Senator ELLENDER. I thought Mr. Wallace and Mr. Bowles and Mr. Snyder were going to be heard. Senator SMITH. I would like to ask permission to insert in the record an excerpt from a report which I was privileged to participate in writing, covering a study of over 2 years by the old Glenn Frank committee, bearing on economic conditions, entitled "A Program for a Dynamic America," published by the Republican program committee in February 1940. We had a discussion of the labor situation, and there are two paragraphs entitled: "The Determination of Wages and Hours" and "Real Wages for Labor," that I would like to put in the record at this point as a contribution to the whole consideration of policy on wages and hours. Senator TUNNELL. It may be inserted in the record. (The document is as follows:) [The section on labor contained in A Program for a Dynamic America, published by the Republican program committee in February 1940] THE DETERMINATION OF WAGES AND HOURS Except in situations where minimum wage and maximum hour regulation is necessary to protect groups of workers not in position to protect themselves through collective bargaining, wages and hours should be determined by collective bargaining between freely chosen representatives of labor and management. It has been a persistent assumption in certain circles that the increase of wage rates and the reduction of hours by law broaden the distribution of income and jobs. Few will question the appropriateness of the Federal Government's providing defense for the defenseless or of its setting limitations upon "sweating," which injures the health of workers. But there is no satisfactory evidence that the political regulation of wages and hours beyond this point increases the real income of workers or raises the general level of employment. It may, indeed, do the precise opposite. There is particular danger involved in legislating wage rates in a depression period. The big companies, with cash or credit available, are likely to raise their prices to absorb the increased production costs, speed up the installation of labor-saving machinery, and reduce their labor staff, while the small companies, which may not be in position to raise their prices or install labor-saving machinery to meet the larger production costs, may be forced out of business, and their workers be forced out of jobs. The Federal Government cannot possibly make the many wage and hour adjustments that would be necessary to meet wisely the varying conditions in a territory as large as the United States. Labor unions working through their resident representatives familiar with local conditions are in position a central government cannot be, to adapt their policies to the real interests of both labor and employer in a local situation. Such labor unions can see to it that the condition of the worker is improved as fast as business conditions warrant, without imposing such arduous conditions on the employer as to destroy the employment which it is sought to preserve. Labor organization and State law should be preserved as the primary means for remedying subnormal labor standards. If the Federal Government assumes anything like general responsibility for the advance of wages and the determination of hours beyond the protective minimum suggested, the stage is set for the ultimate political domination of organized labor. REAL WAGES FOR LABOR Insofar as Government policy can effectively influence the income of workers, its concern should be with the real wages of labor, with what they will buy bring to the living standard of workers, and what wages will buy deper upon a proper relationship between costs and prices in both industr culture than upon hourly or weekly wage rates. It is possible to have a high-wage rate, slight employment, and a low-wage total for labor individually and in mass. Obviously the healthiest wage level both for American workers and for American enterprise is the level at which maximum employment can be maintained at the highest feasible yearly income for the largest possible number of employable workers. This is an axiom alike with enlightened labor leadership and enlightened industrial leadership. A wage rate, no matter how high, and hours, no matter how short, cannot provide food, clothing, or shelter to a worker without a relatively steady job. Sustained and satisfactory buying power for American workers cannot be realized by any simple formula of wage and hour legislation. The thing that most seriously affects the volume of employment and the real income of labor is undue rigidity of costs and prices throughout our economy. If wage, hour, price, and profit policies are flexible, far-sighted labor leadership and far-sighted industrial leadership can maintain such adjustment between these factors that production will be increased, prices lowered, effective consumer demand lifted, total profit improved, and the real wages of labor raised. If, on the other hand, monopolistic or controlled prices, along with profits, are inflexibly held at too high a level in relation to other factors, often to protect a contracting industry, or if wage rates are held inflexibly at too high a level in relation to other factors, then production slumps, consumer demand shrinks, profits dwindie, and the real wages of labor fall. It is the function of Government, not by price fixing or political decrees regarding costs, but by promoting fair and effective competition, to foster such adjustments between costs and prices in business, industry, and agriculture as will tend to increase production, lower prices, life consumer demand, improve profits, and raise the real wages of labor. Senator TUNNELL. We will adjourn until Thursday morning at 10 o'clock. (Whereupon the committee adjourned until Thursday, October 25, 1945, at 10 a. m.) AMENDMENT OF THE FAIR LABOR STANDARDS ACT THURSDAY, OCTOBER 25, 1945 UNITED STATES SENATE, SUBCOMMITTEE OF THE COMMITTEE ON EDUCATION AND LABOR, Washington, D. C. The subcommittee met, pursuant to adjournment, at 10 a. m., in room 424, Senate Office Building, Senator James Tunnell presiding. Present: Senators Tunnell, Ellender, and La Follette. Also present: Charles Kramer, consultant to the committee. TESTIMONY OF FRANK DONNER, ASSISTANT GENERAL COUNSEL, THE CONGRESS OF INDUSTRIAL ORGANIZATIONS Mr. DONNER. Mr. Chairman, my name is Frank Donner. I am assistant general counsel of the Congress of Industrial Organizations. I would like to register the support of my organization to that portion of section 16 (b) which amends section 16 (b) to provide that actions to recover liability under the Fair Labor Standards Act may be maintained at any time within 5 years from the accrual of such liability. Senator TUNNELL. You mean your organization favors the 5 years' limitation? Mr. DONNER. Yes, indeed. The CIO is convinced that some period of limitations is imperative in order to provide uniformity in the statute and to curb existing attempts by the States to undermine the rights granted by the statute. It is likewise our position that only a period of limitations of at least 5 years will do justice to the purposes and policies of the legislation. The necessity for a fixed period of limitations is based upon the following grounds: (1) As presently interpreted, in the absence of a statute of limitations in the Fair Labor Standards Act, the staute of limitations of the particular State in which the suit is brought applies. This means that the durabiltiy of the worker's right turns upon the law of a particular State with the result that not only does the applicabil. statute of limitations vary from State to State and the enf process has become highly balkanized, but the employers in long periods of limitations are placed at a competitive with respect to the employers in States with short statut Senator TUNNELL. Why should not it vary? Mr. DONNER. Let me say here that the purpose of the Fa Standards Act was to prevent unfair competition in the market, to prevent the employer in one State from being place competitive disadvantage with respect to employers in another State which is a low-wage area. Now, you defeat that to a certain extent if you do not have a uniform statute, because you have a Federal statute here and the Federal right should be uniform in its application. Now, there are a number of reasons why it is not uniform not only from State to State but even within a particular State the character of this right changes, depending upon whether the lawsuit is construed as an action on an oral contract, an action on a written contract, or an action on a statutory liability. This has resulted in creating different periods of limitations for the assertion of precisely the same right, depending upon the way a particular court construes the nature of the action or upon whether the worker is suing upon a written collective bargaining contract or an oral contract of hire. So you have got this highly diversified situation not only from State to State but within a particular State. The third reason you should have a uniform statute is that in some States the courts have applied a different period of limitations to suits for single damages and to suits for liquidated damages on the theory, rejected by the Supreme Court, that the liquidated damage suits are suits for a penalty. The Supreme Court has held that both of those sections are compensatory and should be treated as a whole, but the Supreme Court of Mississippi, for example, has held that one kind of statute applies to the liquidated damages section and another kind to the straight damages section. I want to outline as to why we think a 5-year period of limitations is appropriate and necessary. I will go into these in some detail in a moment. (1) A shorter period of limitations than 5 years would seriously undermine the employees' rights and the public interest in fair labor standards. (2) The economic dependence of the employee upon the employer makes prompt filing of a suit by an employee difficult if not impossible, since the employee fears that a suit will mean his discharge. In fixing a statute of limitations for the Fair Labor Standards Act we must avoid placing the employee in the position of choosing between his job and his right of action. We must recognize the fact that employee suits are generally brought after the termination of employment which has given rise to the cause of action. Senator TUNNELL. The present law is no statute? Mr. DONNER. No statute at all. What happens is that an employee, in our experience, does not sue until he terminates his employment which has given rise to his cause of action. That means some period of limitation has to elapse if you are going to give the employee a fair chance to recover, Senator TUNNELL. Cannot a person sue for wages immediately when they become due? Mr. DONNER. He certainly can, but he is afraid he will lose his job if he does. Senator ELLENDER. I think that should not be a good excuse. Mr. DONNER. You see, the Federal legislation is based on the notion of economic coercion. Whether it should be an excuse or not, it certainly operates that way. We have had scores of cases coming to our office in which employees have waited until they lost their employment before they sued. Most of the cases in the Supreme Court have come up that way. (3) The purpose of a statute of limitations is to relieve a defendant from the obligations of refuting a stale charge at a time when the evidence is likely to have disappeared, but such a consideration is not conducive to the establishment of a short period of limitations under the Fair Labor Standards Act since the employer is already required by law to keep a record of his wage payments and hours of service. (4) Wholly apart from his record-keeping obligations under the law the employer is in a far better position to know the requirements of the law and to be informed of his legal obligation through the advice of counsel and information services than is the underpaid employee. (5) A short period of limitatons will reward employers who gamble on evading the act and transfer the burden of the statute from his wrongdoer to his victim. Senator TUNNELL. Is not that an argument that would apply in every case where a suit is brought against an employer for anything? Mr. DONNER. I think it would. I think you have got to consider the peculiar circumstances of this statute, because here you are dealing with the most underpaid group of employees in our community. I think while that general consideration might apply, certainly with respect to this kind of a lawsuit, I think every equity ought to be given to the employee under such circumstances. To go back to my original argument that some statute of limitations is necessary, I do not think anybody can quarrel with the fact that the situation at present is very bad. (6) A short period of limitations will not only injure the rights of the individual employee but seriously threaten the entire enforcement machinery of the act, since the damage provision seeks not only to compensate the injured employee but to deter other employers as well. No extensive argument appears to be necessary to demonstrate that a uniform statute of limitations is imperative in order to effectuate the purposes of the Fair Labor Standards Act. It was the primary purpose of the Fair Labor Standards Act to establish a uniform Federal wage and hour policy so that the low standards of one area could not serve to place the employers of another area at a competitive disadvantage. Now, neither section 16 (b) of the act nor any other section prescribes any period of limitations during which employee suits must be initiated or maintained. Under the Rules of Decisions Act (28 U. S. C. A. 725 (R. S. 721)) the statutes of limitations of the several States, in the absence of Federal legislation, are regarded as "rules of decision" binding upon the Federal courts in actions at law instituted in such courts. (See Bauserman v. Blunt, 147 U. S. 647; Campbell v. Haverhill, 155 U. S. 610.) Moreover, the statute of limitations of the State in which the suit is brought also governs when the jurisdiction of the State court is invoked. Where, however, a Federal statute prescribes a period of limita 4 tions during which the right must be enforced, such period of limita tions is controlling both in respect to actions initiated and main in State as well as in Federal courts. |