Evening star., 1939-02-23

signed contracts ~
with bona fide
labor unions. D"''o Lawrence
Now, however, the latest disclosure
by the Wage and Hour office here
OF what the Government construes
to be the meaning of an annual
wage" or annual employment" has
tended to cast doubts on the merits
OF what are known as 2,OOO-hour
contracts. The law says that over
time need not be paid if an employe
is employed ION an annual basis in
pursuance of an agreement with his
employer, made as result of COL
lective bargaining by representatives
OF employees certified as bona fide
by the National Labor Relations
Board, which provides that the en-
ploye shall not be employed more
than 1000 hours during any period
OF 50 consecutive weeks"
If the above language were to
stand alone, there might not be any
difficulty about it and unions could
make contracts with employers for
not more than 1000 hours and pro-
vide In the contracts that this does
not mean the employer is obligated
TO furnish a whole year of work, or
that he must guarantee to indi-
viduals years compensation or any
major portion thereof. But the
Wage and Hour administrators in a
formal regulation has undertaken to
interpret what was supposed to
have been meant by Congress in
using the words annual wage"
Guarantee to Employe.
Here is the way the regulation is
described in formal opinion by the
office of the Wage and Hour Division
here:
1T is apparent from the legisla-
tive history of section Z that by
requiring the employe to be en-
ployed on an annual basis Congress
intended that the employe be guar
anteed either fixed annual wage or
annual employment. 1t was brought
to the attention of Congress that an
, employer might, for example, guar
antee his employees $50 a week for So
weeks, or a fixed annual wage of
$1,560 regardless of the number of
hours an employe worked in any
particular week. Thus an employe
might work 50 hours in one week
but 16 hours in another, yet receive
$50 for each week. This plan could
not be continued in effect If the
employer was required to pay time
and one-half the regular rate of pay
for all hours worked in excess of A
hours in the weeks that the employe
worked 50 hours.
1T was thus to encourage the
regularization and stabilization of
employment and income that Con-
gress required that the employe be
employed on an annual basis before
the employer was given an exception
from the overtime provisions of the
act"
Obligation on Employers.
Now the difficulty is that not
many employers will want to sign
contracts obligating them in these
uncertain times to guarantee annual
employment or any particular period
approaching 1000 hours. If condi-
tions should turn adversely and
company gets flock of cancellations
of orders, it would be unable to cur
tail operations but must accept the
financial losses of the period in
volved. Wealthy companies may
feel able in some instances to do this,
but the marginal companies, those
striving to find way to compete
against their stronger rivals, would
hesitate to take such financial haz-
ards, especially with limited capital
or resources
Then there is the question of what
Is really meant by guarantee of
employment ION an annual basis"
Does this mean that employees who
are not needed in particular activ-
ity or who are dismissed because
they are not as competent as others
who might be hired would be able
to recover by damage suits the re-
mainder of the compensation for
the balance of the 1000 hours which
they did not work?
Quite often in disputes over the
tenure of individual service con-
tracts, 1t has been held that where
q certain period is mentioned-as
for instance in this case 1000 hours
the term of the contract may be
fixed by the number of hours speci-
fled. Heretofore contracts have
been written with a specification
that the wages are weekly and that
the hours are weekly or by the day.
To write contracts with a reference
to such long periods as 1000 hours
may make them subject to the
possible legal Interpretation in the
courts that individuals have annual
contracts and cannot have their
services terminated before the period
mentioned has expired.
Financial Risks.
TO meet this situation in part, 1t
Is pointed out that the law and the
regulations now permit contracts for
1000 hours or 26 weeks. But here
again the risks of a 26-week contract
may involve financial obligation too
great to be assumed. If the lawyers
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