(Mr. Lawrence submitted the following table:)

Comparative operating ratios-class I motor carriers of property1

2 (There may be slight variations in computations made from motor carrier reports to the Interstate Commerce Commission, the variations resulting from later corrections in the reports, or from the inclusion of reports filed later and not shown in the earlier computation. Any such variations in these percentages would be inconsequential.)

Senator TUNNELL. Mr. Beardsley.

TESTIMONY OF PETER T. BEARDSLEY, ATTORNEY, AMERICAN TRUCKING ASSOCIATIONS, INC.

Mr. BEARDSLEY. Mr. Chairman and members of the subcommittee, my testimony will, of necessity, overlap just a little bit what Mr. Lawrence has said. I will try to hold it down as much as possible.

My name is Peter T. Beardsley. I am an attorney employed by American Trucking Associations, Inc., the only national association representing the interests of all motor carriers of property, both for hire and private. Our offices are located at 1424 Sixteenth Street NW., Washington, D. C.

I shall confine my discussion of the bill to three of its provisions and the necessity for certain amendments which we believe would restore to the basic law the original historical intent of Congress. My discussion will concern sections 5, 7, and 8 of S. 1349. If we understand the bill correctly, section 5 would amend the Fair Labor Standards Act to provide that the Administrator of the Wage and Hour Division of the Department of Labor shall establish "job classifications" for skilled employees in every industry subject to the act and shall also establish minimum wage rates for each such job classification. Section 7 of the bill would eliminate many of the exemp tions presently contained in section 13 of the act. Our particular interest lies in the proposed amendment of the exemption provisions applying to employees of motor carriers subject to the provisions of part II of the Interstate Commerce Act. Section 8 of the bill would amend section 16 (b) of the act to provide a 5-year period of limitations upon actions brought on claims arising out of the failure to observe the requirements of section 6 or 7 of the act.

The first topic I should like to discuss is the amendment to section 8, giving to the Administrator the authority to define "reasonable

job classifications" and to set minimum wage rates for such classifications.

Although the Fair Labor Standards Act is commonly referred to as the wage and hour law, that terminology is in reality a misnomer. The present law does not limit the hours which an employee may be required to work, so long as the employer complies with the requirements for overtime pay. The Supreme Court, in U. S. v. F. W. Darby Lumber Co. (312 U. S. 100), referring to sections 6 and 7 of the act, said:

Both provisions are minimum wage requirements compelling the payment of minimum standar wage with a prescribed increased wage for overtime of “not less than one and one-half times the regular rate" at which the worker is employed.

Of course, S. 1349, like the present law, contains no language which would place a ceiling on hours of employment.

The Supreme Court in the Darby case sustained the constitutionality of the Fair Labor Standards Act on the ground that Congress may exercise its power over interstate commerce to prevent— spreading and perpetuating subshtandard labor conditions.

Again I quote from the Court's opinion:

The motive and purpose of the present regulation is plainly to make effective the congressional conception of public policy that interstate commerce should not be made the instrument of competition in the distribution of goods produced under substandard labor conditions

The quotations from the Court's opinion in the Darby case set forth very clearly the reasoning behind the original congressional enactment providing for payment of specified minimum wages. But the justification for the amendment to section 8 provided by S. 1349, placing in the hands of one man, the Administrator, the power to classify literally millions of skilled employees as belonging in one category or another and to promulgate minimum wage rates applicable to each and every one of them appears nowhere in the bill and entirely escapes us.

Of course, we appreciate the fact that the Administrator would not act until after receiving the recommendations of an "industry committee." But the bill specifically authorizes him to disregard the recommendations of such committee and, if he so desires, appoint another committee in its stead. At any rate, whether this enormous power to classify and establish minimum wage rates for untold numbers of skilled employees may be said to reside in the Administrator or in the individual industry committees, we are unalterably opposed to the provisions of section 5 of the bill which would so radically alter the present provisions of section 8 of the Fair Labor Standards Act. The collective-bargaining process is working out with more than a modicum of success in the motor-carrier industry and there appears to us to be absolutely no justification for experimenting with this vital cog in the labor-relations machine.

Congress based its enactment of the Fair Labor Standards Act on the desire to do away with "substandard" labor conditions. But we have heard no complaint from any segment of labor, organized or otherwise, to the effect that the wage rates paid to skilled labor create "substandard" labor conditions. Nor, to our knowledge, has it been

established that rates paid to skilled labor are not in proper proportion to the rates paid unskilled labor.

We cannot recall a single piece of congressional legislation which was not preceded by a strong demand or a clearly demonstrated need. To our knowledge, there has been no demand made and no need shown for any legislation so socialistic in its concept as the proposed amendment to section 8.

There have been many laws passed by the Congress in recent years guaranteeing the right of employees to bargain collectively. Among these are the Railway Labor Act of 1926, the Norris-La Guardia Act of 1932, the National Industrial Recovery Act, passed in 1933 and declared unconstitutional in the famous Schecter case (295 U. S. 495), and of course, the National Labor Relations Act. And yet the freedom to bargain granted in these landmark labor laws appears to be utterly abandoned in section 8 of this bill which gives the Administrator final authority to establish wage rates in what he considers interrelated job classifications. It seems to us that the enormous power which S. 1349 would put into the hands of the Administrator would constitute the first step away from the collective bargaining procedure and toward Government operation of every industrial activity worthy of the name. With a minimum wage established for each and every employee of every industry of any size whatsoever, there would be little possibility that "collective bargaining" would remain anything but "sounding brass and tinkling cymbal.' It goes without saying that many thousands of contracts negotiated by labor and management in good faith and as a result of collective bargaining, setting up job classifications and wage rates applicable thereto, will be vitiated in the event that S. 1349 is passed as presently worded.

Senator TUNNELL. Have you heard any criticism of the situation as to collective bargaining since the strikes have been so prevalent? Mr. BEARDSLEY. I have heard not so much as to collective bargaining but the unwillingness to bargain collectively on the part of many of these people who are perpetrating it.

Senator TUNNELL. What people do you mean?

Mr. BEARDSLEY. The unwillingness to sit down on the part of the strikers and talk the thing over.

Senator TUNNELL. The criticism has been entirely against the strikers, has it?

Mr. BEARDSLEY. No, sir; I do not believe so. I am willing to state, in the Montgomery Ward case, if we go back a year or so, there was pretty much criticism of the management. Certainly, we do not take the position that the picture was all black on one side and all white on the other.

Senator TUNNELL. I understood from your statement that you had the notion that collective bargaining would take care of the situation. Mr. BEARDSLEY. If it was properly enforced.

Senator TUNNELL. You mean there should be an enforcement of agreements?

Mr. BEARDSLEY. We think that Congress has adopted, Senator, a policy of letting these labor disputes be settled as much as possible by collective bargaining. If that is the policy of Congress, we believe that Congress should see to it that, if necessary, those laws be enforced.

Senator TUNNELL. What do you mean by that? Do you mean that there should be a compulsory agreement? What do you mean

by collective bargaining then? How does it function if there is no enforcement of it?

Mr. BEARDSLEY. I mean the two parties to a wage dispute should be required to sit down and arbitrate.

Senator TUNNELL. Well, that is compulsory arbitration.

Mr. BEARDSLEY. But not a cumpulsory agreement, sir.

I think perhaps we are a little technical there.

Senator TUNNELL. What is the difference?

Mr. BEARDSLEY. I do not mean to say they should be forced to come to any preconceived conclusion.

Senator TUNNELL. Well, whether it is preconceived or not, isn't it your argument that they should be forced to abide by some decision? Mr. BEARDSLEY. Yes, sir.

Senator ELLENDER. They should be forced to comply with such agreements as they enter into; is not that your position?

Mr. BEARDSLEY. Yes.

Senator ELLENDER. In other words, if a labor group agrees to do a certain thing, and the employer agrees to do a certain thing, that both sides ought to be made to conform to whatever agreement they enter into; isn't that what you mean?

Mr. BEARDSLEY. That they entered into in good faith; yes, sir. Senator TUNNELL. Suppose there has not been any agreement? As I understand it, in most of the labor troubles there has been no agreement?

Mr. BEARDSLEY. I am speaking now only for our industry. There are a good many agreements in our industry, sir, especially among the larger carriers.

Senator TUNNELL. You have not had any strikes, have you?

Mr. LAWRENCE. May I answer that? They did have a rather serious strike in Chicago awhile ago that was caused, according to the labor view, because of the changes in views, changes in decisions of the War Labor Board. As you know, at that time the Government did take over. We have some troubles pending now, but whether they. are going to materialize in strikes I do not know. We do have one in Baltimore, and we had one in Wilkes-Barre recently. Whether they are going to be of long duration or not we do not know. I would say, Senator, we have had a surprisingly small number, compared to what we might have expected.

Senator TUNNELL. I am trying to find out from Mr. Beardsley what his organization feels with reference to the average situation. Suppose there is a disagreement. Now, then, how are you going to get together?

Mr. BEARDSLEY. Perhaps the next thing I am going to say will indicate what I mean.

Senator TUNNELL. That is what I want.

Mr. BEARDSLEY. Another real fear which we have is that once the Government undertakes to specify minimum wages for every employee subject to the Fair Labor Standards Act, it will eventually be found legislatively desirable to establish maximums. There are some who say, even today, that any such attempt would be held unconstitutional. To this we can only point out that many powers previously believed not to exist in Congress have been later held to be within the ambit of Federal legislative propriety.

The next provision of S. 1349 which I should like to discuss is the proposed amendment of the section 13 (b) exemption with regard to employees of motor carriers engaged in interstate commerce.

We believe the present provisions of section 13 (b) represent a gross inequity against motor carriers in favor of the railroads. Any legislation seeking to amend the act should, in all fairness, place motor carriers on an equal footing with their chief competitors, the rails.

By the Transportation Act of 1910, Congress adopted as "the national transportation policy" "fair and impartial regulation of all modes of transportation" subject to the Interstate Commerce Act. As presently written the Fair Labor Standards Act burdens motor carriers with the duty of paying time and one-half for overtime after 40 hours a week and subjects them to the penalty provisions of section 16 (b), providing that in cases of failure to pay overtime, employees shall be entitled to recover such unpaid overtime, plus an additional amount as liquidated damages, plus a "reasonable" attorney's fee. And no amount of good faith on the part of the motor carrier employer will suffice to save him from the exceedingly stiff penalty provisions of section 16 (b) (Overnight Motor Transportation Co., Inc. v. Missel, 316 U. S. 572).

It goes without saying that the average motor carrier is essentially a small businessman. There are many such operators who cannot pay the claims which have accrued against them under the act and stay solvent.

Paradoxically, the railroad, truly industrial giants having huge amounts of working capital, have no liability whatsoever to pay overtime after 40 hours under the Fair Labor Standards Act. The rails, more than capable of sustaining such a burden, are relieved by Congress of the load; motor carriers, the majority of whom cannot pay the penalties provided by section 16 (b) and continue to operate, are nevertheless shackled by Congress with the liability.

We need not elaborate. We merely present the picture and ask this subcommittee if, in its view, this constitutes "fair and impartial regulation" of motor carriers and their chief competitors, the railroads, as required by Congress in the national transportation policy.

We do not propose to assert a right on the part of any business. large or small, to deliberately violate the provisions of a congressional enactment, such as the Fair Labor Standards Act, and get away with it. But we do desire to point out that the act has been and is being so broadened by judicial interpretation that it is impossible for a businessman to know, with any degree of exactitude, whether or not he is subject to the provisions thereof. Far worse than the stiff penalties imposed is this uncertainty which is inherent in the act.

The act has been in effect since 1938-seven years.

There are many, many instances where it was utterly impossible to determine in advance of court decisions whether or not an employee was covered, but the stiff penalty imposed by the act was invoked despite this uncertainty inherent in it. We do not blame Congress for that, but certainly the courts, in our opinion, have, in many instances. misconstrued the act.

Senator TUNNELL. Do you think it is hard to understand, or are there possibly different determinations?

Mr. BEARDSLEY. If I had not read the court decisions, I would not say it was too hard to understand. When you look at the congres