Evening star., 1947-01-26
'PortoI' Issue Prompts
Bill Defining Work
Capehart Proposes a Yardstick
to Limit Pay Claims
Bu Gerard D. Reilly.

By Gerard d. Reilly.
With sword of Damocles in the shape
of an account payable in the sum OF
$4,000, 100000 hanging over industry.
proposals for amending the Fair Labor
Standards Act to extinguisn ''portal-to-
portal pay claims picked up strong
support last week from the executive
branch of the Government before Sen
ator Donnell's subcommittee.
The hearings relate to the Capehart
and the Wiley bills, both aimed at the
decision in the Mount Clemens pottery
case, where the Supreme Court init
mated that time spent by employees be-
fore the shift began in changing clothes
|. on the premises, greasing arms, putting
on finger cots, preparing tools, turning
on switches and opening windows, was
time required by their employer and,
therefore, chargeable to wages. Since
in manufacturing plants such prelim-
mary operations have not been CUSTOM
arily regarded as working time, enl-
ployers we're suddenly faced with poten-
tial claims from workers running into
staggering figures.
The situation was aggravated by three
factors: (D There is no statute of hmi-
tations in the Wage-Hour Act Conse-
uuently, unless there is some applicable
State law limiting the period in which
action for back pay may be commenced,
an employe working in factory where
pay was computed as it was in the Mount
Clemens plant may recover for unpaid
wages going back to October, 1888, the
date the act became effective; CD most
manufacturing establishments since the
war boom began in 1899 have been work.
ing on eight-hour shifts. The Wage
Hour Act requires that time in excess OF
40 hours in any week be compensated
for at one and one-half times the regular
rate of pay. Accordingly, except in the
rare instances in which factories were
on part-time schedules, the activities
which under the Mount Clemens doc
trine are now regarded as work" should
have been paid for at time and half;
90 section 16 Co of the Wage-Hour Act
confers on employees who have not re-
ceived the wages they were entitled to
under the statute the right to sue their
employer and recover, as liquidated dam
ages, twice the amount he should origi-
nally have paid them. The purpose OF
the liquidated damages provision, OF
course, was to deter employers from vio-
lating the law. Otherwise an unscrupu-
lous employer might deliberately ignore
the overtime and minimum wage pro-
visions, knowing that if the law even-
tually caught up with him, he would
have to expend only the money he should
have paid in the first place..
But this section made no distinc-
ton between such employers and unwit-
ting violators. Under another decision,
the Brooklyn Savings Bank case, an en-
ployer who discovers through some new
ruling that he has been violating the
law is not protected when he settles
with his employees by making full resti-
tuition, for the Supreme Court held that
even employees who gave releases could
not validly waive their right to double
damages. The result is that most of
the so-called portal pay" suits are based
upon triple the amount which might
have been paid at straight-time rates,
for virtually no factory employer antici-
pated the Mount Clemens interpreta-
ton.
Testimony received by the subcommit-
tee from War and Navy Department
officials indicated that the United States
Treasury will be the chief sufferer If the
pending claims can successfully be es-
tablished More than billion dollars
worth of these claims have been filed
either against firms which had cost-plus
contracts ii. e., contracts requiring the
Government to pay all labor COSTS or
contracts subject to renegotiation. To
the extent to which these additional
wages are payable, these contractors
would look to the Treasury for full re-
endorsement. But this is only part OF
the contingent liability of the Treasury.
If a corporation was in the high
income brackets, as many of them were
during the war years, it might elect not
to contest these claims, but to settle for
the full amount. In such event, by filing
amended returns for the years in which
such claims accrued, the taxpayer might
recover as much as 80 per cent in tax
refunds. Other companies so situated,
whose profits have fallen off, might take
corresponding advantage of the carry
over provisions in the 1945 Revenue Act.
The terrific losses thus incurred by the
Treasury would be Offset to only negll-
gible degree by the additional income
taxes collected from the claimants, since
most of them are in the lower surtaX
brackets. 1t will readily be seen, there
fore, that the modest 5000, 100000 sur
plus envisaged by President Truman in
his budget message might be converted
into an enormous deficit if any stable
amount of the "portal-to-portaP liabil-
ity is realized-even if the Republicans
refrain from passing any tax-reduction
measures.
The task of Congress in devising some
effective means of relief is a compn-
Gated one. It would be easy, Of course,
to amend the WageH Hour Act in terms
which would make it impossible for the
courts in the future to construe the
work week provisions as they were in
terpreted in the Mount Clemens case.
But this would not solve the problem OF
the pending claims. Enactment OF a
short statute of limitations cutting off
accrued causes of action might be
40 fhonrv