Evening star., 1948-12-19
PetriIIo Record Contract
Held Within the Law
Risk Seen, However, That Public May
Suffer From Welfare Fund Abuse
r., Cor1xJ N Qo;II.,

The arrangements entered into the past week
between the manufacturers of phonograph
records and the American Federation Of Mu-
sicians, AFI has again raised the question a.
to whether the present provisions of section
302 Of the Taft-Hartley Act relating to the
administration Of union welfare funds con.
tain adequate safeguards. The problem Ia
receiving renewed attention from the Joint
Committee Of the House and Senate on labor
management relations which Is now preparing
q report to Congress on desirable revisions Of
the act.
When the act first became effective. lawyers
representing both the union and the recording
industry concluded that section 302 sounded
the death knell of the agreement negotiated
some years before by James c. Petrillo, presi.
dent of the union, pursuant to which MEM
bers were allowed to make records only If the
manufacturer paid a royalty OF cents
on each record to union fund for the bene-
fit Of unemployed members. This section made
it illegal for employers to pay any money
to union representatives for welfare funds
unless the administration Of such funds was
jointly controlled by employer and union. and
held in trust for employees to be disbursed
only for such purposes as death benefits, re.
tirement pensions. accidents, health and un.
employment insurance.
While the union was willing to permit rep
resentatives OF the industry as well as officers
of the union to administer the fund, it was
believed that the provisions limiting the benz
efciaries of such fund to employees of com.
panies making the contributions was fatal
stumbling block to a continuance of the
royalty plan. The basic scheme of the Petrillo
fund was to provide work relief for all un-
employed musicians, not merely the artists
who were engaged to make recordings.
Being unable to formulate a plan which
would satisfy the act, the union then forbade
any Of its members to make any records when
the old agreement expired last December.
The rigid enforcement Of this rule demon
strated again the monopoly held by the union
over musicians, for although it meant q
serious reduction in the income Of many sing
ers and radio orchestras, none Of them dared
defy the union. The result was that the
enormous record manufacturing industry was
closed down for period Of almost year
The new contract, which has been pro-
nounced legal by Attorney General Tom Clark
and William S. Tyson, solicitor Of the La
Dor Department, resembles the pre-Taft-
Hartley Act plan in that royalty is still paid
by the manufacturer on each record and the
certs of unemployed musicians, who receive
the usual union wages for such appearances.
Instead Of the money being paid directly to
the union, however, the plan specifies that it
shall be paid to and dsbursed by an i'm
partial trustee designated by the manufac-
turers According to the solicitors analysiA
the unemployed musicians who benefit by
the agreement do not have to be members
Of the federation.
Whether or not this nondiscriminatory fea-
ture will be carried out in good faith depends
a good deal upon the musicians union itself,
for the terms of the agreement still give that
organization a real voice in the making of dis
bursements. The contract specifies, for, exam.
pie, that the trustee must consult the fedora
ton as well as other groups and organizations.
More Importantly, before making any disburse-
ments, the trustee must receive certiflcation
by the union stating that services have been
received or contracted for although there is .
limitation that such certiflcation shall not be
unreasonably withheld.
In his formal opinion, Mr.. Tyson said that
section 1902 (a) of the act, which prohibits
employers under threat Of criminal penalties
to pay any money Ito representative Of his
employees" is limited to payments made to
union representatives. He therefore concluded
. trustee who represented neither a union
nor employees did not fall under this category.
Consequently, the restrictions which make only
employees of the contributing employers eligibls
to the benefits of welfare fund and permit
its expenditures only for the purpose eImer-
ated in the act have no application to the new
trust fund.
1t is this blanket exemption from the pro-
tective provisions of the act which is creating
concern among the members OF the commit
tee. In the musicians case, this Is not par
ticularly serious for the object Of the trust
the payment Of unemployment benefts-is In
accord with the spirit Of the act. Moreover.
the royalties previously received by the fund
seem to have been expended honestly for un-
employed orchestras, the cost Of administration
and arranging for the concerts having been
held to ! per cent.
The device Of designating an intermediary to
act as trustee however, Is obviously susceptible
to abuse. In q recent declaratory judgment
case, Rice-Stix Co. VS.. st. Louis Labor
Health Institute, United States District
Court at st. Louis found no violation Of section
302 in a collective agreement requiring an
employer to pay 3l2 per cent of his payroll to
an unincorporated society created by C1o
union ulaSlQuCl as persons OCleT Llldu
members could belong A
The president of the Institute, however, was
the director of the union local. tThe other
officers also were agents of the union. BY
failing to pierce the corporate lvEl, the court
permitted the intent Of the act TO be thwarteds
as the effect of this holding meant that the
union officers controlling the institute were
free, so far as the statute was concerned, to
spend the money in any way they saw IT.
Despite the clamor of organized labor to
discard all the restrictions in the Taft-Hartley
Act, 1t is unlikely that Congress can be per-
suaded to give unions a blank check on the
methods in which welfare funds, ostensibly
created for the benefit of employees, are to be
handled. One of the most pronounced trends
in collective bargaining in the last year or two
has been the establishment of such funds for
which the nuhlic naYS indirectly both in the