we add that Local 471 of the Hotel & Restaurants Employees International Union covering the Albany, Schenectady, and Troy area have asked us to include their support with ours.

Senator, I have an additional section which is not related to tips but to the hospital portion of the bill. With respect to the hospital portion of the bill we support amendment No. 79 which would include vital hospital services customarily rendered as such but which are presently excluded as the bill stands.

We have a pension, insurance, and medical care program set up by our collective bargaining agreement, and I will submit a copy of the various services.

(The material referred to follows:)

HEALTH SERVICES FOR EMPLOYEES OF THE HOTEL INDUSTRY COVERED BY THE INDUSTRYWIDE COLLECTIVE BARGAINING AGREEMENT

PENSIONERS

(A) At the Health Center (50th Street and 10th Avenue) pensioners will be given :

(1) Ambulatory care; (2) hospital care by health center physicians provided pensioner carries hospital insurance (usually Blue Cross).

(B) At FMO's (family medical offices) if living in covered zones:

(1) Ambulatory care; (2) hospital care by FMO physicians provided pensioner carries hospital insurance; (3) home care.

(C) Pensioners living in FMO covered zones should be treated at the respective FMO. They may, however, elect to be treated at the health center. They cannot shuttle from one to the other or be treated at both.

(D) These services are not extended to spouses or dependents of pensioners.

SUFFOLK AND NASSAU COUNTY RESIDENTS

A HIP program covers eligible members and families living in these areas.

WESTCHESTER, NEW JERSEY, STATEN ISLAND RESIDENTS

On April 1, 1964 a "fee-for-service" plan became effective for eligible members and families. This plan provides partial reimbursement for office, home, and hospital care by MD's of the patient's own choice, according to a schedule of fees set by the Union Family Medical Fund.

QUEENS RESIDENTS

All eligible members and family dependents living in Queens are serviced by the Queens Family Medical Office at 91-31 Queens Boulevard, Telephone TW9-8855.

BROOKLYN RESIDENTS

An agreement has been signed with the Brooklyn Hospital, at Ashland Place and DeKalb Avenue. A family medical office similar to the other FMO's now in operation will be opened early in 1966. Meantime, the member himself or herself will continue to get medical care at the health center, (50th Street and 10th Avenue) and a temporary surgical and obstetrical program is provided for spouses and family dependents.

BRONX RESIDENTS

All eligible members and family dependents living in the Bronx are serviced by the Family Medical Office at 360 East 193d Street, telephone WE-3-2300.

MANHATTAN RESIDENTS

(a) All eligible members and family dependents living in postal zones 21, 22, 26, 27, 28, 29, 35, and 37 are serviced by the Family Medical Office at 21 East 105th Street, telephone EN-9-2211.

(b) All eligible members and family dependents living in postal zones 1 through 7,9 through 14, 16 through 19, 36, and 38 (the area on the East and West Sides

below Central Park) are serviced by the Family Medical Office at 84 Fifth Avenue, telephone YU-9-6300.

(c) For families living in postal zones 23, 24, and 25 (the West Side area from 59th Street up to about 116th Street) service for spouses and dependent children only, but not the member, is provided at the South Manhattan Family Medical Office at 84 Fifth Avenue, telephone YU-9-6300. The member himself or herself is still to use the health center at 50th Street and 10th Avenue, telephone JU-6-1550.

TEMPORARY SURGICAL AND OBSTETRICAL PROGRAM

This program, which provides reimbursement for surgical and obstetrical benefits only, is still in operation. It is applicable to dependents of eligible members who are not included in any of the plans described above. Reimbursement is made according to a set schedule of fees.

HEALTH CENTER

Members, but not family dependents, who are not included in any of the above described programs, will continue to be covered by the health center at 50th Street and 10th Avenue, telephone JU-6-1150.

IF THE EMPLOYEE GETS SICK ON THE JOB

Emergency medical care for those who become ill on the job is being centralized at the health center, 50th Street and 10th Avenue.

Regardless of where the employee lives, he should proceed as follows if taken ill at work and in need of a doctor:

At night and on weekends and holidays when the health center is closed, call its number JU-6–1150, and a doctor will be sent.

During the day when the health center is open go directly to its emergency clinic if able to travel. If too sick to travel, call JU-6-1150.

Miss ALGASE. We provide ambulatory medical care for the elderly pensioned workers in our industry, who are also receiving social security benefits and who would be covered by the proposed bill.

We provide medical care and hospital care for these aged if they can keep up their Blue Cross payments. Part of this hospitalization has traditionally included diagnostic, X-ray and laboratory tests, electrocardiograms, basal metabolism readings, and other customary hospital services.

The proposed exclusion is a dilution of the concept of hospital care and I will not read the rest of my statement on this.

We need not go into the broad impact which the exclusions would have on hospital practice in general and on hospital-physician relationships. The inherent dangers are evident in the critical statements of Senators and Senator Ribicoff in your own answer to questions that we raised on this point.

But we do wish to state that we have a direct and specific interest in the integrity of a hospital system which includes the specialist services.

Our union, as I have stated, provides free and comprehensive medical care both to the worker and the workers' family through a chain of medical offices which are attached to and are virtually an integral part of major New York City hospitals.

In short, a blow at hospitals, and that is what the exclusions are, is a blow at our program and the people it serves. We ask for approval of amendment 79 and I ask and apologize for going over my time. Senator RIBICOFF. Thank you very much, Miss Algase. (The full prepared statement and attachments follow :)

STATEMENT OF JULIA ALGASE, NEW YORK HOTEL AND MOTEL TRADES COUNCIL, IN SUPPORT OF SECTION 3 OF H.R. 6675 AND IN SUPPORT OF AMENDMENT 79 To INCLUDE VITAL HOSPITAL SERVICES PRESENTLY EXCLUDED

My name is Julia Algase. I am legislative counsel and assistant to Jay Rubin, the president of the New York Hotel & Motel Trades Council which represents 35,000 hotel and motel workers in New York City under collective bargaining agreement with the Hotel Association of the City of New York.

Present with me today is Vangel Kamaras, a vice president of local 6, one of our constituent unions, and chairman of the Social Security and Tip Committee of the Hotel Trades Council, as well as other representatives of the large number of tip workers that we represent among the 35,000. The tip employees we represent are waiters, waitresses, bellmen, baggagemen, and doormen.

We come here to ask you to retain intact section 313 of H.R. 6675, the section which defines tips as wages and provides a reporting method for that purpose.

This proposal has been opposed by the American Hotel Association. We are told, as excuse for opposition, either that the program will be difficult to administer or that the employees involved do not want the coverage. Employers have conducted a vigorous campaign directed to the employees involved-a campaign which in effect says "You don't want this coverage. Tell your representative that you don't want it." We offer an example of the literature for your record. It is veiled and confusing. In essence it leaves the employee with this thought: "If tips coverage is legislated, you will have to pay income taxes to the Government which you may be getting away with now."

Employer opposition is actually based, regardless of the excuse, on the fact that this coverage is going to cost them more money in social security taxes, and they would like to keep that amount down as low as possible. Accordingly, we hear such statements as, "We are quite in sympathy but we think that this is a self-employment matter." Tip workers are not self-employed. They are employees and therefore must be treated as such in all areas, including social security. Since tip earnings are related directly to employment and flow out of that employment and an income tax is due on those tips, tip earnings must be included for social security purposes.

Not all hotel employers have the backward view on this problem that the opposition would indicate. Our own experience in New York City is an example of farsighted thinking on the part of a hotel association-the New York City Hotel Association-which does feel a responsibility in this area. Upon the presentation by our union, in collective bargaining negotiations of the problem of social security coverage in this tip area, both sides reached an agreement, recognizing that tips are part of wages and that tip workers covered by our collective bargaining agreement are deemed to earn at least $70 a week in cash wages and tips. Accordingly, the employers involved deducted the employee's share for social security and contributed their own share. Our agreement has been recognized by the Social Security Administration and the Internal Revenue Department as of June 1, 1963, the effecttive date of the agreement. Tip workers covered by our collective bargaining agreement have a certain amount of tip coverage under social security. We are offering a copy of the approval for your record.

The correction of a long-standing inequity is at hand in section 3 in this bill. As far back as 1948 the coverage of tips for social security purposes was recommended in the report of the Advisory Council on Social Security. In 1956, 8 years later, Senator Herbert Lehman offered an amendment to the SocialTM Security Amendments of 1956 on the Senate floor. These were his words:

"There are thousands of people in the United States who receive part of their wages in the form of tips-taxicab drivers, waiters and waitresses, barbers, bellhops, and others. These people are entitled to the same degree of social security coverage as the rest of our citizens. They should not be penalized simply because part of their earnings are not paid to them directly by their employers. These people are required to include moneys received in this way in their income tax returns. I can think of no reason why they should not be entitled to have these moneys accounted for social security."

Now, 9 years later, the situation is still uncorrected and a tip worker presently maintaining a reasonably good standing of living on the basis of wages and tips is reduced at the time of old age to the lowest rung of the social security ladder. We offer for your record an analysis of the difference in these benefits which is based on our own experience. From this it appears that social security benefits

without tips inclusion would be $73 a month, whereas if it were based on $70 a week, the benefits would be $116. But this is for our section of the community which has the benefit of contract and higher base wages than most parts of the country. The unorganized, particularly those who do not have the protection of the Federal minimum wage, are receiving exceedingly low hourly rates-the only amount reflected in their social security benefits.

The correction of the abuse is in your hands and we-35,000 of us-believe that you will correct it by approving section 3.

May we add that local 471 of the Hotel & Restaurant Employees International Union covering the Albany, Schenectady, and Troy area have asked us to include their support with ours.

Now, with respect to the hospital portion of the bill, we support amendment No. 79 which would include vital hospital services customarily rendered as such but which are presently excluded as the bill stands.

We have a pension, insurance, and medical care program set up by our collective bargaining agreement. We provide ambulatory medical care for the elderly pensioned workers in our industry who are also receiving social security benefits and who would be covered by the proposed bill. We provide medical care in hospital for these aged if they can keep up their Blue Cross (hospital insurance) payments. Part of this hospitalization has traditionally included diagnostic, X-ray and laboratory tests, electrocardiograms, basal metabolism readings, and other customary regular hospital services-such as those of radiologists, pathologists, and anesthesiologists.

The proposed exclusion is a dilution of the concept of hospital care. It is a concession to the efforts of the American Medical Association to obstruct enactment of a social security program which would meet adequately the high costs of hospital care for the elderly. Putting these customary hospital services in the voluntary supplementary medical portion of the legislation means billing the patient, a thing alien to the concept of insurance for hospital care.

We need not here go into the broad impact which the exclusions would have on hospital practice in general and on hospital-physician relationships. The inherent dangers have been made evident in the critical statements of Senators Douglas, Neuberger, Gruening, and others. But we do wish to state that we have a direct and specific interest in the integrity of a hospital system that includes the specialist services. Our union provides free and comprehensive medical care, both to the worker and the worker's family, through a chain of medical offices which are attached to, and are virtually an integral part of, major New York City hospitals. In short, a blow at hospitals and that is what the exclusions are is a blow at our program and the people it serves. We ask your approval of amendment No. 79.

Mr. JAY RUBIN,

U.S. TREASURY DEPARTMENT,

INTERNAL REVENUE SERVICE.
DISTRICT DIRECTOR,
New York, N.Y., August 25, 1964.

President, New York Hotel Trades Council,
New York, N.Y.

DEAR MR. RUBIN: At the request of the Director, Tax Rulings Division, I am notifying you of the status for social security, Federal unemployment tax, and withholding of income tax of a stated figure of $70 weekly in cash and tips referred to in paragraph 31 of the collective bargaining agreement of September 28, 1962, between the New York Hotel Trades Council, AFL-CIO, and the Hotel Association of New York City, Inc.

On the basis of advice received by me from the Tax Rulings Division, it is now held that such tips constitute "wages" to the extent that the amount thereof, when added to wages otherwise received by the employee from the employer, equals $70 for services performed during a complete weekly payroll period (or equals a pro rata portion of $70 for services performed during a part of a weekly period). This determination is applicable for purposes of the taxes imposed under the Federal Insurance Contributions Act and the Federal Unemployment Tax Act and for the purposes of the collection of income tax at source on wages. The effective date of this determination shall be in accordance with the following rules:

1. For purposes of the taxes imposed under the Federal Insurance Contributions Act this ruling will be applicable to tips received in pay periods beginning on or after June 1, 1963, the effective date of section 31 of the collective-bargaining agreement.

2. The tax imposed under the Federal Unemployment Tax Act will apply under this ruling only to tips received on or after January 1, 1964.

3. For purposes of income tax withholding this determination will apply (1) to the period beginning June 1, 1963, and ending at the close of the pay period which includes the date of this letter, but only to the extent that income tax has been withheld by the employer and has not been returned to the employee, and (2) to all pay periods beginning after the date of this letter.

Inasmuch as the collective-bargaining argeement has been in effect since June 1, 1963, and, pursuant to section 31 thereof, payments have been made by tip employees and their respective employers to an impartial chairman, as escrow holder, based upon the consideration as wages of certified and accounted gratuities in amounts which, when added to their respective weekly salaries, shall equal the sum of $70, it will become necessary for the respective employers to report and pay over to the Internal Revenue Service the full amount of the employment taxes and withheld income tax due in accordance with the effective dates stated above.

Instructions for the procedure to be followed in reporting these taxes will be communicated to the employers through their trade association.

Please notify your membership of this determination and that the ruling as to the status for employment tax purposes of the $70 referred to herein does not affect the amount to be included in gross income by the members for Federal income tax purposes, as all tips and gratuities received by such members are includible in gross income without limitation.

Senator RIBICOFF. The committee will stand adjourned until tomorrow morning at 10 o'clock.

Miss ALGASE. Senator Ribicoff, I have been asked if these two gentlemen could make a brief statement.

Senator RIBICOFF. All right.

You are taking more time than any other.

Mr. ZUCCA. E. Sarni Zucca. I have a statement here, Senator, but I am not going to read it. I merely wish to make two brief additions to a statement already made by Miss Algase and it is this: that upon retirement these workers qualify for social security benefits substantially inferior to those of other workers who pay the same taxes. The difference in the rate of benefits may mean the difference between economic survival and destitution in old age. However, the same applies