(The material requested follows:) SUPPLEMENTAL Statement of FRANK R. LYON, JR. The following table is offered in reply to Senator Millikin's question of whether productivity per man has kept pace with increased wages and other benefits which are paid to miners: Calendar year. Average weekly wages for all bituminous-coal production in United States Authority: Bureau of Labor Statistics, U. S. Department of Labor. Tons mined per day per man-West Virginia deep mines. Authority: West Virginia State Department of Mines. That table confirms my answer to Senator Millikin's question which I made at the hearing. Furthermore, it would seem obvious that advance in mechanization during the foregoing 10-year period would account for more than the 5.8-percent increase in the tons mined per day per man, and that, therefore, the efficiency of the miner has decreased during this period while his wages have increased. The CHAIRMAN. Thank you very much for your appearance. That finishes the schedule of witnesses for the week, I believe. (Whereupon, at 1:05 p. m., the committee recessed to reconvene Monday, March 6, 1950, at 10 a. m.) SOCIAL SECURITY REVISION MONDAY, MARCH 6, 1950 UNITED STATES SENATE, The committee met at 10 a. m., pursuant to recess, in room 312, Senate Office Building, Senator Walter F. George (chairman) presiding. Present: Senators George, Kerr, and Taft. Also present: Mrs. Elizabeth B. Springer, chief clerk, and F. F. Fauri, Legislative Reference Service, Library of Congress. The CHAIRMAN. The committee will come to order. I believe that Mr. Osherman wishes to appear first. You may come around, Mr. Osherman. Mr. Barron, you may come around, too, if you wish, at this time. Is there anyone else to appear on this particular matter? STATEMENTS OF J. A. OSHERMAN, OF GALLAGHER, OSHERMAN, CONNOR & BUTLER, BOWEN BUILDING, WASHINGTON, D. C.; AND THOMAS B. ROBERTS, DES MOINES, IOWA, REPRESENTING NATIONAL BALLROOM OPERATORS' ASSOCIATION Mr. OSHERMAN. Mr. Roberts is accompanying me, sir. Mr. BARRON. And I have with me Mr. Owens and Mr. Halliday and Mr. Scher. The CHAIRMAN. You gentleman may all be seated. All right, Mr. Osherman, you may proceed. Mr. OSHERMAN. This is a statement concerning the definition of "employee" in H. R. 6000. My name is J. A. Osherman. I am a member of the law firm of Gallagher, Osherman, Connor & Butler, Bowen Building, Washington, D. C. We are the Washington counsel for the National Ballroom Operators' Association, with its principal offce in Des Moines, Iowa. The National Ballroom Operators' Association is an organizacomposed of owners of ballrooms operating in 25 States, and the number of ballrooms so represented is approximately 200, comprising 90 percent of the important ballrooms of the entire country. The music for dancing in these ballrooms is provided mainly by "name bands." tion I have with me this morning Mr. Thomas B. Roberts of Des Moines, Iowa, who has assisted me in the preparation of this statement. Mr. Roberts is the legal counsel for the association and was the principal attorney representing the plaintiff ballroom operators in the case of Bartels v. Birmingham ((1947) 332 U. S. 126). We are appearing in opposition to section 206 (a) of H. R. 6000, which would amend section 1426 (d) of the Internal Revenue Code so as to change the definition of "employee" to read as follows: Employee.-The term "employee" means (2) Any individual who, under the usual rules applicable in determining the employer-employee relationship, has the status of an employee. For purposes of this paragraph, if an individual (either alone or as a member of a group) performs service for any other person under a written contract expressly reciting that such person shall have complete control over the performance of such service and that such individual is an employee, such individual with respect to such service shall, regardless of any modification not in writing, be deemed an employee of such person (or, if such person is an agent or employee with respect to the execution of such contract, the employee of the principal or employer of such person). The report of the Committee on Ways and Means of the House of Representatives specifically states that the second sentence of paragraph 2, quoted about is designed to change the effect of the United States Supreme Court's holding in Bartels v. Birmingham (1947) 332 U. S. 126 * The National Ballroom Operators' Association is vigorously opposed to the provision in question and respectfully submits that it should be eliminated from H. R. 6000 for the following reasons: 1. Provision is grossly discriminatory because it relieves one class of employers from all responsibility of paying the taxes and keeping the records required by the Federal Insurance Contributions Act. The Supreme Court of the United States in Bartels v. Birmingham, supra, said this concerning leaders of orchestras known in the amusement world as "name bands": The trial court found that there is no real dispute; that the leader exercises complete control over the orchestra. He fixes the salaries of the musicians; pays them and tells them what and how to play. He provides the sheet music and arrangements, the public-address system, and uniforms. He employs and discharges the musicians, and he pays the agents' commissions, transportation, and other expenses out of the sum received from the dance-hall operators. excess is his profit and any deficit his personal loss. Any On these facts the Supreme Court held the leader of an orchestra, and not the ballroom operators for whom the orchestra performed dance engagements, was the employer of the members of such orchestra, notwithstanding that the Form B contract of the American Federation of Musicians referred to the establishment owner using the orchestra's services as the "employer" and the orchestra members, including leader, as the "employees" and expressly recited that— the employer shall at all times have complete control of the services which the employees will render under the specifications of this contract. Section 206 (a), if enacted into law, would relieve orchestra leaders such as those which the Supreme Court held were employers from all responsibility as employers for the payment of social-security taxes and keeping of the pay-roll records required by the enactment imposing such taxes. Conclusive proof of the correctness of the foregoing assertion is to be found in a statement of James C. Petrillo, president of the American Federation of Musicians, made in a letter dated October 21, 1949, to V. Dahlstrand, president, local 8, 1714 North Twelfth Street, Milwaukee 5, Wis., as follows: While the House of Representatives and the Senate have adjourned, it is quite hopeful that the Senate will adopt this measure from the House, possibly with some minor changes, thus alleviating many of our headaches as to musician leaders being declared employers and subject to all employer's taxes. The burden of paying social-security tax and of keeping the records occasioned thereby has created "headaches" for many employers, but Congress has never seen fit on that account to relieve them of such burden. The provision in question accomplishes exactly that result. It permits one class of employers to retain the prerogatives of an employer, such as the right to hire and fire employees, fix and determine their compensation, furnish the tools with which the work is performed, and receive a profit from their services, without having to assume and bear any of the taxpaying and record-keeping responsibilities of an employer. Obviously, any provision producing such an unfair result is grossly discriminatory and should be removed from the act. 2. The provision in question creates a wholly new and heretofore unrecognized test for determining the relationship of employer and employee by making such relationship depend solely on what the parties say in their written contract rather than on what they do in fact under it. The manner in which the provision in question is worded implies that it is merely a codification of the common law test for determining the employment relationship since the preceding sentence recites: "Any individual who, under the usual common law rules applicable in determining the employer-employee relationship has the status of an employee. Any such implication is universally refuted by the holdings of many courts that the status of employer and employee is not to be judged by the single evidentiary factor of the patries' form of contract but by an over-all view of all the facts and circumstances showing their true relationship. Some of these holdings were made in cases wherein members of an orchestra were determined to be the employees of the leader and not the establishment owner for social security and employment tax purposes. See: Spillson v. Smith (174 F. 2d 787 (C. C. A. 7th)). Williams v. United States (126 F. 2d 129 (C. C. A. 7th); certiorari denied 317 U. S. 655, 63 S. Ct. 52, 87 L. Ed. 527). Palmer v. Michigan Unemployment Compensation Commission (310 Mich. 702, 18 N. W. 2d 83). Nebraska National Hotel Co. v. O'Malley (63 F. Supp. 26 (Neb.)). In re Jermyn Hotel Co. (Pa. Common Pleas, Sept. 3, 1946, C. C. H. Unemployment Ins. Service, Pa., par. 8149). Other holdings consist of decisions of courts in social security and unemployment tax cases generally as follows: Matcovich v. Anglim (134 F. 2d 834 (C. C. A. 9th); certirorai denied, 320 U. S. 744, 63 S. Ct. 46, 88 L. Ed. 441). Anglim v. Empire Star Mines Co. (129 F. 2d 914 (C. C. A. 9th)). Wabash R. R. Co. v. Finnegan (67 F. Supp. 94 (E. D. Missouri)). Royal Theatre Corporation v. United States (66 F. Supp. 302 (Kans.)). Jack and Jill, Inc., v. Tone (126 Conn. 114, 9 Atl. 2d 497). In re Morton (284 N. Y. 167, 30 N. E. 2d 369). Industrial Commission v. Northwestern Mutual Life Ins. Co. (103 Col. 550, 88 P. 2d 560). In the last case cited, the Supreme Court of Colorado held that the written contracts between the defendant company and its agents would be considered a "slight element" in determining the nature of their relationship. |