My understanding is that you have already been authorized to represent the consignment distributors section of the association, and this now authorizes you to represent the association as a whole. Yours very truly, W. A. PARKER, Secretary. In addition, I am representing the North Carolina Service Station Association, which has a membership of nearly 1,500 independent gasoline retailers. I would like to read a letter from the association signed by its president and executive secretary. Mr. M. M. FOWLER, Durham, N. C. DURHAM, N. C., February 16, 1950. DEAR MR. FOWLER: The North Carolina Service Station Association, with a membership of 1,480 independent gasoline retailers, would like for you to represent the association in your appearance before the congressional committee regarding the pending social-security bill H. R. 6000. The independent retail dealers of our State would like to retain their present status insofar as social-security legislation is concerned, and our organization will appreciate any efforts that you can make toward that end. With kindest regards, we remain, Yours very truly, THE NORTH CAROLINA SERVICE STATION ASSOCIATION. C. F. DORITY, Executive Secretary. I will now proceed with my statement. My name is M. M. Fowler and I am distributor of Gulf Oil Corp. products at Durham, N. C. I became interested in House bill No. 6000, which I understood broadens the coverage for social security. I came to Washington in January and secured a copy of this bill. I studied it, but frankly I did not understand its language. It was my understanding that as a distributor of petroleum products, I would, in all probability, be covered as an employee of the Gulf Oil Corp. under this act, which I do not want. Since I did not understand the language used in this act I secured a copy of House Report No. 1300, which explains various terms of this act. From the report prepared for the Committee on Ways and Means by the staff of the Joint Committee on Internal Revenue Taxation (July 22, 1949), however, I do understand what this committee had to say in regard to their interpretations of the term "employee" as used in this act, which is as follows and is shown beginning on page 189: The proposed definition may result in defining employer-employee status to include a wide range of service relationships, in addition to those listed above, which have heretofore been considered independent contractor relationships. Among these are the following: "Wholesale distributors of oil products may have quite extensive investments and may hire numerous employees, but they are subject to some regulations by the oil companies whose products they distribute. There is permanency in their relationship with the oil companies, and they are closely integrated in the business of the oil companies, since they perform the integral function of serving as outlets for oil-company products." This is why I believe this act will bring me under the law and I will be considered an employee of my supplier, as well as many thousand other small-business men throughout the country. On page 195 of House Report No. 1300, this Joint Committee on Internal Revenue Taxation has this to say: The Federal Security Agency states as its present opinion that the economicdependence test would extend the definition of employees to include the following groups who are considered independent contractors under the common law. This list included contract filling-station operators. The committee then went on to say: It is highly probable that the economic-dependency test would also extend the definition of employee to include bulk-oil distributors. I have heard that there is another bill, similar to this bill, pending before Congress, which would make my employees, and me, employees of my supplying oil company under the unemployment-insurance law, but I am not familiar with the details of this bill. In my business I spend approximately 70 percent of my time selling Gulf Oil Corp. products. I am also engaged as a jobber of fuel oil, as jobber for the automobile tire and accessory line, in the retail groc ery business, the transport business, the building-repair business, and the banking business. I have on my pay roll 13 employees. All of these employees are now covered by social security, unemployment compensation, hospital insurance, life insurance, and workmen's compensation insurance. I use these employees for these various businesses mentioned as it will pay me to use them. The Gulf Oil Corp. does not have anything to do with how much time I put to my business. If I wish to take a vacation, I do not have to ask them. I fix the hours that my plant opens and closes. I receive the majority of the merchandise that I get from Gulf Oil Corp. on consignment. I purchase outright numerous items that I handle. I get a commission on all consigned products. At times in the past the Gulf Oil Corp. has not had the supply of various petroleum products that I needed to take care of my customers. In cases like this we distributors go out on the open market and buy this merchandise where we can get it in order to take care of our customers who are depending on us. My bulk plant is rented from Gulf Oil Corp. from year to year. As stated in the beginning, I started this connection with my supplier, Gulf Oil Corp., between 13 and 14 years ago. At that time their volume of refined oil sales per month was approximately 150,000 gallons. Now my average sales volume of refined oils is approximately 550,000 gallons per month. I have spent 13 years of hard work and many thousands of dollars building up this business, and I want to keep it. I have also reinvested practically everything I have made in retail outlets of my own for the sale of petroleum products and other products, and my investment in these outlets, when I get them fully paid for, will be over $200,000. My supplier has left me free in the development of these service stations. Most all other oil distributors whom I am acquainted with have done the same thing to some extent. Several years ago the Social Security Administration ruled that distributors, such as myself, were employees of the various oil companies. As a result of this it was necessary that certain reports be made to our suppliers, which reports included the number of employees, the salaries or wages paid them, the gross income and operating expenses and the net income and our supplier in turn had to make reports to the Government. It was only after numerous lawsuits over a period of several years that this was discontinued and only after the Federal courts ruled that distributors of petroleum products, such as myself, were not employees of our supplying companies. I pay the expenses of my operation, such as lights, water, telephone, heat, furnish trucks, license tags, and other expense of operating a bulk distributing plant and selling petroleum products. This includes all types of insurance, such as cargo insurance, mistaken delivery, workmen's compensation, public liability and property damage, fire and theft, collision. I pay social-security taxes on each and every one of my employees. The people in my employ are satisfactory to me. I select them, set the salaries or wages they receive, fix the hours they work, am responsible for all the benefits they receive, including vacations, sick leave, life insurance, and hospitalization. The supplier whose products I handle has nothing whatever to do with any of these matters. These employees might not be satisfactory to my supplier if they are ruled employees and there may also be a tendency on the part of my supplier that all of these people whom I employ are designated as their employees to take over the operation for which I have spent 13 years of hard work and invested many thousands of dollars of my money. I want to urge you gentlemen to protect us as small independent businessmen, to allow our status to remain as it is at the present time. I enjoy such profits as I may make out of my business and at the same time, I am subject to take such losses as occur. I would like to call your attention to an example shown in Report 1300 on page 87. This example has to do with bulk-oil-plant operator and would tend to show that under certain conditions a bulk-oilplant distributor or jobber would not be considered an employee. In this example, it refers to the X Oil Co. entering into a contract with A who owns his own storage tanks and trucks. In the great majority of cases throughout the country, the storage tanks and plants are owned by oil companies, and leased to jobbers, distributors such as myself. I, therefore, would not come under this exception. You gentlemen of the committee may wonder why I am afraid that I will be included as an employee under this definition, because of all of the things I have mentioned which show that I am an independent businessman. The following are some of the reason why I am afraid that I will be included as an employee if this definition in H. R. 6000 becomes a law: 1. I know that I was considered an employee at one time by the Administrator of the social-security law. 2. I know that it required several years in court to clear that up. 3. I know that I am not included as an employee under the law now. 4. I know that this bill changes the present definition of employee. 5. I know that the purpose of this definition is to include more people as employees. 6. I know that the reason this proposed change in definition was included in the bill was to include people as employees who are supposed to be economically dependent on a supplying company. 7. I know from reading the House committee report that there are many ways that I can be considered as a part of the business of Gulf Oil Corp. and that this will be considered as evidence that I am an employee of Gulf. 8. I know that I sell many products under the trade name of Gulf and that the committee report says on page 85 that this is evidence to show that I am an employee. As a matter of fact, nearly all of the seven tests contained in paragraph (4) of the definition could be applied in such a way as to make me an employee, despite the fact that I am an independent businessman. So, you can see why I am worried. What I want the Congress to do is leave the present law alone as far as the employee definition is concerned, and in that way I will know that I will not be considered as an employee of the company whose products I distribute. What I have said today is based on my own experiences and refers to my own business, but it can apply equally as far as the many other thousands of oil jobbers, distributors, and consignees are concerned throughout the entire country, who are in a similar position. I know that they also want to retain their status as independent businessmen. On behalf of the North Carolina Oil Jobbers Association, the consignment distributors section of the association, the North Carolina Service Station Association, and myself, I would like to urge that you gentlemen help us all by changing the definition contained in this bill so that we will be allowed to continue our status as independent businessmen. I wish to thank each of you gentlemen for the privilege of appearing before this committee. The CHAIRMAN. We are very glad to have you. Are there any questions? If not, we thank you for your appear ance. Mr. FOWLER. Thank you. The CHAIRMAN. We have one other witness to complete our work today, Mr. Leon Gilbert Simon, Agents Association of the Equitable Life Assurance Society of New York City. Is Mr. Simon here? Is anyone appearing for Mr. Simon? (No response.) The CHAIRMAN. That completes the call of witnesses for the day. The committee will adjourn until tomorrow at 10 o'clock. (The following resolution was submitted for the record:) RESOLUTION UNANIMOUSLY APPROVED BY THE BOARD OF DIRECTORS OF NORTH CAROLINA OIL JOBBERS ASSOCIATION Whereas the North Carolina Oil Jobbers Association, representing approximately 500 independent oil marketers from throughout the State of North Carolina, is interested in improving their position and preserving their independence as small-business men; and Whereas the provisions of H. R. 6000, as now written, might impose many hardships upon, and threaten or destroy the very independence of these smallbusiness men: Now, therefore, be it Resolved, That the North Carolina Oil Jobbers Association petition the Congress to amend H. R. 6000 so as to more clearly define, or better still prohibit, the use of the word "employee" in the contractual relationships of supplies, consignees, jobbers, distributors, lessees, and/or dealers. The objectionable definition of the word "employee" as used in the bill can be changed without loss of socialsecurity benefits. The bill provides coverage for self-employed businessmen: but to preserve the well established lessor-lessee relationship, and to safeguard their independence as small-business men, they should be classified as being Self-employed; be it further Resolved, That a copy of this resolution be sent to each Senator and Representative in the Congress from North Carolina. (At 12:40 p. m., the committee recessed, to reconvene Thursday, March 16, 1950, at 10 a. m. SOCIAL SECURITY REVISION THURSDAY, MARCH 16, 1950 UNITED STATES SENATE, Washington, D. C. The committee met at 10 a. m., pursuant to recess, in room 312, Senate Office Building, Hon. Walter F. George, chairman, presiding. Present: Senators George, Myers, Millikin, Taft, Butler, and Martin. 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, please. Senator Schoeppel, we will be very glad to hear from you now on H. R. 6000. STATEMENT OF HON. ANDREW F. SCHOEPPEL, A UNITED STATES SENATOR FROM THE STATE OF KANSAS Senator SCHOEPPEL. Thank you very much, Mr. Chairman. Chairman George and members of the committee, I have requested time to appear before this committee in order to speak briefly in connection with the proposed definition of "employee" contained in section 210 (k) of H. R. 6000, beginning on page 48 of the bill. There is a sincere and intense interest in this proposed legislation among a substantial number of small-business men in my State. It is on their behalf that I appear here. These small-business men all over my State have been urging me to oppose the provisions of paragraphs (3) and (4) of the proposed definition of employee contained in this bill. I know that the committee has already heard much testimony and received many manuscripts describing the confusion and chaos which will surely result from the inclusion of this vague, indefinite, and ambiguous language in paragraphs (3) and (4) of the definition. I am against this not only because of its vagueness, but also because it will surely have a stifling effect on many thriving small businesses. It would like to direct the attention of the committee to one class of independent businessmen in my State who are genuinely and understandably alarmed at the prospects of this definition becoming law. The effects this definition would have on this group is typical of many classes of independent entrepreneurs. I refer to the thousands of men in my State who are wholesale distributors and retail marketers of gasoline and other petroleum products. As one time chairman of the corporation commission of my State, which is a public service commission, and as chairman of the |