A-54011, OCTOBER 7, 1935, 15 COMP. GEN. 275

A-54011, OCTOBER 7, 1935, 15 COMP. GEN. 275

CONTRACTORS - RELIEF ACT - CODE AND PRESIDENTIAL REEMPLOYMENT AGREEMENT COMPLIANCE A CONTRACTOR MAY NOT BE REIMBURSED UNDER THE ACT OF JUNE 16, 1934, 48 STAT. 974, FOR INCREASES IN WAGES REPRESENTED BY RATES PLACED INTO EFFECT BEFORE SIGNING THE PRESIDENT'S REEMPLOYMENT AGREEMENT, OR RATES PLACED INTO EFFECT IN EXCESS OF THE WAGES STATED IN SAID AGREEMENT, NOR MAY HE BE REIMBURSED FOR INCREASED PAYMENTS FOR OVERTIME SERVICES NOT REQUIRED BY THE AGREEMENT, NOTWITHSTANDING AN EMERGENCY MAY HAVE ARISEN BECAUSE OF UNEXPECTED ACTION BY THE GOVERNMENT IN CONNECTION WITH THE PERFORMANCE OF THE CONTRACT, BUT, REIMBURSEMENT IS AUTHORIZED OF INCREASES IN WAGES RESULTING FROM ARBITRATION IMPOSED BY THE SIGNING OF SAID AGREEMENT REQUIRING COMPLIANCE WITH SECTION 7 (A) OF THE ACT OF JUNE 16, 1933, 48 STAT. 195. THE INCREASED WAGES FOR WHICH REIMBURSEMENT IS AUTHORIZED BY THE ACT OF JUNE 16, 1934, 48 STAT. 974, ARE TO BE MEASURED BY THE RATES IN EFFECT DURING THE PAY PERIOD IMMEDIATELY PRECEDING THE DATE OF SIGNING THE PRESIDENT'S REEMPLOYMENT AGREEMENT, OR COMPLIANCE WITH THE APPLICABLE CODE, AND THE RATES PAID THEREAFTER AND PURSUANT THERETO.

COMPTROLLER GENERAL MCCARL TO THE SECRETARY OF THE NAVY, OCTOBER 7, 1935:

THERE HAS BEEN RECEIVED YOUR REQUEST OF JULY 30, 1935, FOR DECISION OF A QUESTION PRESENTED IN LETTER OF JULY 18, 1935, TO YOU FROM THE CHIEF, BUREAU OF SUPPLIES AND ACCOUNTS, NAVY DEPARTMENT, AS FOLLOWS:

2. A COMPANY HAS SUBMITTED A CLAIM FOR $77,511.44 REPRESENTING ALLEGED INCREASES IN LABOR COST DUE TO THE NATIONAL INDUSTRIAL RECOVERY ACT. THIS AMOUNT IS CLAIMED TO REPRESENT THE ADDITIONAL LABOR COST PAID FROM AND AFTER 29 JUNE 1933 UP TO AND INCLUDING 3 MAY 1935. THE COMPANY STATES THAT IT SIGNED THE PRESIDENT'S REEMPLOYMENT AGREEMENT ON 26 AUGUST 1933 AND THAT NO APPLICABLE CODE FOR ITS INDUSTRY WAS EVER APPROVED. THIS INCREASED LABOR COST IS CLAIMED TO BE DUE TO COMPLYING WITH THE PRESIDENT'S REEMPLOYMENT AGREEMENT AND IS MADE UP OF THREE DISTINCT INCREASES AS FOLLOWS:

(A) RATES WERE INCREASED ON 29 JUNE 1933 TO COMPENSATE FOR DECREASE OF HOURS FROM 52 1/4 TO 40 HOURS PER WEEK, RESULTING IN AN INCREASE OF 30.625 PERCENT. THE COMPANY STATES THAT THIS ACTION WAS TAKEN IN GOOD FAITH AND WITH THE DESIRE TO COOPERATE WITH THE RECOVERY PROGRAM OF THE ADMINISTRATION AS EXPRESSED IN THE ACT OF 16 JUNE 1933.

(B) INCREASE OF 10 PERCENT MADE ON 14 JANUARY 1934. THE COMPANY STATES THAT THIS INCREASE WAS MADE TO ALLAY REQUESTS OF LABOR AUTHORIZED BY THE PROVISION OF SECTION 7 (A) OF THE NATIONAL INDUSTRIAL RECOVERY ACT.

(C) INCREASE IN RATES AS OF 11 MAY 1934. THE COMPANY STATES THAT THIS INCREASE WAS DUE TO A 57-DAY STRIKE AND ARBITRATION OF THE SAME AS A RESULT OF COMPLYING WITH SECTION 7 (A) OF THE NATIONAL INDUSTRIAL RECOVERY ACT AND THAT THIS RESULTED IN AN AVERAGE INCREASE IN RATES OF 6 1/2 PERCENT.

(D)PAYMENT OF TIME AND ONE-THIRD FOR OVERTIME WORK. THE COMPANY STATES THAT IT HAD NOT BEEN THEIR POLICY TO PAY A BONUS FOR OVERTIME PRIOR TO COMPLIANCE WITH THE PRESIDENT'S REEMPLOYMENT AGREEMENT AND IT THEREFORE CLAIMS THE ENTIRE COST OF SUCH OVERTIME. IT DOES NOT APPEAR FROM THE COMPANY'S CLAIM THAT THE SIGNING OF THE PRESIDENT'S REEMPLOYMENT AGREEMENT BY THE COMPANY ON 26 AUGUST 1933 RESULTED IN ANY IMMEDIATE CHANGE IN WAGE RATES WITH THE POSSIBLE EXCEPTION OF EXTRA PAY FOR OVERTIME.

3. A NUMBER OF CLAIMS HAVE BEEN FILED SHOWING THAT WAGE INCREASES WERE MADE DURING JUNE, JULY, AND AUGUST 1933, PRIOR TO THE ADOPTION OF THE PRESIDENT'S REEMPLOYMENT AGREEMENT AND/OR THE APPLICABLE CODE BY THE PARTICULAR CONTRACTOR CONCERNED. UNDER SUCH CIRCUMSTANCES THE SIGNING OF THE REEMPLOYMENT AGREEMENT OR COMPLIANCE WITH THE CODE DID NOT RESULT IN AN INCREASE IN WAGES. THE QUESTION THEREFORE ARISES AS TO WHETHER IN COMPUTING THE INCREASED LABOR COST, THE WAGE RATES SUBSEQUENT TO COMPLIANCE WITH THE REEMPLOYMENT AGREEMENT AND/OR APPLICABLE CODE SHOULD BE COMPARED WITH THE WAGE RATES IN EFFECT IMMEDIATELY PRECEDING THE ADOPTION OF THE REEMPLOYMENT AGREEMENT AND/OR THE CODE OR WITH THE RATE IN EFFECT PRIOR TO THE WAGE INCREASE WHERE SUCH WAGE INCREASE WAS MADE ONLY A SHORT TIME PRIOR TO ACTUAL SIGNING OF THE REEMPLOYMENT AGREEMENT AND/OR THE CODE.

4. BASED IN THE FOREGOING CIRCUMSTANCES, THE FOLLOWING QUESTIONS ARISE IN CONNECTION WITH THIS AND OTHER SIMILAR CLAIMS ON WHICH IT IS DESIRED TO OBTAIN A DECISION BEFORE PROCEEDING WITH THE ADMINISTRATIVE EXAMINATION OF SUCH CLAIMS:

(A) MAY ANY OR ALL OF THE THREE INCREASES LISTED ABOVE UNDER SUBPARAGRAPHS (A), (B), AND (C) BE CONSIDERED AS DUE TO COMPLIANCE BY THE CONTRACTOR WITH THE PRESIDENT'S REEMPLOYMENT AGREEMENT?

(B) MAY THE EXTRA PAY FOR OVERTIME BE CONSIDERED AS DUE TO COMPLIANCE WITH THE PRESIDENT'S REEMPLOYMENT AGREEMENT AND, IF SO, WOULD IT BE NECESSARY FOR THE CLAIMANT TO SHOW THAT THE EMERGENCY AROSE BECAUSE OF UNEXPECTED ACTION BY THE GOVERNMENT IN CONNECTION WITH THE PERFORMANCE OF THE CONTRACT?

(C) WHERE THE PRESIDENT'S REEMPLOYMENT AGREEMENT WAS SIGNED SUBSEQUENT TO 10 AUGUST 1933, SHOULD THE ADDITIONAL COST BE COMPUTED FROM 10 AUGUST 1933, OR FROM THE ACTUAL DATE ON WHICH THE PRESIDENT'S REEMPLOYMENT AGREEMENT AND/OR APPLICABLE CODE WAS PLACED IN EFFECT WHERE THE SIGNING OF THE REEMPLOYMENT AGREEMENT AND/OR ADOPTION OF THE APPLICABLE CODE DID NOT RESULT IN INCREASING WAGE RATES?

SEVERAL QUESTIONS INVOLVING THE TERMS OF THE CITED ACT OF JUNE 16, 1934, 48 STAT. 974, WERE DETERMINED IN MY DECISION OF APRIL 24, 1935, 14 COMP. GEN. 786, 791, AND IT IS UNNECESSARY AT THIS TIME TO REPEAT ANY OF THE CONCLUSIONS THEREIN REACHED. AS THE PRESENT SUBMISSION IS UNDERSTOOD, THERE ARE NOT INVOLVED IN THE QUESTIONS SUBMITTED THE TERMS OF ANY CODE BUT THE TERMS OF THE PRESIDENT'S REEMPLOYMENT AGREEMENT WHICH IS REPORTED TO HAVE BEEN SIGNED BY THE PARTICULAR CONTRACTOR ON AUGUST 26, 1933, THERE HAVING BEEN ISSUED JULY 20, 1933, THE AGREEMENT AND INVITATION TO SIGN BY ALL EMPLOYERS OF LABOR FOR WHOSE INDUSTRIES A CODE OR CODES HAD NOT BEEN AT THAT TIME APPROVED. THE PERTINENT TERMS OF THE REEMPLOYMENT AGREEMENT ARE AS FOLLOWS:

(3) NOT TO EMPLOY ANY FACTORY OR MECHANICAL WORKER OR ARTISAN MORE THAN A MAXIMUM WEEK OF 35 HOURS UNTIL DECEMBER 31, 1933, BUT WITH THE RIGHT TO WORK A MAXIMUM WEEK OF 40 HOURS FOR ANY 6 WEEKS WITHIN THIS PERIOD; AND NOT TO EMPLOY ANY WORKER MORE THAN 8 HOURS IN ANY 1 DAY.

(4) THE MAXIMUM HOURS FIXED IN THE FOREGOING PARAGRAPHS (2) AND (3) SHALL NOT APPLY TO EMPLOYEES IN ESTABLISHMENTS EMPLOYING NOT MORE THAN TWO PERSONS IN TOWNS OF LESS THAN 2,500 POPULATION WHICH TOWNS ARE NOT PART OF A LARGE TRADE AREA; NOT TO REGISTERED PHARMACISTS OR OTHER PROFESSIONAL PERSONS EMPLOYED IN THEIR PROFESSION; NOR TO EMPLOYEES IN A MANAGERIAL OR EXECUTIVE CAPACITY, WHO NOW RECEIVE MORE THAN $35 PER WEEK; NOR TO EMPLOYEES ON EMERGENCY MAINTENANCE AND REPAIR WORK; NOR TO VERY SPECIAL CASES WHERE RESTRICTIONS OF HOURS OF HIGHLY SKILLED WORKERS ON CONTINUOUS PROCESSES WOULD UNAVOIDABLY REDUCE PRODUCTION BUT, IN ANY SUCH SPECIAL CASE, AT LEAST TIME AND ONE-THIRD SHALL BE PAID FOR HOURS WORKED IN EXCESS OF THE MAXIMUM. POPULATION FOR THE PURPOSES OF THIS AGREEMENT SHALL BE DETERMINED BY REFERENCE TO THE 1930 FEDERAL CENSUS.

(5) NOT TO PAY ANY OF THE CLASSES OF EMPLOYEES MENTIONED IN PARAGRAPH (2) LESS THAN $15 PER WEEK IN ANY CITY OF OVER 500,000 POPULATION, OR IN THE IMMEDIATE TRADE AREA OF SUCH CITY; NOR LESS THAN $14.50 PER WEEK IN ANY CITY OF BETWEEN 250,000 AND 500,000 POPULATION, OR IN THE IMMEDIATE TRADE AREA OF SUCH CITY; NOR LESS THAN $14 PER WEEK IN ANY CITY OF BETWEEN 2,500 AND 250,000 POPULATION, OR IN THE IMMEDIATE TRADE AREA OF SUCH CITY; AND IN TOWNS OF LESS THAN 2,500 POPULATION TO INCREASE ALL WAGES BY NOT LESS THAN 20 PERCENT, PROVIDED THAT THIS SHALL NOT REQUIRE WAGES IN EXCESS OF $12 PER WEEK.

(6) NOT TO PAY ANY EMPLOYEE OF THE CLASSES MENTIONED IN PARAGRAPH (3) LESS THAN 40 CENTS PER HOUR UNLESS THE HOURLY RATE FOR THE SAME CLASS OF WORK ON JULY 15, 1929, WAS LESS THAN 40 CENTS PER HOUR, IN WHICH LATTER CASE NOT TO PAY LESS THAN THE HOURLY RATE ON JULY 15, 1929, AND IN NO EVENT LESS THAN 30 CENTS PER HOUR. IT IS AGREED THAT THIS PARAGRAPH ESTABLISHES A GUARANTEED MINIMUM RATE OF PAY REGARDLESS OF WHETHER THE EMPLOYEE IS COMPENSATED ON THE BASIS OF A TIME RATE OR ON A PIECEWORK PERFORMANCE.

(7) NOT TO REDUCE THE COMPENSATION FOR EMPLOYMENT NOW IN EXCESS OF THE MINIMUM WAGES HEREBY AGREED TO (NOTWITHSTANDING THAT THE HOURS WORKED IN SUCH EMPLOYMENT MAY BE HEREBY REDUCED) AND TO INCREASE THE PAY FOR SUCH EMPLOYMENT BY AN EQUITABLE READJUSTMENT OF ALL PAY SCHEDULES.

(8) NOT TO USE ANY SUBTERFUGE TO FRUSTRATE THE SPIRIT AND INTENT OF THIS AGREEMENT WHICH IS, AMONG OTHER THINGS, TO INCREASE EMPLOYMENT BY A UNIVERSAL COVENANT, TO REMOVE OBSTRUCTIONS TO COMMERCE, AND TO SHORTEN HOURS AND TO RAISE WAGES FOR THE SHORTER WEEK TO A LIVING BASIS.

OF COURSE, RATES OF WAGES PLACED INTO EFFECT BY AN EMPLOYER BEFORE SIGNING THE REEMPLOYMENT AGREEMENT OR IN THE EXCESS OF THE WAGES STATED IN SAID AGREEMENT WERE NOT PLACED INTO EFFECT OR PAID BY REASON OF COMPLIANCE WITH SAID AGREEMENT WITHIN THE TERMS OF THE ACT OF JUNE 16, 1934, ENTITLING THE CONTRACTOR TO REIMBURSEMENT OF AN AMOUNT EQUAL TO SUCH INCREASE. THAT IS TO SAY, THE INCREASES IN PARAGRAPH 2 (A) AND (B) STATED IN QUESTION 4 (A) IN THE LETTER OF JULY 18, 1935, WERE NOT MADE BY REASON OF ANY COMPLIANCE WITH THE PRESIDENT'S REEMPLOYMENT AGREEMENT. AS TO THE INCREASE REFERRED TO IN PARAGRAPH 2 (C), IF IT BE A FACT THAT THERE WAS AN AVERAGE INCREASE OF RATES OF 6 1/2 PERCENT EFFECTIVE MAY 11, 1934, AS THE RESULT OF AN ARBITRATION MADE BY OR UNDER THE AUSPICES OF THE NATIONAL INDUSTRIAL RECOVERY LABOR BOARD PURSUANT TO SECTION 7 (A) OF THE ACT OF JUNE 16, 1933, SUCH INCREASE MAY BE ALLOWED AS THE EMPLOYMENT AGREEMENT PROVIDED THAT IT WAS SUBJECT TO ALL THE TERMS AND CONDITIONS REQUIRED BY SAID SECTION 7 (A) OF THE ACT OF JUNE 16, 1933.

WITH RESPECT TO PARAGRAPH 2 (D) OR QUESTION 4 (B) IN THE ABOVE QUOTED LETTER, THERE APPEARS NOTHING IN THE PRESIDENT'S REEMPLOYMENT AGREEMENT REQUIRING THE PAYMENT OF EXTRA COMPENSATION FOR OVERTIME EXCEPT IN SPECIAL CASES WHERE RESTRICTIONS OF HOURS OF HIGHLY SKILLED WORKERS ON CONTINUOUS PROCESSES WOULD UNAVOIDABLY REDUCE PRODUCTION. IN SUCH CASES IT WAS PROVIDED THAT AT LEAST TIME AND ONE-THIRD SHOULD BE PAID FOR HOURS WORKED IN EXCESS OF THE MAXIMUM. ONE OF THE PURPOSES OF THE REEMPLOYMENT AGREEMENT WAS TO SPREAD EMPLOYMENT, AND THAT PURPOSE WAS NOT ACCOMPLISHED BY OVERTIME WORK EXCEPT WHERE MADE NECESSARY IN ACCORDANCE WITH THE SPECIFIC TERMS OF THE ABOVE-QUOTED PARAGRAPH 4 OF THE AGREEMENT. THE FACT THAT AN EMERGENCY MAY HAVE ARISEN BECAUSE OF UNEXPECTED ACTION BY THE GOVERNMENT IN CONNECTION WITH THE PERFORMANCE OF A CONTRACT DOES NOT NECESSARILY ENTITLE THE CONTRACTOR TO REIMBURSEMENT OF OVERTIME PAID THE EMPLOYEES; SUCH OVERTIME MAY NOT BE PAID EXCEPT IN VERY SPECIAL CASES WHERE RESTRICTION OF HOURS OF HIGHLY SKILLED WORKERS ON CONTINUOUS PROCESSES WOULD HAVE UNAVOIDABLY REDUCED PRODUCTION.

AS TO QUESTION 4 (C), YOU ARE ADVISED THAT THE ADDITIONAL COST MAY NOT BE COMPUTED FROM ANY DATE PRIOR TO THE ACTUAL DATE WHEN THE CONTRACTOR SIGNED THE REEMPLOYMENT AGREEMENT OR, IN CASE A CODE WAS ADOPTED, THE DATE THE APPLICABLE CODE WAS PLACED INTO EFFECT, AND THE INCREASED WAGES, IF ANY, PAID ARE TO BE MEASURED BY THE RATES IN EFFECT DURING THE PAY PERIOD IMMEDIATELY PRECEDING THE DATE OF SIGNING THE AGREEMENT OR COMPLIANCE WITH THE APPLICABLE CODE AND THE RATES PAID THEREAFTER AND PURSUANT THERETO.