of "employee"
any individual employed in domestic service, except babysitters. This
amendment would add to coverage an estimated 1.2 million workers.
In addition, section 3 (e) is amended to include local seasonal hand
harvest laborers in the man-day count for agricultural coverage and to
define those government employees covered by the bill.
Amends section 3(h) to add the words "or other activity" to the
definition of the word "Industry."
Amends section 3(m) to reduce the allowance for tips as part of
wages for employees in normally tipped occupations to 40 percent and
to require that tipped employees retain all tips. At present, employers
may include the value of tips actually received in determining wages
to be paid, up to half the statutory minimum rate.
Amends section 3(r) to include under "enterprise" the activities
of the United States Government or any State or political subdivision
thereof. This amendment will have the effect of retaining the current
coverage for schools and hospitals, whether operated for profit or not
for profit, and. for regulated public and private local transit whether
operated for profit or not for profit.
Amends section 3(s) to lower the sales test for "enterprise" coverage
to $150,000 in annual gross sales over a four-year period, thus adding
to coverage those enterprises with between $250,000 and $150,000 in
gross sales. This amendment retains coverage of enterprises which are
engaged in: laundering, cleaning or repair of clothing or fabrics;
construction or reconstruction or both; and the operation of hospitals
and schools, whether operated for profit or not for profit. Present law
covers only retail and service enterprises with annual gross sales
volume of $250,000 or more. This amendment would add to coverage
an estimated 2 million workers (1.8 million in retail trade, and about .2
million in services, excluding domestic service).
Amends sections 5 and 8 by bringing under the mainland minimum
wage the employees of hotels, motels, and restaurants in Puerto Rico
and the Virgin Islands. At present these workers are covered by wage
(53)
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rates determined by specially convened industry committees. Also
covered at the mainland minimum are employees of governmental
units in Puerto Rico and the Virgin Islands.
SEc. 3. Amends section 4 to make it a crime to knowingly employ
illegal aliens.
SEC. 4. Amends section 6(a) to establish, for employees in activities
covered by the Act prior to the 1966 amendments, an hourly minimum
of $2.00 during the first year from the effective date of the 1972
amendments and $2.20 thereafter.
Amends section 6(a) to establish, for employees in agriculture, an
hourly minimum of $1.60 during the first year from the effective date
of the 1972 amendments, $1.80 during the second year from the
effective date of the 1972 amendments, $2.00 during the third year
from the effective date of the 1972 amendments, and $2.20 thereafter.
Amends section 6(a) to establish, for employees newly covered by the
1966 amendments and by the 1972 amendments, an hourly minimum
of $1.80 during the first year from the effective date of the 1972
amendments, $2.00 during the second year from the effective date
of the 1972 amendments, and $2.20 thereafter.
Amends section 15(c) to require that covered employees in Puerto
Rico and the Virgin Islands making less than $0.80 per hour under
the most recent wage order be paid not less than $1.00 sixty days
after enactment. Thereafter, their wages are increased by $0.20 per
hour each year until parity is achieved with the mainland minimum.
Employees over $0.80 per hour are raised $0.20 per hour each year
after enactment until parity is achieved. Each year, special industry
committees may increase the $0.20 per hour raise, but they may not
lower it. Provision is also made for newly covered employees.
Amends section 6(e) to eliminate clauses excluding certain linen
supply establishments from full coverage.
SEC. 5. Amends section 7 to eliminate certain provisions which
provide partial overtime exemptions, particularly in agricultural
processing industries, and makes other conforming amendments.
Amends section 7 to provide for overtime averaging over a twenty-
eight day period and a phase down from 48 to 40 hours per week with-
out time-and-a-half penalty for state and local government employees
engaged in fire protection and law enforcement activities, including
security personnel in correctional institutions.
Amends section 7 to exempt voluntary charter activities from hours
worked in local transit for purposes of calculating overtime.
SEc. 6. Amends section 12 to permit the Secretary to require em-
ployers to obtain proof of age from any employee in order to carry out
the objectives of the child labor provisions of the Act.
SEc. 7(a). Amends section 13(a) to bring executive, administrative,
or professional employees under the equal pay provision (section
6(d)) of the law. Section 6(d) was added to the Fair Labor Standards
Act by the Equal Pay Act of 1963, 77 Stat. 56.
Retains minimum wage and overtime exemptions permitted by
section 13(a) as follows:
13(a)(1) which describes any employee employed in a bona fide
executive, administrative, or professional capacity, or in the capacity
of outside salesman;
13(a)(3) employees of seasonal amusement and recreational estab-
lishments ;
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13(a) (5) employees engaged in certain seafood harvesting and
processing;
13 (a) (6) employees in agriculture if employer uses 500 or fewer
man days of hired labor during a peak quarter, but the provision
exempting local seasonal hand harvest laborers regardless of the size
of the farm on which they work is repealed;
13(a)(7) certain learners, apprentices, students, or handicapped
workers ;
13(a)(8) employees of small newspapers;
13 (a) (10) switchboard employees of small telephone companies; and
13(a) (12) seamen on other than an American vessel.
Repeals minimum wage and overtime exemptions permitted by
section 13(a) as follows:
13(a)(4) and (11) employees in certain retailing and service
establishments ;
13(a)(9) employees of motion picture theaters;
13 (a) (14) agriculture employees engaged in growing and harvesting
shade-grown tobacco.
Repeals section 13(a)(13) by removing minimum wage exemption
for logging employees and retaining overtime exemption in new
paragraph of section 13(b).
Amends section 13(a)(2) by eliminating the special dollar volume
establishment test for retail and service enterprises. This amendment
has the effect of covering most chain store operations not now covered.
SEC. 7(b). Retains overtime exemptions permitted by section 13(b)
as follows:
13(b)(1) employees for whom the Secretary of Transportation may
establish qualifications and maximum hours of service:
13 (b) (2) employees of railroads;
13 (b) (3) employees of air carriers,
13 (b) (5) outside buyers of dairy products;
13 (b) (6) seamen;
13 (b) (9) certain employees of small radio or television stations;
13(b) (10) employees employed as salesman by motor vehicle dealers,
or as salesmen, partsmen or mechanics by farm implement dealers;
13(b)(11) local drivers and drivers' helpers;
13 (b) (12) certain agricultural employees;
13(b)(13) employees engaged in livestock auction operations;
13(b)(14) employees of country elevators;
13(b)(16) employees engaged in transportation of fruits and
vegetables; and
13(b)(17) taxicab drivers.
Repeals overtime exemptions permitted by section 13(b) as follows:
13(b)(2) employees of oil pipelines;
13(b)(4) employees of certain fish and aquatic forms of food
processors;
13(b) (10) employees employed as partsmen or mechanics by motor
vehicle dealers, or as salesmen, partsmen or mechanics by aircraft
dealers :
13(b)(15) employees engaged in ginning of cotton, sugar beet or
sugar cane processing, but the exemption for employees engaged in
the processing of maple sap into syrup is retained;
Overtime standards for certain employees are improved in stages as
follows :
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13 (b) (8) employees of nursing homes must be paid time-and-a-half
after 48 hours first year (as in present law), after 46 hours second
year, and after 44 hours thereafter;
13 (b) (8) employees of hotels, motels, and restaurants must be paid
time-and-a-half after 48 hours first year, and after 46 hours thereafter.
Overtime standards for certain employees are repealed in stages as
follows :
13(b)(7) employees of street, suburban or interurban electric rail-
ways, or local trolley or motor bus carriers must be paid time-and-a-
half after 48 hours first year, 44 hours second year, and the exemption
is repealed thereafter (all hours exclusive of voluntary charter time);
13(b)(18) and 13(b)(19) employees of food service and catering
establishments and bowling establishments must be paid time-and-a-
half after 48 hours first year, 44 hours second year, and the exemptions
are repealed thereafter.
Amends section 13(b) to provide new overtime exemptions for the
following employees:
Domestic service employees,
Resident employees in small apartment buildings,
Ilouseparents (couples) of orphans in private nonprofit educa-
tional institutions, if couple earns at least $10,000 per year.
I)river-salesmen in certain dry cleaning establishments who
earn more than half their salary in commissions.
Amends section 13(d) to exempt from the child labor laws newsboys
delivering shopping news and advertising material published by the
newspaper.
SEC. 7(c). Amends the provisions relating to child labor in agri-
culture to prohibit certain employment outside of school hours,
principally for all children under the age of twelve, except on a farm
owned or operated by a parent.
SEC. 8. Amends section 14(b) to prevent unwarranted displacement
of full-time employees by student workers in retail and service estab-
lishments that are brought within the coverage of the FLSA by these
amendments and to provide for student certificates for educational
institutions.
SEC. 9. Amends section 16(c) to allow the Secretary of Labor to
bring suit to recover unpaid minimum wages or overtime compensa-
tion and an equal amount of liquidated damages without requiring a
written request from an employee. In addition, this amendment would
allow the Secretary to bring such actions even though the suit might
involve issues of law that have not been finally settled by the courts.
SEC. 10. Amends section 16 to provide for a civil penalty of up to
$1000 for violation of the provisions of section 12, relating to child
labor.
SEC. 11. Amends section 18(b) to conform with new amendments.
SEC. 12. Provides conforming amendments to other laws.
SEC. 13. Amends age discrimination in Employment Act of 1967 to
cover employees of Federal, State, and local governments.
SEC. 14. Provides that the Fair Labor Standards Amendments of
1972 become effective 60 days after date of enactment.
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Changes in Existing Law
(Existing law proposed to be omitted is enclosed in black brackets,
new matter is printed in italic, existing law in which no change is
proposed is shown in roman) :
FAIR LABOR STANDARDS ACT OF 1938
AN ACT To provide for the establishment of fair labor standards in employments
in and affecting interstate commerce, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled, That this Act may
be cited as the "Fair Labor Standards Act of 1938."
FINDINGS AND DECLARATION OF POLICY
SEC. 2. (a) The Congress hereby finds that the existence, in in-
dustries 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 gen-
eral well-being of workers (1) causes commerce and the channels and
instrumentalities of commerce to be used to spread and perpetuate
such labor conditions among the workers of the several States; (2) bur-
dens commerce and the free flow of goods in commerce; (3) constitutes
an unfair method of competition in commerce; (4) leads to labor dis-
putes burdening and obstructing commerce and the free flow of goods
in commerce; and (5) interferes with the orderly and fair marketing
of goods in commerce.
(b) It is hereby declared to be the policy of this Act, through the
exercise by Congress of its power to regulate commerce among the
several States and with foreign nations, to correct and as rapidly as
practicable to eliminate the conditions above referred to in such
industries without substantially curtailing employments 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, transmis-
sion, or communication among the several States or between any State
and any place outside thereof.
(c) "State" means any State of the United States or the District
of Columbia or any Territory or possession of the United States.
(d) "Employer" includes any person acting directly or indirectly
in the interest of an employer in relation to an [employee but shall
not include] employee, including the United States [or] and any
(57)
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58
State or political subdivision of a [State (except with respect to
employees of a State, or a political subdivision thereof, employed
(1) in a hospital, institution, or school referred to in the last sentence
of subsection (r) of this section, or (2) in the operation of a railway
or care ier referred to in such sentence), or] State, but shall not include
any labor organization (other than when acting as an employer), or
anyone acting in the capacity of officer or agent of such labor
organization.
(e) "Employee" [includes] means any individual employed by an
employer, including any individual employed in domestic service
(other than a babysitter), and in the case of any individual employed
by the United States means any individual employed (1) as a civilian
in the military departments as defined in Section 102 of Title 5, United
States Code, (2) in executive agencies (other than the General Account-
ing Office) as defined in. Section 105 of Title 5, United States Code
(including employees who are paid from non-appropriated funds),
(3) in the United States Postal Service and the Postal Rate Commis-
sion, (4.) in those Units of the Government of the District of Colum-
bia having positions in the competitive service, (5) in those units of
the legislative and ;judicial branches o f the Federal Government hav-
ing positions in the competitive service, and (6) in the Library of
Congress, and in the case of any individual employed by any State or
political subdivision of any State ?Weans any employee holding a posi-
tion comparable to one of the positions enumerated for individuals
employed by the United States except that such term shall not, for
the purposes of section 3 (u) include [-]
[(1) ] any individual employed by an employer engaged in agri-
culture if such individual is the parent, spouse, child, or other
member of the employer's immediate family. [or]
[(2) any individual who is employed by an employer engaged
in agriculture if such individual (A) is employed as a hand har-
vest laborer and is paid on a piece rate basis in an operation which
has been, and is customarily and generally recognized as having
been, paid on a piece rate basis in the region of employment, (B)
commutes daily from his permanent residence to the farm on which
he is so employed, and (C) has been employed in agriculture less
than thirteen weeks during the preceding calendar year.]
(f) "Agriculture" includes farming in all its branches and among
other things includes the cultivation and tillage of the soil, dairying,
the production, cultivation, growing, and harvesting of any agri-
cultural or horticultural commodities (including commodities defined
as agricultural commodities in section 15(g) of the Agricultural
Marketing Act, as amended), the raising of livestock, bees, fur-
bearing animals, or poultry, and any practices (including any forestry
or lumbering operations) performed by a farmer or on a farm as an
incident to or in conjunction with such farming operations, including
preparation for market, delivery to storage or to market or to carriers
for transportation to market.
(g) "Employ" includes to suffer or permit to work.
(h) "Industry" means a trade, business, industry, or other activity,
or branch or group thereof, [or group of industries,] in which in-
dividuals are gain fully employed.
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(i) "Goods" means goods (including ships and marine equipment)
wares, products, commodities, merchandise, or articles or subjects ol
commerce of any character, or any part or ingredient thereof, but
does not include goods after their delivery into the actual physical
possession of the ultimate consumer thereof other than a producer,
manufacturer, or processor thereof.
(j) "Produced" means produced, manufactured, mined, handled,
or in any other manner worked on in any State; and for the purposes
of this Act an employee shall be deemed to have been engaged in the
production of goods if such employee was employed in producing,
manufacturing, mining, handling, transporting, or in any other man-
ner working on such goods, or in any closely related process or occupa-
tion directly essential to the production thereof, in any State.
(k) "Sale" or "sell" includes any sale, exchange, contract to sell,
consignment for sale, shipment for sale, or other disposition.
(1) "Oppressive child labor" means a condition of employment under
which (1) any employee under the age of sixteen years is employed
by an employer (other than a parent or a person standing in place of a
parent employing his own child or a child in his custody under the
age of sixteen years in an occupation other than manufacturing or
mining or an occupation found by the Secretary of Labor to be partic-
ularly hazardous for the employment of children between the ages of
sixteen and eighteen years or detrimental to their health or well-
being) in any occupation, or (2) any employee between the ages of
sixteen and eighteen years is employed by an employer in any occu-
pation which the Secretary of Labor shall find and by order declare
to be particularly hazardous for the employment of children between
such ages or detrimental to their health or well-being; but oppressive
child labor shall not be deemed to exist by virtue of the employment
in any occupation of any person with respect to whom the employer
shall have on file an unexpired certificate issued and held pursuant to
regulations of the Secretary of Labor certifying that such person is
above the oppressive child labor age. The Secretary of Labor shall
provide by regulation or by order that the employment of employees
between the ages of fourteen and sixteen years in occupations other
than manufacturing and mining shall not be deemed to constitute
oppressive child labor if and to the extent that the Secretary of Labor
determines that such employment is confined to periods which will not
interfere with their schooling and to conditions which will not inter-
fere with their health and well-being.
(m) "Wage" paid to any employee includes the reasonable cost,
as determined by the Secretary of Labor, to the employer of furnish-
ing such employee with board, lodging, or other facilities, if such
board, lodging, or other facilities are customarily furnished by such
employer to his employees : Provided, That the cost of board, lodging,
or other facilities shall not be included as a part of the wage paid to
any employee to the extent it is excluded therefrom under the terms of
a bona fide collective-bargaining agreement applicable to the particu-
lar employee: Provided further, That the Secretary is authorized to
determine the fair value of such board, lodging, or other facilities for
defined classes of employees and in defined areas, based on average
cost to the employer or to groups of employers similarly situated, or
average value to groups of employees, or other appropriate measures
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of fair value. Such evaluations, where applicable and pertinent, shall
be used in lieu of actual measure of cost in determining the wage paid
to any employee. In determining the wage of a tipped employee, the
amount paid such employee by his employer shall be deemed to be
increased on account of tips by an amount determined by the employer,
but not by an amount in excess of [50] 40 per centum of the applicable
minimum wage rate, except that [in the case of an employee who
(either himself or acting through his representative) shows to the
satisfaction of the Secretary that the actual amount of tips received
by him was less than the amount determined by the employer as the
amount by which the wage paid him was deemed to be increased
under this sentence, the amount paid such employee by his employer
shall be deemed to have been increased by such lesser amount.] the
amount of the increase on account of tips determined by the employer
may not exceed the value of tips actually received by the employee.
The previous sentence shall not apply unless (1) the employer has
informed each of his tipped employees of the provisions of this section,
and (2) all tips received by any such employees have been retained by
such tipped empoyees.
(n) "Resale" shall not include the sale of goods to be used in resi-
dential or farm building construction, repair, or maintenance : Pro-
vided, That the sale is recognized as a bona fide retail sale in the
industry.
(o) IIouRS WoR1crn:--In determining for the purposes of sections
6 and 7 the hours for which an employee is employed, there shall be
excluded any time spent in changing clothes or washing at the begin-
ning or end of each workday which was excluded from measured work-
ing time during the week involved by the express terms of or by custom
or practice under a bona fide collective-bargaining agreement appli-
cable to the particular employee.
(p) "American vessel" includes any vessel which is documented or
numbered under the laws of the United States.
(q) "Secretary"' means the Secretary of Labor.
(r) "Enterprise" means the related activities performed (either
through unified operation or common control) by any person or persons
for a common business purpose, and includes all such activities
whether public or private or conducted for profit or not for
profit, or whether performed in one or more establishments or by one
or more corporate or other organizational units including departments
of an establishment operated through leasing arrangements, but shall
not include the related activities performed for such enterprise by an
independent contractor: Provided, That, within the meaning of this
subsection, a retail or service establishment which is under independent
ownership shall not be deemed to be so operated or controlled as to be
other than a separate and distinct enterprise by reason of any arrange-
ment, which inclines, but is not necessarily limited to, an agreement,
(1) that it will sell, or sell only, certain goods specified by a particular
manufacturer, distributor, or advertiser, or (2) that it will join with
other such establishments in the same industry for the purpose of
collective purchasing, or (3) that it will have the exclusive right to
sell the goods or use the brand name of a manufacturer, distributor, or
advertiser within a specified area, or by reason of the fact that it occu-
pies premises leased to it by a person who also leases premises to other
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retail or service establishments. For purposes of this subsection, the
activities performed by any person or persons [-]
[(1) in connection with the operation of a hospital, an institu-
tion primarily engaged in the care of the sick, the aged, the
mentally ill or defective who reside on the premises of such
institution, a school for mentally or physically handicapped or
gifted children, an elementary or secondary school, or an institu-
tion of higher education (regardless of whether or not such
hospital, institution, or school is public or private or operated for
profit or not for profit), or
[(2) in connection with the operation of a street, suburban or
interurban electric railway, or local trolley or motorbus carrier,
if the rates and services of such railway or carrier are subject to
regulation by a State or local agency (regardless of whether or
not such railway or carrier is public or private or operated for
profit or not for profit),
shall be deemed to be activities performed for a business purpose.]
in connection with the activities of the Government of the United
States or o fany State or political subdivision of any State shall be
deemed to be activities performed for a business purpose.
(s) "Enterprise engaged in commerce or in the production of goods
for commerce"' means an enterprise (whether public or private or ope r-
ated for profit or not, for profit and including activities of the Govern-
ment of the United States or of any State or political subdivision of
any State) which has [employees.] any employee engaged in commerce
or in the production of goods for commerce, including [employees]
any employee handling, selling, or otherwise working on goods that
have been moved in or produced for commerce by any person, and
which-
(1) [during the period February 1, 1967, through January 31,
1969,] is an enterprise whose annual gross volume of sales made
or business done is-[not less than $500,000 (exclusive of excise
taxes at the retail level which are separately stated) or is a gaso-
line service establishment whose annual gross volume of sales is
not less than $250,000 (exclusive of excise taxes at the retail level
which are separately stated), and beginning February 1, 1969, is
an enterprise whose annual gross volume of sales made or business
done is not less than $250,000 (exclusive of excise taxes at the
retail level which are separately stated) ;]
(A) not less than $225,000' (exclusive of excise taxes at the
retail level which are separately stated) during the first year from
the effective date of the Fair Labor Standards Amendments of
1972;
(B) not less than $200,000 (exclusive of excise taxes at the retail
level which are separately stated) during the second year from
such date;
(C) not less than $175,000 (exclusive of excise taxes at the
retail level which are separately stated) during the third year
from such date;
(D) not less than $150,000 (exclusive of excise taxes at the
retail level are separately stated) thereafter;
(2) is engaged in laundering, cleaning, or repairing clothing
or fabrics;
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(3) is engaged in the business of construction or reconstruction,
or both ; or
(4) is engaged in the operation of a hospital, an institution
primarily engaged in the care of the sick, the aged, the mentally
ill or defective who reside on the premises of such institution, a
school for mentally or physically handicapped or gifted children,
an elementary or secondary school, or an institution of higher
education (regardless of whether or not such hospital, institution,
or school is public or private or operated for profit or not for
profit).
[Any establishment which has as its only regular employees the
owner thereof or the parent, spouse, child, or other member of the
immediate family of such owner shall not be considered to be an
enterprise engaged in commerce or in the production of goods for
commerce or a part of such an enterprise, and the sales of such estab-
lishment shall not be included for the purpose of determining the
annual gross volume of sales of any enterprise for the purpose of this
subsection.]
Any establishment which has as its only regular employee the
owner thereof or the parent, spouse, child, or other member of the im-
mediate family of such owner shall not be considered to be an enter-
prise engaged in commerce or in the production of goods for commerce
or a part of such an enterprise.
(t) "Tipped employee" means any employee engaged in an occu-
pation in which he customarily and regularly receives more than $20
a month in tips.
(u) "Man-day" means any day during which an employee performs
any agricultural labor for not less than one hour.
(v) "Elementary school" means a day or residential school which
provides elementary education, as determined under State law.
(w) "Secondary* school" means a day or residential school which
provides secondary education, as determined under State law.
SEC. 4. (a) There is hereby created in the Department of Labor a
Wage and Hour Division which shall be under the direction of an Ad-
ministrator, to be known as the Administrator of the Wage and Hour
Division (in this k et referred to as the "Administrator"). The Ad-
ministrator shall be appointed by the President, by and with the advice
and consent of the Senate, and shall receive compensation at the rate of
$26,000 a year.'
(b) The Secretary of Labor may, subject to the civil service laws,
appoint such employees as he deems necessary to carry out his func-
tions and duties under this Act and shall fix their compensation in
accordance with the Classification Act of 1949, as amended. The
Secretary may establish and utilize such regional, local, or other
* Exeerpt8 From Reorganization Plan No. 6 of 1950, 64 Stat. 1263.
"Except as otherwise provided [with respect to hearing examiners], there are hereby
transferred to the Secretary of Labor all functions of all other officers of the Department of
Labor and all functions of all agencies and employees of such Department * * *. The Sec-
retary of Labor may from time to time make such provisions as he shall deem appropriate
authorizing the performance by any other officer, or by any agency or employee, of the De-
of this reorganiatio planuding any function transferred to
partment
Secretary by the provisions function
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agencies, and utilize such voluntary and uncompensated services,
as may from time to time be needed. Attorneys appointed under
this section may appear for and represent the Secretary in any litiga-
tion, but all such litigation shall be subject to the direction and
control of the Attorney General. In the appointment, selection, classi-
fication, and promotion of officers and employees of the Secretary,
no political test or qualification shall be permitted or given considera-
tion, but all such appointments and promotions shall be given and
made on the basis of merit and efficiency.
(c) The principal office of the Secretary shall be in the District
of Columbia, but he or his duly authorized representative may exer-
cise any or all of his powers in any place.
(d) The Secretary shall submit annually in January a report to the
Congress covering his activities for the preceding year and including
such information, data, and recommendations for further legislation
in connection with the matters covered by this Act, as he may find
advisable. Such report shall contain an evaluation and appraisal by
the Secretary of the minimum wages established by this Act, together
with his recommendations to the Congress. In making such evalua-
tion and appraisal, the Secretary shall take into consideration any
changes which may have occurred in the cost of living and in produc-
tivity and the level of wages in manufacturing, the ability of employers
to absorb wage increases, and such other factors as he may deem
pertinent.
(e) Whenever the Secretary has reason to believe that in any
industry under this Act the competition of foreign producers in United
States markets or in markets abroad, or both, has resulted, or is likely
to result, in increased unemployment in the United States, he shall
undertake an investigation to gain full information with respect to
the matter. If he determines such increased unemployment has in
fact resulted, or is in fact likely to result, from such competition, he
shall make a full. and complete report of his findings and determina-
tions to the President and to the Congress; Provided, that he may
also include in such report information on the increased employment
resulting from additional exports in any industry under this Act as
he may determine to be pertinent to such report.
(f) Any employer subject to this Act, including any person acting
as an agent of such employer, who knowingly employs any alien who
is in the United States in violation of law or in an immigration status
in which such, employment is n-ot authorized, shall be guilty of a mis-
demeanor and upon conviction thereof shall be punished by a fine not
exceeding $1,000 or by imprisonment not exceeding one year, or both,
for each alien with respect to whom any violation of this subsection
occurs.
(g) Any contract subject to the Act of March 3, 1931 (40 U.S.C.
276a-276a-5, known as the Davis-Bacon Act), the Act of June 30,
1936 (41 U.S.C. 35-45, known as the Walsh-Healey Act), or the Serv-
ice Contract Act of 1965 (41 U.S.C. 351-357) shall contain, in addition
to the provisions required by such Acts, a provision by which the
contractor agrees not to knowingly employ in the performance of such
contract any alien who is in the United States in violation of law or in
an immigration status in which, such employment is not authorized.
Any violation of such contract provision will be subject to the penalties
provided in such Act, as well as in this Act.
(h) Neither the Secretary nor the Attorney General shall, by rule
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sion, wit respec o any c ass o emp Dyers or emp oyees.
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SPECIAL INDUSTRY COMMITTEES FOR PUERTO RICO AND THE VIRGIN ISLANDS
SEC. 5. (a) The Secretary of Labor shall as soon as practicable ap-
point a special industry committee to recommend the minimum rate
or rates of wages to be paid under section 6 to employees in Puerto
Rico or the Virgin Islands, or in Puerto Rico and the Virgin Islands,
engaged in commerce or in the production of goods for commerce or
employed in any enterprise engaged in commerce or in the production
of goods for commerce, or the Secretary may appoint separate indus-
try committees to recommend the minimum rate or rates of wages to
be paid under section 6 to employees therein engaged in commerce or
in the production of goods for commerce or employed in any enter-
prise engaged in commerce or in the production of goods for commerce
in particular industries. An industry committee appointed under this
subsection shall be composed of residents of such island or islands
where the employees with respect to whom such committee was ap-
pointed are employed and residents of the United States outside of
Puerto Rico and the Virgin Islands. In determining the minimum rate
or rates of wages to be paid, and in determining classifications, such
industry committees shall be subject to the provisions of section 8.
(b) An industry committee shall be appointed by the Secretary
without regard to any other provisions of law regarding the appoint-
ment and compensation of employees of the United States. It shall in-
clude a number of disinterested persons representing the public, one
of whom the Secretary shall designate as chairman, a like number of
persons representing employees in the industry, and a like number
representing employers in the industry. In the appointment of the
persons representing each group, the Secretary shall give due regard to
the geographical regions in which the industry is carried on.
(c) Two-thirds of the members of an industry committee shall con-
stitute a quorum, and the decision of the committee shall require a
vote of not less than a majority of all its members. Members of an in-
dustry committee shall receive as compensation, for their services a
reasonable per diem, which the Secretary shall by rules and regulations
prescribe, for each day actually spent in the work of the committee,
and shall in addition be reimbursed for their necessary traveling and
other expenses. The Secretary shall furnish the committee with ade-
quate legal, stenographic, clerical, and other assistance, and shall by
rules and regulations prescribe the procedure to be followed by the
committee.
(d) The Secretary shall submit to an industry committee from time
to time such data as he may have available on the matters referred to
it, and shall cause to be brought before it in connection with such
matters any witnesses whom he deems material. An industry commit-
tee may summon other witnesses or call upon the Secretary to furnish
additional information to aid it in its deliberations.
(e) The provisions of this section and section 8 shall not apply with
respect to the minimum wage rate of any employee in Puerto Rico or
the Virgin Islands employed (1) by an estabiishment which is a, hotel,
motel, or restaurant, or (2) by any other retail or service establishment
if such employee is employed primarily in connection with the prepa-
ration or offering of food or beverages for human consumption, either
on the premises, or by such services as catering, banquet, box lunch., or
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curb or counter service, to the public, to employees, or to members or
guests of members of clubs, or (3) by any employer which is a State or
a political subdivision of any State. The minimum wage rate of such an
employee shall be determined in accordance with sections 6, 13, and 14
of this Act.
(f) The provisions of this section and section 8 shall not operate to
permit a wage order rate lower than that which would result under the
provisions of section 6 (c).
Src. 6. (a) Every employer shall pay to each of his employees who
in any workweek is engaged in commerce or in the production of goods
for commerce, or is employed in an enterprise engaged in commerce or
in the production of goods for commerce, wages at the following rates :
[ (1) not less than $1.40 an hour during the first year from the effec-
tive date of the Fair Labor Standards Amendments of 1966 and not
less than $1.60 an hour thereafter, except as otherwise provided in this
section ;]
(1) (A) not less than $2.00 an hour during the first year from the
effective date of the Fair Labor Standards Amendments of 1972, and
(B) not less than $2.20 an hour thereafter.
(2) if such employee is a home worker in Puerto Rico or the Virgin
Islands, not less than the minimum piece rate prescribed by regulation
or order; or, if no such minimum piece rate is in effect, any piece rate
adopted by such employer which shall yield, to the proportion or class
of employees prescribed by regulation or order, not less than the appli-
cable minimum hourly wage rate. Such minimum piece rates or em-
ployer piece rates shall be commensurate with, and shall be paid in lieu
of, the minimum hourly wage rate applicable under the provisions of
this section. The Secretary of Labor, or his authorized representative,
shall have power to make such regulations or orders as are necessary or
appropriate to carry out any of the provisions of this paragraph, in-
cluding the power without limiting the generality of the foregoing, to
define any operation or occupation which is performed by such home
work employees in Puerto Rico or the Virgin Islands ; to establish mini-
mum piece rates for any operation or occupation so defined; to pre-
scribe the method and procedure for ascertaining and promulgating
minimum piece rates ; to prescribe standards for employer piece rates,
including the proportion or class of employees who shall receive not
less than the minimum hourly wage rate; to define the term "home
worker"; and to prescribe the conditions under which employers,
agents, contractors, and subcontractors shall cause goods to be produced
by home workers.
(3) if such employee is employed in American Samoa, in lieu of the
rate or rates provided by this subsection or subsection (b), not less than
the applicable rate established by the Secretary of Labor in accordance
with recommendations of a special industry committee or committees
which lie shall appoint in the same manner and pursuant to the same
provisions as are applicable to the special industry committees pro-
vided for Puerto Rico and the Virgin Islands by this Act as amended
from time to time. Each such committee shall have the same powers
and duties and shall apply the same standards with respect to the appli-
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cation of the provisions of this Act to employees employed in American
Samoa as pertain to special industry committees established under sec-
tion 5 with respect to employees employed in Puerto Rico or the
Virgin Islands. The minimum wage rate thus established shall not ex-
ceed the rate prescribed in paragraph (1) of this subsection;
(4) if such employee is employed as a seaman on an American vessel,
not less than the rate which will provide to the employee, for the period
covered by the wage payment, wages equal to compensation at the
hourly rate prescribed by paragraph (1) of this subsection for all hours
(luring such period when he was actually on duty (including periods
aboard ship when the employee was on watch or was, at the direction of
a superior officer, performing work or standing by, but not including
off-duty periods which are provided pursuant to the employment agree-
ment) ; or
(5) if such employee is employed in agriculture, not less than [$1]
$1.60 an hour during the first year from the effective date of the Fair
Labor Standards Amendments of [1966,] 1972, not less than [$1.15]
$1.80 an hour during the second year from such date, not less than-
$2.00 an hour during the third year from such date, and not less than
[$1.30] $2.20 an hour thereafter.
(b) Every employer shall pay to each of his employees (other than
an employee to whom subsection (a) (5) applies) who in any workweek
is engaged in commerce or in the production of goods for commerce,
or is employed in an enterprise engaged in commerce or in the produc-
tion of goods for commerce, and who in such workweek is brought
within the purview of this section by the amendments made to this
Act by the Fair Labor Standards Amendments of 1966, or the Fair
Labor Standards Amendments of 1972, wages at the following rates :
[(1) not less than $1 an hour during the first year from the effective
date of such amendments,
[(2) not less than $1.15 an hour during the second year from
such date,
[(3) not less than $1.30 an hour during the third year from such
date,
[(4) not less than $1.45 an hour during the fourth year from such
date, and
[(5) not less than $1.60 an hour thereafter.]
(1) not less than $1.80 an hour during the flrst year from the effec-
tive date of the Fair Labor Standards Amendments of 1972;
(2) not less than $2.00 an hour during the second year from such
date; and
(3) not less than $2.20 an hour thereafter.
(c) (1) The rate or rates provided by subsections (a) and (b) of
this section shall be superseded in the case of any employee in Puerto
Rico or the Virgin Islands only for so long as and insofar as such
employee is covered by a wage order heretofore or hereafter issued
by the Secretary pursuant to the recommendations of a special in-
dustry committee appointed pursuant to section 5.
[(2) In the case of any such employee who is covered by such a
wage order to whom the rate or rates prescribed by subsection (a)
would otherwise apply, the following rates shall apply :
[(A) The rate or rates applicable under the most recent wage
order issued by the Secretary prior to the effective date of the
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Fair Labor Standards Amendments of 1966, increased by 12 per
centum, unless such rate or rates are superseded by the rate or
rates prescribed in a wage order issued by the Secretary pursuant
to the recommendations of a review committee appointed under
paragraph (C). Such rate or rates shall become effective sixty
days after the effective date of the Fair Labor Standards Amend-
ments of 1966 or one year from the effective date of the most
recent wage order applicable to such employee theretofore issued
by the Secretary pursuant to the recommendations of a special
industry committee appointed under section 5, whichever is later.
[(B) Beginning one year after the applicable effective date
under paragraph (A), not less than the rate or rates prescribed
by paragraph (A), increased by an amount equal to 16 per centum
of the rate or rates applicable under the most recent wage order
issued by the Secretary prior to the effective date of the Fair
Labor Standards Amendments of 1966, unless such rate or rates
are superseded by the rate or rates prescribed in a wage order
issued by the Secretary pursuant to the recommendations of a
view committee under paragraph (C).
[(C) Any employer, or group of employers, employing a major-
ity of the employees in an industry in Puerto Rico or the Virgin
Islands, may apply to the Secretary in writing for the appointment
of a review committee to recommend the minimum rate or rates
to be paid such employees in lieu of the rate or rates provided by
paragraph (A) or (B). Any such application with respect to any
rate or rates provi ed for under paragraph (A) shall be filed
within sixty days following the enactment of the Fair Labor
Standards Amendments of 1966 and any such application with
respect to any rate or rates provided for under paragraph (B)
shall be filed not more than one hundred and twenty days and not
less than sixty days prior to the effective date of the applicable
rate or rates under paragraph (B). The Secretary shall promptly
consider such application and may appoint a review committee if
he has reasonable cause to believe, on the basis of financial and
other information contained in the application, that compliance
with any applicable rate or rates prescribed by paragraph (A)_ or
(B) will substantially curtail employment in such industry. The
Secretary's decision upon any such application shall be final. Any
wage order issued pursuant to the recommendations of a review
committee appointed under this paragraph shall take effect on the
applicable effective date provided in paragraph (A) or (B).
[(D) In the event a wage order has not been issued pursuant
to the recommendation of a review committee prior to the appli-
cable effective date under paragraph (A) or (B), the applicable
percentage increase provided by any such paragraph shalt take
effect on the effective date prescribed therein, except with respect
to the employees of an employer who filed an application under
paragraph (C) and who files with the Secretary an undertaking
with a surety or sureties satisfactory to the Secretary for payment
to his employees of an amount sufficient to compensate such
employees for the difference between the wages they actually
receive and the wages to which they are entitled under this sub-
section. The Secretary shall be empowered to enforce such un-
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dertaking and any sums recovered by him shall be held in a
special deposit account and shall be paid, on order of the Secre-
tary, directly to the employee or employees affected. Any such
sum not paid to an employee because of inability to do so within
a period of three years shall be covered into the Treasury of the
United States as miscellaneous receipts.
[(3) In the case of any such employee to whom subsection (a) (5) or
subsection (b) would otherwise apply, the Secretary shall within
sixty days after the effective date of the Fair Labor Standards Amend-
ments of 1966 appoint a special industry committee in accordance
with section 5 to recommend the highest minimum wage rate or
rates in accordance with the standards prescribed by section 8, but not
in excess of the applicable rate provided by subsection (a) (5) or
subsection (b), to be applicable to such employee in lieu of the
rate or rates prescribed by subsection (a) (5) or subsection (b),
as the case may be. The rate or rates recommended by the special
industry committee shall be effective with respect to such employee
upon the effective. date of the wage order issued pursuant to such
recommendation but not before sixty days after the effective date of
the Fair Labor Standards Amendments of 1966.
[(4) The provisions of section 5 and section 8, relating to special
industry committees, shall be applicable to review committees ap-
pointed under this subsection. The appointment of a review committee
shall be in addition to and not in lieu of any special industry com-
mittee required to be appointed pursuant to the provisions of subsec-
tion (a) of section 8, except that no special industry committee shall
hold any hearing within one year after a minimum wage rate or
rates for such industry shall have been recommended to the Sec-
retary by a review committee to be paid in lieu of the rate or rates
provided for under paragraph (A) or (B). The minimum wage rate
or rates prescribed by this subsection shall be in effect only for so
long as and insofar as such minimum wage rate or rates have not
been superseded by a wage order fixing a higher minimum wage rate
or rates (but not in excess of the applicable rate prescribed in sub-
section (a) or subsection (b)) hereafter issued by the Secretary
pursuant to the recommendation of a special industry committee.]
(2) In the case of any such employee who is covered by such a wage
order to whom the rate or rates prescribed by subsection (a) or (b)
would otherwise apply. the following rates shall apply:
(A) During the first year from the effective date of the Fair Labor
Standards Amendments of 1972, for any employee whose highest rate
is less than $0.80 an hour, such rate shall not be less than $1.00 an hour.
(B) During the first year from the effective date of the Fair Labor
Standards Amendments of 1972 for any employee whose highest rate
is $0.80 an hour or more, such rate shall be the highest rate or rates in
effect on or before such date under any wage order covering such em-
ployee, increased by $0.20.
(C) During the second year from the effective date of the Fair
Labor Standards Amendments of 1972, and in each year thereafter,
the highest rate or rates (including any increase prescribed by this
paragraph) in effect ion or before such date, under any wage order
covering such employee increased by $0.20 in each such year.
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(D) Whenever the rates prescribed by subparagraph (C) would
otherwise equal or exceed the rates prescribed in section 6(a), the
provisions of such section shall apply thereafter.
(3) (A) In the case of any such employee to whom this subsection
was made applicable by the Fair Labor Standards Amendments of
1972, the Secretary shall, as soon as practicable after the date of enact-
ment of such amendment, appoint a. special industry committee in ac-
cordance with section 5. Such industry committee shall recommend a
minimum wage rate of $1.60, unless there is substantial documentary
evidence, including pertinent unabridged pro fit and loss statements
and balance sheets for a representative period of years, in the record
which establishes that the industry, or a predominant portion thereof,
is unable to pay that wage. In no event shall any industry committee
recommend a minimum wage rate less than the rate prescribed in para-
graph (2) (A) of this subsection. Any rate recommended by the special
industry committee within sixty days of ter the effective date of the
Fair Labor Standards Amendments of 1972 shall be effective with
respect to such employee upon the effective date of the wage order
issued pursuant to such recommendation, but not before sixty days
after the effective date of the Fair Labor Standards Amendments of
1972.
(B) Upon the issuance of the wage order required by subparagraph
(A) of this paragraph, the provisions of paragraph (2) shall apply.
(4) In the case of any employee employed in agriculture who is cov-
ered by a wage order issued by the Secretary pursuant to the recom-
mendations of a special industry committee appointed pursuant to sec-
tion 5 and whose hourly wage is increased above the wage rate pre-
scribed by such wage order by a subsidy (or income supplement? paid,
in whole or in part, by the government of Puerto Rico, the following
rates shall apply :
(A) The rate or rates applicable under the most recent such wage
order issued by the Secretary increased, by (i) the amount by which
such employee's hourly wage is increased above such rate or rates by
the subsidy (or other income supplement), and (ii) $0.20.
(B) Beginning one year after the effective date of the Fair Labor
Standards Amendments of 1972, the provisions of subparagraphs 2(C)
and 2 (D) of this subsection shall apply.
(d) (1) No employer having employees subject to any provisions
of this section shall discriminate, within any establishment in which
such employees are employed, between employees on the basis of sex
by paying wages to employees in such establishment at a rate less
than the rate at which he pays wages to employees of the opposite sex
in such establishment for equal work on jobs the performance of which
requires equal skill, effort, and responsibility, and which are performed
under similar working conditions, except where such payment is made
pursuant to (i) a seniority system; (ii) a merit system; (iii) a system
which measures earnings by quantity or quality of production; or
(iv) a differential based on any other factor other than sex : Provided,
That an employer who is paying a wage rate differential in violation
of this subsection shall not, in order to comply with the provisions of
this subsection, reduce the wage rate of any employee.
(2) No labor organization, or its agents, representing employees of
an employer having employees subject to any provisions of this section
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shall cause or attempt; to cause such an employer to discriminate
against an employee in violation of paragraph (1) of this subsection.
(3) For purposes of administration and enforcement, any amounts
owing to any employee which have been withheld in violation of this
subsection shall be deemed to be unpaid minimum wages or unpaid
overtime compensation under this Act.
(4) As used in this subsection, the term "labor organization" means
any organization of any kind, or any agency or employee representa-
tion committee or plan, in which employees participate and which
exists for the purpose, :in whole or in part, of dealing with employers
concerning grievances, labor disputes, wages, rates of pay, hours of
employment, or conditions of work.
[(c) (1) Notwithstanding the provisions of section 13 of this Act
(except subsections (a) (1) and (f) thereof), every employer providing
any contract services (other than linen supply services) under a con-
tract with the United States or any subcontract thereunder shall pay
to each of his employees whose rate of pay is not governed by the
Service Contract Act of 1965 (41 U.S.C. 351-357) or to whom subsec-
tion (a) (1) of this section is not applicable, wages at rates not less
than the rates provided for in subsection (b) of this section.
[(2) Notwithstanding the provisions of section 13 of this Act (ex-
cept subsections (a) (1) and (f) thereof) and the provisions of the
Service Contract Act of 1965, every employer in an establishment
providing linen supply services to the United States under a contract
with the United States or any subcontract thereunder shall pay to
each of his employees in such establishment wages at rates not less
than those prescribed in subsection (b), except that if more than
50 per centum of the gross annual dollar volume of sales made or
business done by such establishment is derived from providing such
linen supply services under any such contracts or subcontracts, such
employer shall pay to each of his employees in such establishment
wages at rates not less than those prescribed in subsection (a) (1) of
this section.]
(e) Notwithstanding the provisions of section 13 of this Act (except
subsections (a) (1) and (f) thereof), every employer providing any
contract services under a contract with the United States or any sub-
contract thereunder shall pay to each of his employees whose rate of
pay is not governed by the Service Contract Act of 1965 (41 U.S.C.
351-357) or to whom subsection (a) of this section is not applicable,
wages at rates not less than the rates provided for in such subsection.
(f) Every employer who in any workweek employs any employee
in domestic service in a household shall pay such employee wages at a
rate not less than the wage rate in effect under subsection (b) of this
section, unless' such errs ployee's compensation for such service would
not, as determined by the Secretary, constitute `wages' under section
209 of the Social Security Act.
SEc. 7. (a) [(I) Except as otherwise provided in this section, no]
No employer shall employ any of his employees who in any workweek
is engaged in commerce or in the production of goods for commerce, or
is employed in an enterprise engaged in commerce or in the production
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of goods for commerce, for a workweek longer than forty hours, unless
such employee receives compensation for his employment in excess of
the hours above specified at a rate not less than one and one-half times
the regular rate at which he is employed.
[(2) No employer shall employ any of his employees who in any
workweek is engaged in commerce or in the production of goods for
commerce, or is employed in an enterprise engaged in commerce or in
the production of goods for commerce, and who in such workweek is
brought within the purview of this subsection by the amendments
made to this Act by the Fair Labor Standards Amendments of 1966-
first year from the, workweek date a of forty-four Fathe
thiLhours abor Standards
Amendments of 1966,
[(B) for a workweek longer than forty-two hours during the
second year from such date, or
[(C) for a workweek longer than forty hours after the expira-
tion of the second year from such date,
unless such employee receives compensation for his employment in
excess of the hours above specified at a rate not less than one and one-
half times the regular rate at which he is employed.]
(b) No employer shall be deemed to have violated subsection (a)
by employing any employee for a workweek in excess of that specified
in such subsection without paying the compensation for overtime
employment prescribed therein if such employee is so employed-
(1) in pursuance of an agreement, made as a result of collective
bargaining by representatives of employees certified as bona fide
by the National Labor Relations Board, which provides that no
employee shall be employed more than one thousand and forty
hours during any period of twenty-six consecutive weeks, or
(2) in pursuance of an agreement, made as a result of collec-
tive bargaining by representatives of employees certified as bona
fide by the National Labor Relations Board which provides that
during a specified period of fifty two consecutive weeks the em-
ployee shall be employed not more than two thousand two hundred
and forty hours and shall be guaranteed not less than one thous-
and eight hundred and forty hours (or not less than forty-six
weeks at the normal number of hours worked per week, but not
less than thirty hours per week) and not more than twa thousand
and eighty hours of employment for which he shall receive com-
pensation for all hours guaranteed or worked at rates not less than
those applicable under the agreement to the work performed and
for all hours in excess of the guaranty which are also in excess of
the maximum work week applicable to such employee under
subsection (a) or two thousand and eighty in such period at rates
not less than one and one-half times the regular rate at which he
is employed; or
(3) by an independently owned and controlled local enter-
prise (including an enterpirse with more than one bulk storage
establishment) engaged in the wholesale or bulk distribution of
petroleum products if-
(A) the annual gross volume of sales of such enterprise
is less than $1,000,000 exclusive of excise taxes,
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(B) more than 75 per centum of such enterprise's annual
dollar volume of sales is made within the State in which
such enterprise is located, and
(C) not more than 25 per centum of the annual dollar
volume of sales of such enterprise is to customers who are
engaged in the bulk distribution of such products for resale,
and such employee receives compensation for employment in
excess of forty hours in any workweek at a rate not less than one
and one-half times the minimum wage rate applicable to him
under section 6,
and if such employee receives compensation for employment in excess
of twelve hours in any workday, or for employment in excess of fifty-
six hours in any workweek, as the case may be, at a rate not less than
one and one-half times the regular rate at which he is employed.
[ (c) For a period or periods of not more than ten workweeks in the
aggregate in any calendar year, or fourteen workweeks in the aggregate
in the case of an employer who does not qualify for the exemption in
subsection (d) of this section, any employer may employ any employee
for a workweek in excess of that specified in subsection (a) without
paying the compensation for overtime employment prescribed in such
subsection if such employee (1) is employed by such employer in an
industry found by the Secretary to be of a seasonal nature, and (2)
receives compensation for employment by such employer in excess of
ten hours in any workday, or for employment by such employer in
excess of fifty hours in. any workweek, as the case may be, at a rate
not less than one and one-half times the regular rate at which lie is
employed.
[(d) For a period or periods of not more than ten workweeks in
the aggregate in any calendar year, or fourteen workweeks in the aggre-
gate in the case of an employer who does not qualify for the exemp-
tion in subsection (c) of this section, any employer may employ any
employee for a workweek in excess of that specified in subsection (a)
without paying the compensation for overtime employment prescribed
in such subsection, if such employee-
[ (1) is employed by such employer in an enterprise which is
in an industry found by the Secretary-
[(A) to be characterized by marked annually recurring
seasonal peaks of operation at the places of first marketing or
first processing of agricultural or horticultural commodities
from fauns if such industry is engaged in the handling, pack-
ing, preparing, storing, first processing, or canning of any
perishable agricultural or horticultural commodities in their
raw or natural. state, or
[(B) to be of a seasonal nature and engaged in the han-
dling, packing, storing, preparing, first processing, or canning
of any perishable agricultural or horticultural commodities
in their raw or natural state, and
[(2) receives compensation for employment by such employer
in excess of ten hours in any workday, or for employment in
excess of forty-eight hours in any workweek, as the case may be,
at a rate not less than one and one-half times the regular rate at
which he is employed.]
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[(e)] (c) As used in this section the "regular rate" at which an
employee is employed shall be deemed to include all remuneration for
employment paid to, or on behalf of, the employee, but shall not be
deemed to include-
(1) sums paid as gifts ; payments in the nature of gifts made at
Christmas time or on other special occasions, as a reward for
service, the amounts of which are not measured by or dependent
on hours worked, production, or efficiency ;
(2) payments made for occasional periods when no work is
performed due to vacation, holiday, illness, failure of the em-
ployer to provide sufficient work, or other similar cause; reason-
able payments for traveling expenses, or other expenses, incurred
by an employee in the furtherance of his employer's interests and
properly reimbursable by the employer; and other similar pay-
ments to an employee which are not made as compensation for
his hours of employment ;
(3) sums paid in recognition of services performed during a
given period if either, (a) both the fact that payment is to be
made and the amount of the payment are determined at the sole
discretion of the employer at or near the end of the period and
not pursuant to any prior contract, agreement, or promise causing
the employee to expect such payments regularly; or (b) the pay-
ments are made pursuant to a bona fide profit-sharing plan or
trust or bona fide thrift or savings plan, meeting the requirements
of the Secretary of Labor set forth in appropriate regulation
which he shall issue, having due regard among other relevant
factors, to the extent to which the amounts paid to the employee
are determined without regard to hours of work, production, or
efficiency; or (c) the payments are talent fees (as such talent fees
are defined and delimited by regulations of the Secretary) paid
to performers, including announcers, on radio and television
programs ;
(4) contributions irrevocably made by an employer to a trustee
or third person pursuant to a bona fide plan for providing old-
age, retirement, life, accident, or health insurance or similar bene-
fits for employees ;
(5) extra compensation provided by a premium rate paid for
certain hours worked by the employee in any day or workweek
because such hours are hours worked in excess of eight in a day
or in excess of the maximum workweek applicable to such em-
ployee under subsection (a) or in excess of the employee's normal
working hours or regular working hours, as the case may be;
(6) extra compensation provided by a premium rate paid for
work by the employee on Saturdays, Sundays, holidays, or regular
days of rest, or on the sixth or seventh day of the workweek,
where such premium rate is not less than one and one-half times
the rate established in good faith for like work performed in non-
overtime hours on other days ; or
(7) extra compensation provided by a premium rate paid to the
employee, in pursuance of an applicable employment contract or
collective-bargaining agreement, for work outside of the hours
established in good faith by the contract or agreement as the
basic, normal, or regular workday (not exceeding eight hours) or
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workweek (not exceeding the maximum workweek applicable to
such employee under subsection (a)), where such premium rate
is not less than one, and one-half times the rate established in
good faith by tare contract or agreement for like work performed
during such workday or workweek.
[ (f) ] (d) No employer shall be deemed to have violated subsection
(a) by employing any employee fora workweek in excess of the maxi-
mum workweek applicable to such employee under subsection (a) if
such employee is employed pursuant to a bona fide individual contract,
or pursuant to an agreement made as a result of collective bargaining
by representatives of employees, if the duties of such employee necessi-
tate irregular hours of work, and the contract or agreement (1) speci-
fies a regular rate of pay not less than the minimum hourly rate
provided in subsection (a) or (b) of section 6 (whichever may be ap-
plicable) and compensation at not less than one and one-half times
such rate for all hours worked in excess of such maximum workweek
and (2) provides a weekly guaranty of pay for more than sixty hours
based on the rates so specified.
[(g] (e) No employer shall be deemed to have violated subsec-
tion (a) by employing any employee for a workweek in excess of the
maximum workweek applicable to such employee under such subsec-
tion if, pursuant to an agreement or understanding arrived at between
the employer and the employee before performance of the work, the
amount paid to the employee for the number of hours worked by him
in such workweek in excess of the maximum workweek applicable to
such employee under such subsection-
(1) in the case of an employee employed at piece rates, is
computed at piece rates not less than one and one-half times the
bona fide piece rates applicable to the same work when performed
during nonovertime hours; or
(2) in the case of an employee performing two or more kinds
of work for which different hourly or piece rates have been estab-
lished, is computed at rates not less than one and one-half times
such bona fide rates applicable to the same work when performed
during nonovertime hours; or
(3) is computed at a rate not less than one and one-half times
the rate established by such agreement or understanding as the
basic rate to be used in computing overtime compensation there-
under : Provided, That the rate so established shall be authorized
by regulation by the Secretary of Labor as being substantially
equivalent to the average hourly earnings of the employee, ex-
clusive of overtime premiums, in the particular work over a rep-
resentative period of time;
and if (i) the employee's average hourly earnings for the workweek
exclusive of payments described in paragraphs (1) through (7) of
subsection [(e)) (c) are not less than the minimum hourly rate re-
quired by applicable law, and (ii) extra overtime compensation is
properly computed and paid on other forms of additional pay required
to be included in computing the regular rate.
(h) ] ({) Extra compensation paid as described in paragraphs (5),
(6 , and ( ) of subsection [(e)] (c) shall be creditable toward over-
time compensation payable pursuant to this section.
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I(i)] (g) No employer shall be deemed to have violated subsection
(a) by emp oying any employee of a retail or service establishment for
a workweek in excess of the applicable workweek specified therein, if
(1) the regular rate of pay of such employee is in excess of one and
one-half times the minimum hourly rate applicable to him under sec-
tion 6, and (2) more than half his compensation for a representative
period (not less than one month) represents commissions on goods or
services. In determining the proportion of compensation representing
commissions, all earnings resulting from the application of a bona fide
commission rate shall be deemed commissions on goods or services
without regard to whether the computed commissions exceed the draw
or guarantee.
[ (j) ] (h) No employer engaged in the operation of a hospital shall
be deemed to have violated subsection (a) if, pursuant to an agreement
or understanding arrived at between the employer and the employee
before performance of the work, a work period of fourteen consecutive
days is accepted in lieu of the workweek of seven consecutive days
for purposes of overtime computation and if, for his employment in
excess of eight hours in any workday and in excess of eighty hours in
such fourteen-day period, the employee receives compensation at a rate
not less than one and one-half times the regular rate at which he is
employed.
(i) No State or political subdivision of a State shall be deemed to
have violated subsection (a) with regard to any employee engaged in
fire protection or law enforcement activities (including security per-
sonnel in correctional institutions) if, pursuant to an agreement or
understanding arrived at between the employer and the employee be-
fore performance of the work, a work period of twenty-eight consecu-
tive days is accepted in lieu of the workweek of seven consecutive days
for purposes of overtime computation and if the employee receives
compensation at a rate not less than one and one-half times the regular
rate at which he is employed for his employment in excess of-
(1) one hundred and ninety-two hours in each such twenty-eight
day period during the first year from the effective date of the Fair
Labor Standards Amendments of 1972;
(2) one hundred and eighty-four hours in each such twenty-eight
day period during the second year from such date;
(3) one hundred and seventy-six hours in each such twenty-eight
day period during the third year from such date;
(4) one hundred and sixty-eight hours in each such twenty-eight
day period during the fourth year from such date;
(5) one hundred and sixty hours in each such twenty-eight day
period thereafter.
(j) In the case of an employee of an employer engaged in the busi-
ness of operating a street, suburban or interurban electric railway, or
local trolley or motorbus carrier, regardless of whether or not such
railway or carrier is public or private or operated for profit or not for
profit), in determining the hours of employment of such an employee
to which the rate prescribed by subsection (a) applies there shall be
excluded the hours such employee was employed in charter activities
by such employer 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 employ-
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ment in such activities is not part of such employee's regular employ-
ment.
WAGE ORDERS IN PUERTO RICO AND THE VIRGIN ISLANDS
SEC. 8. (a) The policy of this Act with respect to industries or enter-
prises in Puerto Rico and the Virgin Islands engaged in commerce
or in the production of goods for commerce is to reach as rapidly as
is economically feasible without substantially curtailing employment,
the objective of the minimum wage prescribed in paragraph (1) of sec-
tion 6(a) in each such industry. The Secretary of Labor shall from
time to time convene an industry committee or committees, ap-
pointed pursuant to section 5, and any such industry committee shall
from time to time recommend the minimum rate or rates of wages to
be paid under section 6 by employers in Puerto Rico or the Virgin
Islands, or in Puerto Rico and the Virgin Islands, engaged in com-
merce or in the production of goods for commerce or in any enterprise
engaged in commerce or in the production of goods for commerce in
any such industry or classifications therein. Minimum rates of wages
established in accordance with this section which are not equal to the
minimum wage rate prescribed in paragraph (1) of section 6 (a) shall
be reviewed by such a committee once during each biennial period,
beginning with the biennial period commencing July 1, 1958, except
that the Secretary, in his discretion, may order an additional review
during any such biennial. period.
(b) Upon the convening of any such industry committee, the
Secretary shall refer to it the question of the minimum wage rate
or rates to be fixed for such industry. The industry committee shall
investigate conditions in the industry and the committee, or any
authorized subcommittee thereof, shall after due notice hear such
witnesses and receive such evidence as may be necessary or appro-
priate to enable the committee to perform its duties and functions
under this Act. The committee shall recommend to the Secretary the
highest minimum wage rates for the industry which it determines,
having due regard to economic and competitive conditions, will not
substantially curtail employment in the industry, and will not give
any industry in Puerto Rico or in the Virgin Islands a competitive
advantage over any industry in the United States outside of Puerto
Rico and the Virgin Islands.
(c) The industry committee shall recommend such reasonable
classifications within any industry as it determines to be necessary
for the purpose of fixing for each classification within such industry
the highest minimum wage rate (not in excess of that prescribed in
paragraph (1) of section 6 (a) ) which (1) will not substantially curtail
employment in such classification and (2) will not give a competitive,
advantage to any group in the industry, and shall recommend for each
classification in the industry the highest minimum wage rate which
the committee determines will not substantially curtail employment
in such classification. In determining whether such classifications
should be made in any industry, in making such classifications, and
in determining the minimum wage rates for such classifications, no
classifications shall be made, and no minimum wage rate shall be
fixed, solely on a regional basis, but the industry committee shall
consider among other relevant factors the following :
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(1) competitive conditions as affected by transportation,
living, and production costs;
(2) the wages established for work of like or comparable
character by collective labor agreements negotiated between
employers and employees by representatives of their own choos-
ing; and
(3) the wages paid for work of like or comparable character
by employers who voluntarily maintain minimum wage stand-
ards in the industry.
No classification shall be made under this section on the basis of
age or sex.
(d) The industry committee shall file with the Secretary a report
containing its findings of fact and recommendations with respect to
the matters referred to it. Upon the filing of such report, the Secre-
tary shall publish such recommendations in the Federal Register
and shall provide by order that the recommendations contained in
such report shall take effect upon the expiration of 15 days after the
date of such publication.
(e) Orders issued under this section shall define the industries and
classifications therein to which they are to apply, and shall contain
such terms and conditions as the Secretary finds necessary to carry
out the purposes of such orders, to prevent the circumvention or
evasion thereof, and to safeguard the minimum wage rates established
therein.
(f) Due notice of any hearing provided for in this section shall be
given by publication in the Federal Register and by such other means
as the Secretary deems reasonably calculated to give general notice to
interested persons.
SFc. 9. For the purpose of any hearing or investigation provided
for in this Act, the provisions of sections 9 and 10 (relating to the
attendance of witnesses and the production of books, papers, and
documents) of the Federal Trade Commission Act of September 16,
1914, as amended (U.S.C., 1934 edition, title 15, sees. 49 and 50), are
hereby made applicable to the jurisdiction, powers, and duties of the
Secretary of Labor and the industry committees.
SEc. 10. (a) Any person aggrieved by an order of the Secretary
issued under section 8 may obtain a review of such order in the United
States Court of Appeals for any circuit wherein such person resides or
has his principal place of business, or in the United States Court of
Appeals for the District of Columbia, by filing in such court, within
60 days after the entry of such order a written petition praying that the
order of the Secretary be modified or set aside in whole or in part. A
copy of such petition shall forthwith be transmitted by the clerk of the
court to the Secretary, and thereupon the Secretary shall file in the
court the record of the industry committee upon which the order
complained of was entered, as provided in section 2112 of title 28,
United States Code. Upon the filing of such petition such court shall
have exclusive jurisdiction to affirm, modify, or set aside such order in
whole or in part, so far as it is applicable to the petitioner. The review
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by the court shall be limited to questions of law, and findings of fact by
such industry committee when supported by substantial evidence shall
be conclusive. No objection to the order of the Secretary shall be con-
sidered by the court unless such objection shall have been urged
before such industry committee or unless there were reasonable grounds
for failure so to do. If application is made to the court for leave to
adduce additional evidence, and it is shown to the satisfaction of the
court that such additional evidence may materially affect the result of
the proceeding and that there were reasonable grounds for failure to
adduce such evidence in the proceedings before such industry com-
mittee, the court may order such additional evidence to be taken before
an industry committee and to be adduced upon the hearing in such
manner and upon such terms and conditions as to the court may seem
proper. Such industry committee may modify the initial findings by
reason of the additional evidence so taken, and shall file with the court
such modified or new findings which if supported by substantial evi-
dence shall be conclusive, and shall also file its recommendation, if any,
for the modification or setting aside of the original order. The judg-
ment and decree of the court shall be final, subject to review by the
Supreme Court of the United States upon certiorari or certification as
provided in section 1254 of title 28 of the United States Code.
(b) The commencement of proceedings under subsection (a) shall
not, unless specifically ordered by the court, operate as a stay of the
Secretary's order. The court shall not grant any stay of the order
unless the person complaining of such order shall file in court an under-
taking with a surety or sureties satisfactory to the court for the pay-
ment to the employees affected by the order, in the event such order
is affirmed, of the amount by which the compensation such employees
are entitled to receive under the order exceeds the compensation they
actually receive while such stay is in effect.
INVESTIGATIONS, INSPECTIONS, RECORDS, AND HOMEWORK REGULATIONS
SEC. 11 (a) The Secretary of Labor or his designated representatives
may investigate and gather data regarding the wages, hours, and other
conditions and practices of employment in any industrial subject to
this Act, and may enter and inspect such places and such records
(and make such transcriptions thereof), question such employees,
and investigate such facts, conditions, practices or matters as he may
deem necessary or appropriate to determine whether any person has
violated any provision of this Act, or which may aid in the enforcement
of the provisions of this Act. Except as provided in section 12 and
in subsection (b) of this section, the Secretary shall utilize the bureaus
and divisions of the Department of Labor for all the investigations
and inspections necessary under this section. Except as provided in sec-
tion 12, the Secretary shall bring all actions under section 17 to restrain
violations of this Act.
(b) With the consent and cooperation of State agencies charged
with the administration .of State labor laws, the Secretary of Labor
may, for the purpose of carrying out his functions and duties under
this Act, utilize the services of State and local agencies and their em-
ployees and, notwithstanding any other provision of law, may reim-
burse such State and local agencies and their employees for services
rendered for such purposes.
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(c) Every employer subject to any provision of this Act or of any
order issued under this Act shall make, keep, and preserve such
records of the persons employed by him and of the wages, hours, and
other conditions and practices of employment maintained by him,
and shall preserve such records for such periods of time, and shall make
such reports therefrom to the Secretary as he shall prescribe by regula-
tion or order as necessary or appropriate for the enforcement of the
provisions of this Act or the regulations or orders thereunder.
(d) The Secretary is authorized to make such regulations and orders
regulating, restricting, or prohibiting industrial homework as are nec-
essary or appropriate to prevent the circumvention or evasion of and to
safeguard the minimum wage rate prescribed in this Act, and all exist-
ing regulations or orders of the Administrator relating to industrial
homework are hereby continued in full force and effect.
SEC. 12. (a) No producer, manufacturer, or dealer shall ship or
deliver for shipment in commerce any goods produced in an establish-
ment situated in the United States in or about which within thirty
days prior to the removal of such goods therefrom any oppressive
child labor has been employed : Provided, That any such shipment or
delivery for shipment of such goods by a purchaser who acquired them
in good faith in reliance on written assurance from the producer,
manufacturer, or dealer that the goods were produced in compliance
with the requirements of this section, and who acquired such goods
for value without notice of any such violation, shall not be deemed
prohibited by this subsection: And provided further, That a prosecu-
tion and conviction of a defendant for the shipment or delivery for
shipment of any goods under the conditions herein prohibited shall be
a bar to any further prosecution against the same defendant for ship-
ments or deliveries for shipment of any such goods before the beginning
of said prosecution.
(b) The Secretary of Labor, or any of his authorized representatives,
shall make all investigations and inspections under section 11 (a) with
respect to the employment of minors, and, subject to the direction
and control of the Attorney General, shall bring all actions under
section 17 to enjoin any act or practice which is unlawful by reason
of the existence of oppressive child labor, and shall administer all
other provisions of this Act relating to oppressive child labor.
(c) No employer shall employ any oppressive child labor in com-
merce or in the production of goods for commerce or in any enterprise
engaged in commerce or in the production of goods for commerce.
(d) In order to carry out the objectives of this section, the Secretary
may by regulation require employers to obtain from any employee
proof of age.
SEC. 13. (a) The provisions of [sections 6 and 7]. section 6 (other
than section 6(d) in the case of paragraph (1) of this subsection) and
section 7 shall not apply with respect to-
(1) any employee employed in a bona fide executive, admin-
istrative, or professional capacity (including any employee em-
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ployed in the capacity of academic administrative personnel or
teacher in elementary or secondary schools), or in the capacity
of outside salesman (as such terms are defined and delimited
from time to time by regulations of the Secretary, subject to the
provisions of the Administrative Procedure Act [, except that an
employee of a retail or service establishment shall not be excluded
from the definition of employee employed in a bona fide executive
or administrative capacity because of the number of hours in his
workweek which he devotes to activities not directly or closely
related to the performance of executive or administrative activi-
ties, if less than 40 per centum of his hours worked in the work-
week are devoted to such activities) ] ; or
(2) any employee employed by any retail or service establish-
ment (except an establishment or employee engaged in launder-
ing, cleaning, or repairinig clothing or fabrics or an establishment
engaged in the operation of a hospital, institution, or school de-
scribed in section 3 (s) (4) ), if more than 50 per centum of such
establishment's annual dollar volume of sales of goods or services
is made within the State in which the establishment is located,
and such establishment is not in an enterprise described in sec-
tion 3(s) [or such establishment has an annual dollar volume of
sales which is less than $250,000 (exclusive of excise taxes at the
retail level which are separately stated)]. A "retail or service
establishment" [shall mean] means an establishment 75 per
centum of whose annual dollar volume of sales of goods or services
or of both) is not for resale and is recognized as retail sales or
services in the particular industry; or
(3) any employee employed by an establishment which is an
amusement or recreational establishment, if (A) it does not op-
erate for more than seven months in any calendar year, or (B)
during the preceding calendar year, its average receipts for any
six months of such year were not more than 331/.3 per centum of
its average receipts for the other six months of such year; or
[(4) any employee employed by an establishment which quali-
fies as an exempt retail establishment under clause (2) of this
subsection and is recognized as a retail establishment in the par-
ticular industr .y notwithstanding that such establishment makes
or processes at the retail establishment the goods that it sells :
Provided, That more than 85 per centum of such establishment's
annual dollar volume of sales of goods so made or processed is
made within the State in which the establishment is located; or]
EMI (4) any employee employed in the catching, taking,
propagating, harvesting, cultivating, or farming of any kind of
fish, shellfish, crustacea, sponges, seaweeds, or other aquatic forms
of animal and vegetable life, or in the first processing, canning
or packing such marine products at sea as an incident to, or in
conjunction with, such fishing operations, including the going to
and returning from work and loading and unloading when per-
formed by any such employee; or
[(6)] (5) any employee employed in. agriculture (A) if such
employee is employed by ,in employer who did not, during any
calendar quarter during the preceding calendar year, use more
than five hundred man-days of agricultural labor, (B) if such
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employee is the parent, spouse, child, or other member of his em-
ployer's immediate family, [(C) if such employee (i) is employed
as a hand harvest laborer and is paid on a piece rate basis in an
operation which has been, and is customarily and generally recog-
nized as having been, paid on a piece rate basis in the region of
employment, (ii) commutes daily from his permanent residence to
the farm on which he is so employed, and (iii) has been employed
in agriculture less than thirteen weeks during the preceding calen-
day year, (D)] (C) if such employee [(other than an employee
described in clause (C) of this subsection)] (i) is sixteen years of
age or under and is employed as a hand harvest laborer, is paid on
a piece rate basis in an operation which has been, and is customar-
ily and generally recognized as having been, paid on a piece rate
basis in the region of employment, (ii) is employed on the same
farm as his parent or person standing in the place of his parent,
and (iii) is paid at the same piece rate as employees over age six
teen are paid on the same farm, or [(E)] (D) if such employee is
principally engaged in the range production of livestock; or
[(7)] (6) any employee to the extent that such employee is
exempted by regulations, order or certificate of the Secretary
issued under section 14; or
[(8)] (7) any employee employed in connection with the pub-
lication of any weekly, semiweekly, or daily newspaper with a
circulation of less than four thousand the major part of which cir-
culation is within the county where published or counties contigu-
ous thereto ; or
[(9) any employee employed by an establishment which is a
motion picture theater; or]
[ (10) ] (8) any switchboard operator employed by an independ-
ently owned public telephone company which has not more than
seven hundred and fifty stations; or
[ (11) any employee or proprietor in a retail or service establish-
ment which qualifies as an exempt retail or service establishment
under clause (2) of this subsection with respect to whom the pro-
visions of sections 6 and 7 would not otherwise apply, engaged in
handling telegraphic messages for the public under an agency or
contract arrangement with a telegraph company where the tele-
graph message revenue of such agency does not exceed $500 a
month; or]
[(12)] (9) any employee employed as a seaman on a vessel
other than an American vessel [; or].
[ (13) any employee employed in planting or tending trees,
cruising, surveying, or felling timber, or in preparing or trans-
porting logs or other forestry products to the mill, processing
plant, railroad, or other transportation terminal, if the number of
employees employed by his employer in such forestry or lumber-
ing operations does not exceed eight; or
[(14) any agricultural employee employed in the growing and
harvesting of shade-grown tobacco who is engaged in the process-
ing (including, but not limited to, drying, curing, fermenting,
bulking, rebulking, sorting, grading, aging, and baling) of such
tobacco, prior to the stemming process, for use as cigar wrapper
tobacco.]
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(b) The provisions of section 7 shall not apply with respect to-
(1) any employeewith respect to whom the Secretary of Trans-
portation has power to establish qualifications and maximum
hours of service pursuant to the provisions of section 204 of the
Motor Carrier Act,1935 ; or
(2) any employee of an employer engaged in the operation of a
common carrier by rail and subject to the provisions of part 1 of
the l nterstate Commerce Act ; or
(3) any employee of a carrier by air subject to the provisions
of title II of the Railway Labor Act; or
[(4) any employee employed in the canning, processing, market-
ing, freezing, curing, storing, packing for shipment, or distribut-
ing of any kind of fish, shellfish, or other aquatic forms of animal
or vegetable life, or any byproduct thereof ; or]
10A (4) any individual employed as an outside buyer of
poultry, eggs, cream, or milk, in their raw or natural state; or
[(6)] (5) any employee employed as a seaman; or
[(7)] (6) any driver, operator, or conductor employed by an
employer engaged in. the business of operating a street, suburban
or interurban electric railway, or local trolley or motorbus carrier,
[if the rates and services of such railway or carrier are subject to
regulation by a State or local agency] (regardless of whether or
not such railway or carrier is public or private or operated for
profit or not for profit), and i, f such employee receives compensa-
tion for employment in excess of forty-eight hours in any work-
week at a, rate not less than one and one-half times the regular
rate at which he is employed; or
[(8)] (7) (A) any employee who is employed by an establish-
ment which is a hotel, motel, or restaurant and receives compensa-
tion at a, rate not less than one and one-half times the regular rate
a.tt which he is employed for his employment in excess of (i) forty-
eight hours in any workweek during the first year from the effec-
tive date of the Fair Labor Standards Amendments of 1972, (ii)
forty-six hours in any workweek thereafter or (B) any employee
who [(A)] is employed by an establishment which is an institu-
tion (other than a hospital) primarily engaged in the care of the
sick, the aged, or the mentally ill or defective. who reside on the
premises, and [(B)] receives [compensation for employment in
excess of forty-eight hours in any workweek at a rate not less than
one and one-half times the regular rate at which he is employed;
or] compensation at a rate not less than one and one-half times the
regular rate at which he is ern ployed for his employment in excess
of (i) forty-eight hours in any workweek during the first year
from the effective- date of the Fair Labor Standards Amendments
of 1.972, (ii) forty-si'x hours in any workweek during the second
year from the effective date of the Fair Labor Standards Amend-
ments of 1972, and (iii) forty-four hours in any workweek there-
after; or
U91 ] (8) any employee employed as an announcer, news editor,
or chief engineer by a radio or television station the major
studio of which is located (A) in a city or town of one hundred
thousand population or less, according to the latest available
decennial census figures compiled by the Bureau of the Census,
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except where such city or town is part of a standard metropolitan
statistical area, as defined and designated by the Bureau of the
Budget, which has a total population in excess of one hundred
thousand, or (B) in a city or town of twenty-five thousand popu-
lation or less, which is part of such an area but is at least 40
airline miles from the principal city in such area; or
[(10)] (9) any salesman, partsman, or mechanic primarily en-
gaged in selling or servicing [automobiles, trailers, trucks,] farm
implements [, or aircraft] or any salesman primarily engaged in
selling automobiles, trailers or trucks if employed by a nonmanu-
facturing establishment primarily engaged in the business of
selling such vehicles to ultimate purchasers ; or
E(11)3 (10) any employee employed as a driver or drivers'
helper making local. deliveries, who is compensated for such em-
ployment on the basis of trip rates, or other delivery payment
plan, if the Secretary shall find that such plan has the general
purpose and effect of reducing hours worked by such employees
to, or below, the maximum workweek applicable to them under
section 7 (a) ; or
[(12)] (11) any employee employed in agriculture or in con-
nection with the operation or maintenance of ditches, canals,
reservoirs, or waterways, not owned or operated for profit, or
operated on a sharecrop basis, and which are used exclusively for
supply -and storing of water for agricultural purposes; or
[(13)] (1?9) any employee with respect to his employment in
agriculture by a farmer, notwithstanding other employment of
such employee in connection with livestock auction operations in
which such farmer is engaged as an adjunct to the raising of live..
stock, either on his own account or in conjunction with other farm-
ers, if such employee (A) is primarily employed during his
workweek in agriculture by such farmer, and (B) is paid for his
employment in connection with such livestock auction operations
at a wage rate not less than that prescribed by section 6(a) (1) ; or
[(14)1 (13) any employee employed within the area of produc-
tion (as defined by the Secretary) by an establishment commonly
recognized as a country elevator, including such an establishment
which sells products and services used in the operation of a farm
if no more than five employees are employed in the establishment.
in such operations; or
E(15)] (14) any employee engaged in [ginning of cotton for
market, in any place of employment located in a county where
cotton is grown in commercial quantities, or in] the processing of
[sugar beets, sugar beet molasses, sugarcane, or] maple sap into
sugar (other than refined sugar) or syrup; or
[(16)] (16) any employee engaged (A) in the transportation
and preparation for transportation of fruits or vegetables, whether
or not performed by the farmer, from the farm to a place of first
processing or first marketing within the same State, or (B) in
transportation, whether or not performed by the farmer, between
the farm and any point within the same State of persons employed
or to be employed in the harvesting of fruits or vegetables; or
[(17)] (16) any driver employed by an employer engaged in
the business of operating taxicabs; or
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[(18)] (17) any employee of a retail or service establishment
who is employed primarily in connection with the preparation or
offering of food or beverages for human consumption, either on
the premises, or by such services as catering, banquet, box lunch,
or curb or counter service, to the public, to employees or to mem-
bers or guests of members of clubs, and if such employee receives
compensation for employment in excess of forty-eight hours in
any workweek at a rate not less than one and one-half times the
regular rate at which he is employed; or
[(19)] (18) any employee of a bowling establishment if such
employee receives compensation for employment in excess of forty-
eight hours in any workweek at a rate not less than one and one-
half times the regular rate at which he is employed[.] ; or
(19) any employee who in any workweek is employed in dornes-
tic service in a household.; or
(20) any employee employed in planting or tending trees, cruis-
ing, surveying, or felling timber, or in preparing or transporting
logs or other forestry products to the mill, processing plant, rail-
road, or other transportation terminal, if the number of em-
loyees employed by his employer in such forestry or lumbering
operations does not exceed eight; or
(21) any employee employed by an owner of an apartment
building or by a management agent on behalf of the owner: Pro-
vided, That (A) such, employee resides in that apartment building
and (B) the gross annual rentals of such, building are less than
the annual grass volume of sales for an. enterprise specified in
section 3(s) of this act; or
(22) any employee who is employed with his spouse by a non-
profit educational institution to serve as the parents of children-
(A) who are orphans or one of whose natural parents is de-
ceased, and
(B) who are enrolled in such institution and reside in resi-
dential facilities of the institution, while such children are in
residence at such, institution, if such, employee and his spouse re-
side in such facilities, receive, without cost, board and lodging
from such institution, and are together compensated, on a cash
basis, at an annual rate of not less than $10,000,
(23) Any employee of an employer primarily engaged in the
wholesale business of drycleaning clothing or fabrics who cus-
tomarily works irregular hours in performing pickups or delivery
services directly for establishments offering drycleaning services
to the public, and if more than one-half of his or her annual comp-
pensation represents commissions based on the performance of
such services.
(c) (1) Except as provided in paragraph (2), the provisions of sec-
tion 12 relating to child labor shall not apply [with respect] to any
employee employed in agriculture outside of school hours for the school
district where such employee is living while he is so employed if such
employee-
(A) is employed by his parent, or by a person standing in the
place of his parent, on a farm owned or operated by such parent or
person, or
(B) is fourteen years of age or older, or
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(C) is twelve years of age or older, and (i) such employment is
with the written consent of his parent or person standing in place
of his parent, or (ii) his parent or person standing in place of his
parent is employed on the same farm.
(2) The provisions of section 12 relating to child labor shall apply
to an employee below the age of sixteen employed in agriculture in an
occupation that the Secretary of Labor finds and declares to be par-
ticularly hazardous for the employment of children below the aof
sixteen, except where such employee is employed by his parent or-Icy a
person standing in the place of his parent on a farm owned or operate .
by such parent or person.
(3) The provisions of section 12 relating to child labor shall not
apply to any child employed as an actor or performer in motion pic-
tures or theatrical productions, or in radio or television productions.
(d) (1) (A) The provisions of sections 6, 7, and 12 shall not apply
with respect to any employee engaged in the delivery of newspapers
to the consumer, and (B) the provisions of section 12 shall not apply
with respect to any such employee when engaged in the delivery to
households or consumers of shopping news (including shopping guides,
handbills, or other types of advertising material) published by any
weekly, semiweekly, or daily newspaper.
(2) The provisions of sections ti, 7, and 12 shall not apply with
respect to any homeworker engaged in the making of wreaths com-
posed principally of natural holly, pine, cedar, or other evergreens
(including the harvesting of the evergreens or other forest products
used in making such wreaths).
(e) The provisions of section 7 shall not apply with respect to
employees for whom the Secretary of Labor is authorized to establish
minimum wage rates as provided in section 6(a) (3), except with
respect to employees for whom such rates are in effect; and with
respect to such employees the Secretary may make rules and regula-
tions providing reasonable limitations and allowing reasonable varia-
tions, tolerances, and exemptions to and from any or all of the provi-
sion of section 7 if he shall find, after a public hearing on the matter,
and taking into account the factors set forth in section 6(a) (3), that
economic conditions warrant such action.
(f) The provisions of sections 6, 7, 11, and 12 shall not apply with
respect to any employee whose services during the workweek are per-
formed in a workplace within a foreign country or within territory
under the jurisdiction of the United States other than the following:
a State of the United States ; the District of Columbia ; Puerto Rico ;
the Virgin Islands: Outer Continental Shelf lands defined in the Outer
Continental Shelf Lands Act (ch. 345, 67 Stat. 462) ; American Samoa;
Guam; Wake Island: Eniwetok Atoll: Kwajalein Atoll: Johnston
Island; and the Canal Zone.
NOTE.-Section 13(b) (7) is further changed effective during the second year
following enactment of the Fair Labor Standards Amendments of 1972 and re-
pealed thereafter.
Sxa.13. (a) < <
(b) M * *
(1) * *
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* * * * * * *
(7) any driver, operator, or conductor employed by an employer engaged in the
business of operating a street, suburban or interurban electric railway, or local
trolley or motorbus carrier, if the rates and services of such railway or carrier
are subject to regulation by a State or local agency and if such employee receives
compensation for employment in excess of [forty-eight] forty-four hours in any
workweek at a rate not less than one and one-half times the regular rate at
which he is employed ; or
SEC.13. (a) * *
(b) * * *
(1) * * *
* *
* * * * No
1[(7) any driver, operator, or conductor employed by an employer engaged in
the business of operating a street, suburban or interurban electric railway, or
local trolley or motorbus carrier, if the rates and services of such railway or
carrier are subject to regulation by a State or local agency and if such employee
receives compensation for employment in excess of forty-four hours in any work-
week at a rate not less than one and one-half times the regular rate at which he
is employed ; or]
NOTE.-Section 13(b) (18) is further changed effective (luring the second year
following enactment of the Fair Labor Standards Amendments of 1972 and
repeal thereafter.
SEC. 13. (a) * * *
(b) * * *
(1) * * *
* * * * * * *
(18) any employee of a retail or service establishment who is employed pri-
marily in connection with the preparation or offering of food or beverages for
human consumption, either on the premises, or by such services as catering,
banquet, box lunch, or curb or counter service, to the public, to employees, or to
members or guests of members of clubs, and if such employee receives compen-
sation for employment in excess of [forty-eight] forty-four hours in any work-
week at a rate not less than one and one-half times the regular rate at which he
is employed ;
SEC.13. (a) * * *
(b) * * *
(1) * * *
* * * * * No
[(18) any employee of a retail or service establishment who is employed pri-
marily in connection with the preparation or offering of food or beverages for
human consumption, either on the premises, or by such services as catering,
banquet, box lunch, or curb or counter service, to the public, to employees, or
to members or guests of members of clubs, and if such employee receives compen-
sation for employment in excess of forty-four hours in any workweek at a rate
not less than one and one-half times the regular rate at which he is employed ;3
NOTE.-Section 13 (b) (19) is further changed effective during the second year
following enactment of the Fair Labor Standards Amendments of 1972 and
repealed thereafter
SEC. 13. (a) ***
(b) * * *
(1) ***
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(19) any employee of a bowling establishment if such employee receives com-
pensation for employment in excess of [forty-eight] forty-four hours in any
workweek at a rate not less than one and one-half the regular rate at which
he is employed ; or
SEC. 13. (a) * * *
(b) * * *
(1) * * *
* * * * * * *
[(19) any employee of a bowling establishment if such employee receives
compensation for employment in excess of forty-four hours in any workweek at
a rate not less than one and one-half the regular rate at which he is employed ;
or]
LEARNERS, APPRENTICES, STUDENTS, AND HANDICAPPED WORKERS
SEC. 14. (a) The Secretary of Labor, to the extent necessary in
order to prevent curtailment of opportunities for employment, shall by
regulations or by orders provide for the employment of learners, of
apprentices, and of messengers employed primarily in delivering
letters and messages, under special certificates issued pursuant to
regulations of the Secretary, at such wages lower than the minimum
wage applicable under section 6 and subject to such limitations as to
time, number, proportion, and length of service as the Secretary shall
prescribe.
(b) The Secretary, to the extent necessary in order to prevent
curtailment of opportunities for employment, shall by regulation or
order provide for the employment of full-time students, regardless of
age but in compliance with applicable child labor laws, on a part-time
basis in retail or service establishments or educational institutions (not
to exceed twenty hours in any workweek) or on a part-time or a full-
time basis in such establishments during school vacations under spe-
cial certificates issued pursuant to regulations of the Secretary, at a
wage rate not less than 85 per centum of the minimum wage applicable
under section 6, except that the proportion of student hours of employ-
ment to total hours of employment of all employees in any establish-
ment or an educational institution may not exceed (1) such proportion
for the corresponding month of the twelve-month period preceding
May 1, 1961, (2) in the case of a retail or service establishment or an
educational institution whose employees (other than employees en-
gaged in commerce or in the production of goods for commerce) are
covered by this Act for the first time on or after the effective date of the
Fair Labor Standards Amendments of 1966, and the Fair Labor Stand-
ards Amendments of 1972, such proportion for the corresponding
month of the twelve-month period immediately prior to such appli-
cable date, or (3) in the case of a retail or service establishment or an
educational institution coming into existence after May 1, 1961, or a
retail or service establishment or an educational institution for which
records of student hours worked are not available, a proportion of
student hours of employment to total hours of employment of all em-
ployees based on the practice during the twelve-month period preced-
ing May 1, 1961, in (A) similar establishments or educational institu-
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lions of the same employer in the same general metropolitan area in
which the new establishment or an educational institution is located,
(B) similar establishments of the same employer in the same or nearby
counties if the new establishment or an education institution is not in
a metropolitan area, or (C) other establishments or educational insti-
tution s of the same general character operating in the community or
the nearest comparable community. Before the Secretary may issue a
certificate under this subsection he must find that such employment
will not create a substantial probability of reducing the full-time em-
ployment opportunities of persons other than those employed under
this subsection.
(c) The Secretary, to the extent necessary in order to prevent cur-
tailment of opportunities for employment, shall-by certificate or order
provide for the employment of full-time students, regardless of age
but in compliance with applicable child labor laws, on a part-time basis
in agriculture (not to exceed twenty hours in any workweek) or on a
part-time or a full-time basis in agriculture during school vacations,
at a wage rate not less than 85 per centum of the minimum wage
applicable under section 6. Before the Secretary may issue a certificate
or order under this subsection he must find that such employment will
not create a substantial probability of reducing the full-time employ-
ment opportunities of persons other than those employed under this
subsection.
(d) (1) Except as otherwise provided in paragraphs (2) and (3) of
this subsection, the Secretary of Labor, to the extent necessary in
order to prevent curtailment of opportunities for employment, shall
by regulation or order provide for the employment under special
certificates of individuals (including individuals employed in agricul-
ture) whose earning or productive capacity is impaired by age or
physical or mental deficiency or injury, at wages which are lower
than the minimum wage applicable under section 6 of this Act but
not less than 50 per centum of such wage and which are commensu-
rate with those paid nonhandicapped workers in industry in the
vicinity for essentially the same type, quality, and quantity of work.
(2) The Secretary, pursuant to such regulations as he shall prescribe
and upon certification of the State agency administeringor supervising
the administration of vocational rehabilitation services, may issue spe-
cial certificates for the employment of-
(A) handicapped workers engaged in work which is incidental
to training or evaluation programs, and
(B) multihandicapped individuals and other individuals whose
earning capacity is so severely impaired that they are unable to
engage in competitive employment,
at wages which are less than those required by this subsection and
which are related to the worker's productivity.
(3) (A) The Secretary may by regulation or order provide for the
employment of handicapped clients in work activities centers under
special certificates at wages which are less than the minimums appli-
cable under section 6 of this Act or prescribed by paragraph (1) of this
subsection and which constitute equitable compensation for such clients
in work activities centers.
(B) For purposes of this section, the term "work activties centers"
shall mean centers planned and designed exclusively to provide
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therapeutic activities for handicapped clients whose physical or mental
impairment is so severe as to make their productive capacity inconse-
quential.
SEC. 15. (a) After the expiration of one hundred and twenty days
from.the date of enactment of this Act, it shall be unlawful for any
person-
(1) to transport, offer for transportation, ship, deliver, or sell
in commerce, or to ship, deliver, or sell with knowledge that ship-
ment or delivery or sale thereof in commerce is intended, any
goods in the production of which any employee was employed in
violation of section 6 or section 7, or in violation of any regulation
or order of the Secretary of Labor issued under section 14; except
that no provision of this Act shall impose any libality upon any
common carrier for the transportation in commerce in the regular
course of its business of any goods not produced by such common
carrier, and no provision of this Act shall excuse any common car-
rier from its obligation to accept any goods for transportation;
and except that any such transportation, offer, shipment, delivery,
or sale of such goods by a purchaser who acquired them in good
faith in reliance on written assurance from the producer that the
goods were produced in compliance with the requirements of the
Act, and who acquired such goods for value without notice of
any such violation, shall not be deemed unlawful;
(2) to violate any of the provisions of section 6 or section 7, or
any,of .the provisions of any regulation or order of the Secretary
issued under section 14;
(3) to discharge or in any other manner discriminate against
any employee because such employee has filed any complaint
or instituted or caused to be instituted any proceeding under or
related to this Act, or has testified or is about to testify in any
such proceeding, or has served or is about to serve on an industry
committee ; .
(4) to violate any of the provisions of section 12;
(5) to violate any of the provisions of section 11(c) or any
regulation or order made or continued in effect under the pro-
visions of section 11(d), or to make any statement, report, or
record filed or kept pursuant to the provisions of such section or
of any regulation or order thereunder, knowing such statement,
report, or record to be false in a material respect.
(b) For the purposes of subsection (a) (1) proof that any employee
was . employed in any place of employment where goods shipped or
sold. in commerce were produced, within ninety days prior to the
removal of the goods from such place of employment, shall be prima
facie evidence that such employee was engaged in the production of
such goods.
PENALTIES
SEc. 16. (a) Any person who willfully violates any of the provisions
of. section 15 shall upon conviction thereof be subject to a fine of not
more than $10,000, or to imprisonment for not more than six months,
or both. No person shall be imprisoned under this subsection except
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for an offense committed after the conviction of such person for a prior
offense under this subsection.
(b) Any employer who violates the provisions of section 6 or section
7 of this Act shall be liable to the employee or employees affected in
the amount of their unpaid minimum wages, or their unpaid overtime
compensation, as the case may be, and in an additional equal amount
as liquidated damages. Action to recover such liability may be main-
tained in any court of competent jurisdiction by any one or more
employees for and I u behalf of himself or themselves and other em-
ployees similarly situated. No employee shall be a party plaintiff to
any such action unless he gives his consent in writing to become such
a party and such consent; is filed in the court in which such action is
brought. The court in such action shall., in addition to any judgment
awarded to the plaintiff or plaintiffs, allow a reasonable attorney's fee
to be paid by the defendant, and costs of the action. The right pro-
vided by this subsection to bring an action by or on behalf of any
employee, and the right of any employee to become a party plaintiff
to any such action, shall terminate upon the filing of a complaint by
the Secretary of Labor in an action under section 17 in which restraint
is sought of any further delay in the payment of unpaid minimum
wages, or the amount of unpaid overtime compensation, as the case
may be, owing to such employee under section 6 or section 7 of this
Act by an employer liable therefor under the provisions of this
subsection.
(c) The Secretary [of Labor] is authorized to supervise the payment
of the unpaid minimum wages or the unpaid overtime compensation
owing to any employee or employees under section 6 or [section] 7 of
this Act, and the agreement of any employee to accept such payment
shall upon payment in full constitute a waiver by such employee of
any right he may have under subsection (b) of this section to such
unpaid minimum wages or unpaid overtime compensation and an
additional equal amount as liquidated damages. (When a written
request is filed by any employee with the Secretary claiming unpaid
minimum wages or unpaid overtime compensation under section 6
or section 7 of this Act, the] The Secretary may bring an action in
any court of competent jurisdiction to recover the amount of [such
claim : Provided, That this authority to sue shall not be used by the
Secretary in any case involving an issue of law which has not been
settled finally by the courts, and in any such case no court shall have
jurisdiction over such action or proceeding initiated or brought by
the Secretary if it does involve any issue of law not so finally settled]
the unpaid minimum wages or overtime compensation and an eq
amount as liquidated damages. The consent of any employee to the
ction by the Secretary, unless such action is
bringing of any such action'
dismissed without prejudice on motion of the Secretary, shall consti-
tute a waiver by such employee of any right of action he may have
under subsection (b) of this section for such unpaid minimum wages or
unpaid overtime compensation and an additional equal amount as
liquidated damages. Any sums thus recovered by the Secretary on
behalf of an employee pursuant to this subsection shall be held in a
special deposit account and shall be paid, on order of the Secretary,
directly to the employee or employees affected. Any such sums not
paid to an employee because of inability to do so within a period of
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three years shall be covered into the Treasury of the United States as
miscellaneous receipts. In determining when an action is commenced
by the Secretary under this subsection for the purposes of the statutes
of limitations provided in section 6(a) of the Portal-to-Portal Act of
1947, it shall be considered to be commenced in the case of any indi-
vidual claimant on the date when the complaint is filed if he is specifi-
cally named as a party plaintiff in the complaint, or if his name did not
so appear, on the subsequent date on which his name is added as a
party plaintiff in such action.
(d) In any action or proceeding commenced prior to, on, or after the
date of enactment of this subsection, no employer shall be subject to
any liability or punishment under this Act or the Portal-to-Portal Act
of 1947 on account of his failure to comply with any provision or
provisions of such Acts (1) with respect to work heretofore or here-
after performed in a workplace to which the exemption in section 13 (f )
is applicable, (2) with respect to work performed in Guam, the Canal
Zone or Wake Island before the effective date of this amendment of
subsection (d), or (3) with respect to work performed in a possession
named in section 6 (a) (3) at any time prior to the establishment by the
Secretary, as provided therein, of a minimum wage rate applicable to
such work.
(e) Any person who violates the provisions of section 12, relating
to child labor, or any regulation issued under that section, shall be
subject to a civil penalty .of not to exceed $1,000 for each such violation.
Any such civil penalty may be compromised by the Secretary. In de-
termining the amount Of such penalty, or the amount agreed upon in
compromise, the appropriateness of such penalty to the size of the
business of the person charged and the gravity of the violation shall
be considered. The amount of such penalty, when finally determined,
or the amount agreed upon in compromise, may be deducted from any
sum8 owing by the United States to the person charged.
SEC. 17. The district courts, together with the United States District
Court for the District of the Canal Zone, the District Court of the
Virgin Islands, and the District Court of Guam shall have jurisdiction,
for cause shown, to restrain violations of section 15, including in the
case of violations of section 15 (a) (2) the restraint of any withholding
of payment of minimum wages or overtime compensation found by
the court to be due to employees under this Act (except sums which
employees are barred from recovering, at the time of the commence-
ment of the action to restrain the violations, by virtue of the provisions
of section 6 of the Portal-to-Portal Act of 194t).
RELATION TO OTHER LAWS
SEC. 18. (a) No provision of this Act or of any order thereunder
shall excuse noncompliance with any Federal or State law or municipal
ordinance establishing a minimum wage higher than the minimum
wage established under this Act or a maximum workweek lower than
the maximum workweek established under this Act, and no provision
of this Act relating to the employment of child labor shall justify
noncompliance with any Federal or State law or municipal ordinance
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establishing a higher standard than the standard established under
this Act. No provision of this Act shall justify any employer in
reducing a wage paid by him which is in excess of the applicable
minimum wage under this Act, or justify any employer in increasing
hours of employment maintained by him which are shorter than the
maximum hours applicable under this Act.
(b) Notwithstanding any other provision of this Act (other than
section 13 (f)) or any other law-
(1) any Federal employee in the Canal Zone engaged in em-
ployment of the kind described in section 5102(c) (7) of title 5.
United States Code, or
(2) any employee employed in a nonappropriated fund instru-
mentality under the jurisdiction of the Armed Forces,
shall have his basic compensation fixed or adjusted at a wage rate
which is not less than the appropriate wage rate provided for in
section [6(a) (1)] 6(a) of this Act (except that the wage rate pro-
vided for in section 6(b) shall apply to any employee who performed
services during the workweek in a work place within the Canal Zone,
and shall have his overtime compensation set at an hourly rate not less
than the overtime rate provided for in section '[7 (a) (1) ] 7 (a) of this
Act.
SEO. 19. If any provision of this Act or the application of such
provision to any person or circumstances is held invalid, the remainder
of the Act and the application of such provision to other persons or
circumstances shall not be affected thereby.
OTHER LAWS AMENDED
Section 12(a) (2) of the Emergency Employment Act of 1971
? 12. Special Provisions
(a) The Secretary shall not provide financial assistance for any
program or activity under this Act unless he determines, in accordance
with such regulations as he shall prescribe, that-
(1) ***
(2) persons employed in public service jobs under this Act shall
be paid wages which shall not be lower than whichever is the
highest of (A) the minimum wage which would be applicable to
the employee under the Fair Labor Standards Act of 1938, if
[section 6 (a) ( 1) ] section. 6 of such Act applied to the participant
and if he were not exempt under section 13 thereof, (B) the State
or local minimum wage for the most nearly comparable covered
employment, or (C) the prevailing rates of pay for persons em-
ployed in similar public occupations by the same employer; * * *
Section 11 of the Age Discrimination in Employment Act of 1967
SEC. 11. For the purposes of this Act-
(a) * * *
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(b) The term "employer" means a person engaged in an in-
dustry affecting commerce who has twenty-five or more employees
for each working day in each of twenty or more calendar weeks
in the current or preceding calendar year : Provided, That prior
to June 30, 1968, employers having fewer than.fifty employees
shall not be considered employers. [The term also means any agent
of such a person, but such term does not include the United States,
a corporation wholly owned by the Government of the United
States, or a State or political subdivision thereof.] The term also
means (1) any agent of such a person, and (2) a State or political
subdivision of a State and any agency or instrumentality of a
State or a political subdivision of a State, but such term does not
include the' United States, or a corporation wholly owned by the
Government of the United States.
(c) The term "employment agency" means any person regularly
undertaking with or without compensation to procure employees
for an employer and includes an agent of such a person; but shall
not include an agency of the United States [or an agency of a State
or political subdivision of a State, except that such term shall
include the United States Employment Service and the systems
of State and local employment services receiving Federal as-
sistance.]
Section 14. of the Age Discrimination in Employment Act of 1967
FEDERAL-STATE RELATIONSHIP
SEC. 14. (a) Nothing in this Act shall affect the jurisdiction of any
agency of any State performing like functions with regard to dis-
criminatory employment practices on account of age except that upon
commencement of action under this Act such action shall supersede
any State action.
(b) In. the case of an alleged unlawful practice occurring in a State
which has a law prohibiting discrimination in employment because
of age and establishing or authorizing a State authority to grant or
seek relief from such discriminatory practice, no suit may be brought
under section 7 of this Act before the expiration of sixty days after
proceedings have been commenced under the State law, unless such
proceedings have been earlier terminated : Provided, That such sixty-
day period shall be extended to one hundred and twenty days during
the first year after the effective date of such State law. If any require-
ment for the commencement of such proceedings is imposed by a State
authority other than a requirement of the filing of a written and signed
statement of the facts upon which the proceeding is based, the pro-
ceeding shall be deemed to have been commenced for the purposes
of this subsection at the time such statement is sent by registered mail
to the appropriate State authority.
NONDLSCRIMINATION ON ACCOUNT OF AGE IN FEDERAL GOVERNMENT
EMPLOYMENT
SEC. 15. (a) All personnel actions affecting employees or applicants
for employment (except with regard to aliens employed outside the
limits of the United States) in military departments as defined in sec-
tion 102 of title 5, United States Code, in executive agencies (other
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than the General Accounting Office) as defined in section 105 of title
5, United States Code (including employees and applicants for em-
ployment who are paid from nonappropriated funds), in the United
States Postal Service and the Postal Rate Commission, of, the Govern-
ment of the District of Columbia having positions in the competitive
service, and in those units of the legislative and judicial branches of
the Federal Government hawing positions in the competitive service,
and in the Library of Congress shall be made free from any discrimina-
tion based on age.
(b) Except as otherwise provided in this subsection, the Civil Serv-
ice Commission is authorized to enforce the provisions Of subsection
(a) through appropriate remedies, including reinstatement or hiring
of employees with or without backpay, as will effectuate the policies of
this section. The Civil Service Commission shall issue such rules, regu-
lations, orders, and instructions as it deems necessary and appropriate
to carry out its responsibilities under this section. The Civil Service
Commission shall--
(1) be responsible for the review and evaluation o the opera-
tion o f all agency programs designed to carry out the policy of
this section, periodically obtaining and publishing (on at least a
semiannual basis) progress reports from each such department,
agency, or unit; and
(2) consult with and solicit the recommendations of interested
individuals, groups, and organizations relating to nondiscrimi-
ation in employment on, account of age.
The head of each such department, agency, or unit shall comply with
such rules, regulations, orders, and instructions which shall include a
provision that an P. ployee or applicant for employment shall be noti-
fied of any final action taken or any complaint of discrimination filed
by him thereunder. Reasonable exemptions to the provisions of this
section may be established by the Commission but only when the Com-
mission has established a maximum age requirement on the basis of a
determination that age is a, bona fide occupational qualification neces-
sary to the performance of the duties of the position. With respect to
employment in the Library of Congress, authorities granted in this
subsection to the Civil Service Commission shall be exercised by the
Librarian. of Congress.
(c) Any persons aggrieved may bring a civil action in any court of
competent jurisdiction for such legal or equitable relief as will effectu-
ate the purposes o f this Act.
(d) When the individual has not filed a complaint concerning age
discrimination with the Commission, no civil action may be com-
menced by any indivdual under this section until the individual has
given the Commission not less than thirty days' notice of an intent to
file such action. Such notice shall be filed within one hundred and
eighty days after the alleged unlawful practice occurred. Upon re-
ceiving a notice of intent to sue, the Commission shall promptly notify
all persons named therein as prospective defendants in the action
and take any appropriate action to assure the elimination of any un-
lawful practice.
(e) Nothing contained in this section shall relieve any Government
agency or official of the responsibility to assure nondiscrimination on
account of age in employment as required under any provision of
Federal law.
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Section 15 of the Age Discrimination in Employment Act of 1967
EFFECTIVE DATE
SEC. [15] 16. This Act shall become effective one hundred and eighty
days after enactment, except (a) that the Secretary of Labor may
extend the delay in effective date of any provision of this Act up to
an additional ninety days thereafter if he finds that such time is
necessary in permitting adjustments to the provisions hereof, and
(b) that on or after the date of enactment the Secretary of Labor is
authorized to issue such rules and regulations as may be necessary to
carry out its provisions.
Section 16 of the Age Discrimination in Employment Act of 1967
SEC. [16] 17. There are hereby authorized to be appropriated such
sums, not in excess of $3,000,000 for any fiscal year, as may be necessary
to carry out this Act.
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MINORITY VIEWS OF MR. TAFT FOR HIMSELF, AND
MESSRS. DOMINICK AND PACKWOOD
We all desire to see the elimination of substandard and exploitive
wage practices. But at a time when millions of American workers
are out of work, unemployment must be a primary concern. At a time
when low income families are hard pressed by inflation, this too must
be a concern. Unfortunately, the Committee has developed an approach
which seems likely to make job opportunities more difficult for the
poor, for the young, and for those who have found it difficult to enter
the mainstream of the American economy.
An excessive increase in the minimum wage at this time would in-
crease the inflationary pressures on our economy at the very time
when we are succeeding in attempts to curb the inflationary spiral.
While an increase in wage levels for those in the lowest paid cate-
gories might not of itself have a major inflationary effect, an increase
in the minimum wage seems bound to have a ripple effect throughout
the economy which will have a substantial economic impact.
Moreover to broaden coverage at this time would have a like effect
and also increase costs through red tape, reporting, and increased
Federal interference into State, local and household affairs.
For those who are desperately poor, family assistance is a more
desirable approach than the minimum wage law. As Congressman
John Anderson of Illinois aptly stated on the floor of the House on
May 8:
The primary reason that the working poor are poor is not
,at bottom entirely, or even mainly, a matter of inadequate
hourly wage rates. Far more important is first, the lack of
full time job opportunities, and secondly, in the case of more
than half the working poor, the fact of relatively great in-
come needs because of large families. Clearly, the minimum
wage is too blunt an instrument to deal with the great com-
plexity and variety of the income deficiency problem that we
find among the working poor. The reason for this is simply
that it is geared to wage earners rather than family units.
Unfortunately, the consideration of the bill has not been careful.
The Committees efforts have been so far-reaching and misguided that
Vista workers, clerics, prisoners working in prison industries, and
similar cases, were blanketed into coverage until moments before the
bill was ordered reported. The Committee has taken such a broad
brush approach that it seems likely to frustrate the hope for any
moderate increase in the minimum wage for those now covered. For
that reason we join with Senator Befall in offering 'a substitute amend-
(97)
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ment, similar to the House passed measure. Some of our specific objec-
tions to the Committee bill are as follows :
A-DOMESTIC HELP
While the Committee correctly continues to exempt small businesses,
it proposes to cover a housewife who occasionally has someone come in
to help wash the windows or clean up. It seems utterly nonsensical
to exclude small businessmen on the one hand, and then require house-
wives without any business experience to comply with record-keeping
and other provisions of this law. In doing so we are likely to make a
mockery of the law and invite its violation. As we all know, tax and
reporting violations are rife under the Social Security law as it applies
to domestic help, and avoidance practices are widespread. The Com-
mittee now proposes to compound that problem and make it worse.
Because some domestic workers are poorly paid, is no reason to
bring the Federal bureaucracy into the kitchen of the American house-
wife. Because others are marginally employed is no reason to eliminate
their employment.
Quite apart from this practical consideration, we believe that an
extension of coverage to domestic help is beyond the power of Con-
gress under the commerce clause. If domestic employees who make
beds, dust, and wash windows in a private residence are engaged in
interstate commerce, there is nothing left of intrastate activities. If
someone who vacuums your carpet is engaged in interstate commerce
or is considered to have a substantial impact on interstate commerce,
then the commerce clause has been magnified to include every aspect
of American life. We do not believe that this was the intent of the
drafters of our Constitution, nor do we believe that it is a workable
proposition supported by case law.
The basic argument of those who favor this expansive interpreta-
tion of the commerce clause seems to be that the number of domestic
employees is so large that they collectively have a very significant
impact on the national economy. It is argued that domestic help have
an impact of more than $1 billion per year on our national economy,
and that they use cleaning fluids purchased through the channels of
interstate commerce.
A legal precedent here is the fact that the medical profession, which
has a far greater impact on our nation's economy, has been held to be
beyond the constitutional power of Congress under the commerce
clause. If the practice of medicine, which involves more than $14 billion
per year, is beyond the sweep of the commerce clause, certainly domes-
tic helpers and housekeepers, having a much lesser impact, should
be similarly excluded.
In U.S. v. Oregon State Medical Society, 95 F. Supp. 103 (D. Ore.
1950), defendant medical socoieties were charged with conspiracy to
monopolize prepaid medical care in the State of Oregon. At page 118,
the court said :
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The practice of medicine as conducted within the State
of Oregon by doctors of Oregon, including defendants. is
not trade or commerce within the meaning of Section 1 of the
Sherman Anti-Trust Law ... nor is it commerce within the
meaning of the constitutional grant of power to Congress "to
regulate commerce * * * among the several states."
This decision was affirmed by the U.S. Supreme Court, 343 U.S. 326
(1952).
Section 2 (a) extends coverage under the Fair Labor Standards Act
to employees of states and their political subdivisions. In Section 2(b)
the term "employee" is defined to include those state and local em-
ployees who hold positions comparable to Federal employees "in the
competitive service and employees in the U.S. Postal Service, the
Postal Rate Commission, and the Library of Congress . ."
This definition is illustory at best. It was dreamed up in later execu-
tive sessions. It appears, however, that the Federal government will be
determining even the wages and overtime to be paid to youth employed
by a city in its recreation department. This would include young people
employed as lifeguards, employed to teach basket-weaving, and em-
ployed to umpire little league baseball games. If a city decides to hire
disadvantaged young people to work in its parks during the summer,
these employees would apparently be subject to the full force of the
provisions of the Fair Labor Standards Act.
This approach not only interferes with the ability of cities to pro-
vide jobs for the disadvantaged, but it also entirely overlooks the
regional differences with respect to the welfare needs and the cost of
living. In March of 1970, the percentage of state and local non-super-
visory employees (excluding education and' hospital institutions who
are already covered) receiving less than $2.00 per hour was as follows:
Percent
Northeast region-----------------------------------------------------
5.9
South region---------------------------------------------------------
22.2
North Central region-------------------------------------------------
10.4
West region----------------------------------------------------------
5.9
In addition, this bill overlooks the differential between metropolitan
and non-metropolitan areas. In March of 1970, only 7.9% of local gov-
ernmental non-supervisory employees (excluding education and hospi-
tal institutions) were paia less than $2.00 per hour. But in non-metro-
politan areas the percentage was 22.6. The difference obviously repre-
sents different standards and costs of living.
The variety of state and local governmental employees affected by
this law and the extent to which they differ by state and region is illus-
trated by the following charts also prepared by the U.S. Department
of Labor and submitted to the Congress in 1971.
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Occupations in State, county and city governments with entrance level rates of
less than $1.60 an hour, by region, 1969 or 1970
Region, State and government
jurisdiction :
Northeast
New Jersey : Cities_ -
New York : Counties_._
South
Alabama :
State -----_---?-
Recreation leader.
Cytologist I trainee.
Clerical aid, clerk messenger, dock sweeper,
domestic worker, food service worker, forest
towerman, human services aide, laborer, laun-
dry worker.
Clerk, janitor, lineman helper, maintenance fore-
man, maintenance worker, mason, playground
director, recreation leader, snack bar attend-
ant.
Clerk, cook, custodial worker, dairyman, deck-
hand, elevator operator, farmworker, fish cul-
turist, food service worker, forest towerman,
foster grandparents, groundskeeper, highway
bridge tender, housekeeper, keypunch opera-
tor trainee, laborer, laboratory aide, laundry
worker, library aide, linen room worker, mes
senger, medical assistant, mental retardation
aide, museum guide, public health clinic aide,
revenue permit agent, seamstress, skill trades
helper, social service aide, stock clerk, switch-
board operator, trapper, watchman.
Elevator operator, fountain clerk, library aide,
locker attendant.
Automotive serviceman, community worker,
farm and dairy hand, field inspector I, home
service aide, institutional trainee, institu-
tional worker, laboratory aide I, maid, main-
tenance laborer 1, sales clerk, seamstress I,
utility worker I.
Account clerk, ambulance driver, assistant dis-
patcher, attendant, automotive serviceman,
bookkeeping machine operator, bookmender,
cashier, clerical aide, clerk, central supply
technician, cook, costumer, custodial super-
visor, custodial worker, dental assistant, dieti-
tian assistant, dispatcher, doorkeeper, dupli-
cating machine operator, elevator operator,
engineering aide, equipment operator, food
service worker, housing laborer, inhalation
therapy technician, laborer, laundry worker,
library radio operator, maintenance fireman,
maintenance mechanic, maintenance worker,
medical technician assistant, museum assist-
ant, personnel clerk, physical therapy aide,
police court matron, police court officer, public
facilities attendant, public health laborer,
radio repairman, sanitary inspector, station-
ary fireman, seamstress, stenographer clerk,
store keeper, telephone operator, traffic con-
trol officer, typist clerk, watchman.
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Occupations on State, county and city governments with entrance level rates of
less than $1.60 an hour, by region, 1969 or 1970-Continued
Region, State and government
jurisdiction : Occupation
South-Continued
Louisiana :
State --------- Bridge tender, central service worker, community
activity worker, custodial worker, elevator
operator, food service worker, forest fireman,
laundry worker, public health unit aide watch-
man.
Cities --------- Building guide, clerk, custodial worker, elevator
operator, garage attendant, home health aide, in-
dustrial school worker, institution aide, labora-
tory animal care taker, laboratory technical as-
sistant, laborer, laborer utility, library page,
meter repairman, musician, park attendant,
parking attendant, pest control worker, recrea-
tion attendant, seamstress, stock clerk, stock
patrol helper, test checker.
Counties ------ Ceramics pourer, custodial worker, messenger.
Maryland :
Cities -------- Cashier-cafeteria, cook's helper, custodial work-
er, food service helper, head janitress (mu-
seum).
Counties ------ Recreation leader.
Mississippi: State_ Homemaker.
Oklahoma : State___ Assistant multilith machine operator, bindery
worker, building guide, capitol policeman, cash-
ier-dining room, central service worker, clerk
trainee, clothing clerk, cook trainee, custodial
worker, dictating machine operator, duplicating
equipment operator trainee, elevator operator,
employment aide, farmhand, food service work-
or, highway maintenance man, home health aide,
janitor, job corps recruiter, laboratory manual
helper, laborer, laundry worker, manual help-
er, marking room clerk, park attendant, patrol-
man, psychiatric attendant, rental sales clerk,
room clerk, seamstress, security attendant, secu-
rity officer, seed analyst, tourist interviewer,
typist trainee, utility office worker.
Cities -------- I'laground leader, tennis instructor.
Texas: Cities______ Clerical aide, clerk, clerk-typist, clinic assistant,
dental health education aide, health aide, health
education aide, laboratory aide, messenger, mu-
seum custodial, sanitation -aide, technician-
criminal investigation laboratory.
State --------- Cain aide, clerk, eligibility aide, embossing equip-
ment operator, food service helper, handyman,
home health aide, homemaker, housekeeper, in-
stitutional aide, laboratory assistant, laundry
worker, matron, sales clerk, seamstress, social
services aide, steam fireman's helper, telephone
operator, typist, watchman, water plant opera-
tor.
North Central :
Indiana : Cities____ Clerk stenographer, information clerk.
Iowa :
State --------- Messenger.
Cities --------- Bailiff, bookmender-clerk, housekeeper, janitress,
messenger.
Michigan :
Cities --------- Library page, museum aide.
Counties ------ Clerk-matron.
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Occupations on State, county and city governments with entrance level rates of
less than $1.60 an hour, by region, 1969 or 1970-Continued
Region, State and government
jurisdiction : Occupation
South-Continued
Minnesota :
Cities ----------Casual labor, laborer, refectory worker.
Counties -------- Junior library page.
Missouri:
State ---------- Custodial worker, food service helper, laboratory
helper, laundry worker, mental health worker
trainee, seamstress, watchman.
,Cities ----------- Concession clerk.
Nebraska:
State ----------Clerk, clerk aide, clerk-typist, keypunch operator,
photostat microfilm aide, photostat microfilm
operator, stenographer-clerk, telephone operator.
Cities ----------- Casual worker, concession attendant, usher.
Ohio: Cities ---------- Concession attendant, park attendant, recreation
aide, sergeant-at-arms.
South Dakota : State_Bookkeeper, bookkeeping machine operator, cash-
ier, claims, auditor, clerk-typist, data recorder,
general clerk.
West :
Arizona : Cities- ---.--City youth worker, janitor, street cleaner.
California : Counties-Clerk,. laborer, library page, watchman.
New Mexico: State_ -Attendant, automatic machine operator trainee,
bindery worker, boiler fireman, cast maker,
clerk, custodian, employment aide, farm helper,
food service aide, group worker trainee, junior
clerk, laborer, laundry worker, maintenance
helper, messenger, motor vehicle examiner,
museum assistant, museum gallery attendant,
print shop trainee, seamstress, secretarial aide,
social service aide, telephone operator, truck
driver, watchman. .
Note : Government jurisdiction listed are those which had one or more occupa-
tional classifications with entrance level rates of less than $1.60 an hour as shown
on Table 11.
Source : Based on data on file with the American Federation of State, County,
and. Municipal Employees, AFL-CIO.
All of the occupations listed above involve entrance levels of less
than $1.60 per hour. From this, one can appreciate the financial impact
of a law providing a $2.20 per hour minimum in two years and the
uneven way in which this law will affect various states and localities.
The overtime provisions in this measure are made applicable to
state and local governmental employees, including policemen and
firemen. A report by the U.S. Department of Labor entitled, "Non-
Supervisory Employees in State and Local Governments" states on
page 24 that as to state and local employees "about seven-tenths of
all employees working over 48 hours were employed in a public safety
activity." Presumably, under this bill firemen who are asleep in a dorm
of a firehouse will be paid overtime for the period of their slumber.
To say the least, this is a massive intrusion of the Federal government
into state and local governmental affairs.
State and local officials can better appreciate the differences in the.
cost of living which vary widely between states. State and local
officials also are responsible for their governmental finances. We do
not believe that we should, by law, intrude into their judgment, upset
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 Approved For Release 2002/01/10 : CIMRDP73B00296R000400140001-2
their budgets, and provide a law which is not related to the job market
for cost of living in any particular community. Who is to say that we
in the Congress are better able to make these judgments than duly
elected state and local officials. At a time when revenue sharing is
desperately needed, the Committee compounds the financial problems
of our state and local governments.
The vast majority of state and local workers are paid more than
the proposed minimum wage. Consequently, the major impact of the
wage provisions of this bill will not help most state and local em-
ployees who are full time workers attempting to support families.
The effect, instead, will be to cut back those programs which attempt
to provide employment for young people who otherwise must remain
idle on our city streets. Like the provisions relating to domestic em-
ployees, we believe that this extension of the Act, while well-inten-
tioned, will have unfortunate consequences which will be counter-
productive to many of our nation's objectives. State and local gov-
ernments do not need revenue sharing in reverse. They do not need
to have the Federal government compound their already serious
budgetary problems. And our disadvantaged youths do not need a
further obstacle to summer employment.
D--SMALL RETAIL BUSINESSES
Retail and service enterprises with annual gross sales volume below
$250,000 currently are exempt from coverage under the Fair Labor
Standards Act. The proposed substitute would retain this $250,000
figure. The Committee bill, however, extends coverage for all retail
and service employees working in chain stores and scales down the
current $250,000 enterprise test to $150,000 by $25,000 a year over the
next four years.
The Committee apparently forgets that inflation affects small busi-
nesses as well as employees. The $250,000 exemption level set in 1966
is already equivalent to $310,000 at today's dollar values. The Com-
mittee has totally disregarded the economic consequences of minimum
wage legislation on small businesses. In effect, the Committee would
mandate the closing of many of our nation's small businesses over the
next four years.
The Committee fails to realize that the impact of this measure would
not be distributed evenly throughout the economy. Instead, the im-
pact is concentrated in low wage manufacturing industries, trade,
services and farming. Specifically America's retail merchants who em-
ploy more than 11 million people will be seriously affected since two-
thirds of their total operating expenses are directly attributable to
labor costs. Rates or profit as well as profit per worker, are typically
lower in these industries than in the economy as a whole. (See George
E. Belehanty and Robert Evans, Jr., Low-Wage Employment: An
Inventory and an Assessment. These industriesare highly competitive.
The rate of business failure is high, particularly among the small firms
that are currently exempt from the Fair Labor Standards Act. Dunn
and Bradstreet statistics show that a total of 10,321 small businesses
and industries failed in 1971, and 4,428, or 43% of these, were in the
retail trade. Given these considerations, it is economically impossible
for profits in these firms and businesses to absorb any significant share
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 Approved For Release 2002/011/10: CIA-RDP73B00296R000400140001-2
of the increased minimum wage at this time. The low profit rate and
high failure rate in businesses employing a high proportion of very
low wage labor suggest that wages are low because of low productvity
and not because of any substantial exploitation-of labor.
Because of the narrow profit margins and low productivity of many
low wage industries, the passage of the Committee bill can be expected
to significantly increase unemployment and business failures. Such a
course would decrease tax revenue and increase the number of welfare
applicants. It would be difficult to think of a policy that would have
more of a disastrous effect on a nation's small businesses than the pro-
visions contained in S. 1861.
The Fair Labor Standards Act currently contains an overtime ex-
emption for local bus operators and motormen. The Committee bill
reduces and ultimately repeals the local transit overtime exemption.
The Committee completely ignores the economic realities of our
nation's mass transit system. Since 1954, 268 transit systems in this
country have failed financially. The operating deficit for the American
transit industry was $332 million in 1970, $427 million in 1971, and is
projected to exceed one-half billion dollars this year. This estimate
does not include the $30 million in additional costs imposed on the
transit industry by the provisions of S. 1861.
The following table, listing the transit systems which have been
abandoned since January 1, 1954, illustrates the financial crisis of our
nation's transit systems?
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