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The CHAIRMAN. We will hear from Mrs. Geerlofs now, and then perhaps there will be time for brief questions.

STATEMENT OF MARJORIE GEERLOFS, SENIOR VICE PRESIDENT, BAMBERGERS DEPARTMENT STORE

Mrs. GEERLOFS. Mr. Chairman and members of the committee, I am Marjorie Geerlofs. I am vice president for personnel and labor relations of Bambergers in New Jersey. Bambergers is a department store organization currently operating 12 stores in New Jersey and New York.

I would like to speak to the 40-percent nonexempt duty test for exempt executives and administrative employees in retailing.

Section 13(a)(1) of the Fair Labor Standards Act permits executive or administrative employees in retailing or service establishments to devote up to 40 percent of their time to nonexempt duties and still maintain their exemption from the overtime provisions of the act.

The Secretary of Labor, under the power granted to him by the Fair Labor Standards Act, promulgated regulations which defined the terms "executive" and "administrative" employees. In these regulations the Secretary further defined what constitutes an exempt executive and administrative employee. The regulation, S. 541.1 (e), title 29 of the Code of Federal Regulations, defined an exempt executive and administrative employee as an employee who would lose his exempt status if he spent more than 20 percent of his time doing routine work. Routine work is usually defined as work which normally is done by an employee who would be subject to the law.

This 20-percent nonexempt work test is still in effect because the Labor Department thinks it is equitable as applied to duties of exempt employees such as shop foremen, production line foremen, et cetera. In 1961, the 40-percent provision was put into the act when coverage was first extended to retailing. It was based on the inherent nature of executive and administrative jobs in retailing and to retail distribution. In stores, the customers are on the scene. They are physically present, service needs are immediate. The nature and the extent of executive involvement reflects this. Stores are open all hours. We can't close, we can't refuse to wait on the customers. And the managers in the stores, the executives that we are speaking of, must be available to perform any duty that needs to be performed. If there is a sales person absent the executive must step in and sell. If there is a stock person absent and stock has to be moved from the receiving department to the selling floor the sales manager or executive must step in.

The 1961 Congress recognized the fact that a retail executive, such as an assistant department manager, a buyer, etc., is quite a different type of executive than are those in other industries, such as manufacturing. Shortly after the 1961 amendments became effective, the WageHour Division held several days of hearings on this 40 percent test. It was demonstrated that in all but the very largest department store units, buyers, top assistant buyers, and sales or service managers must physically handle stock, arrange displays, meet customers and take care of essential paperwork as part of their executive or administrative duties. There was no question of taking over staff functions. The executives were not replacing nonexecutives in these duties. This was, and is, part of the retail executive's job.

In smaller units the physical handling of stock and demonstration selling are even more an integral part of the executives' job than in the very largest stores.

It is difficult to decide how to explain the need for the 40 percent nonexempt duty test without knowing why it is being challenged. Virtually all segments of retailing took part in the Wage-Hour Division hearing 13 years ago. All would take part again to explain in detail that the seemingly routine duties performed by executive and administrative employees are for the purpose of management and cannot be delegated efficiently.

The 40 percent was written into the law to permit the bona fide executive employee, who by regulation must make much more than the current minimum wage rate, to carry out his executive duties and still maintain contact with the public and not lose his executive status.

Obviously, the payment of the minimum wage is not of issue. Retail executive employees make substantially more than the minimum wage at this time, under these same regulations an employee must make at least $125 as one of the tests to be classified as an exempt executive or administrative employee in retailing.

Actually the people we are talking about, executives and administrative employees, across the country are in the salary range from $7,000 to $20,000 a year. In our large metropolitan area in New Jersey a salary of less than $8,500 for an executive would not be competitive. It is logical to believe that if a new, higher, minimum wage is enacted, that the Secretary will then revise this executive minimum upward.

Finally, although the chairman's bill, S. 1861, takes this 40 percent test out of the law as it did last year, no reason was given in the 1972 committee report as to why action was deemed necessary or advisable. Therefore, Mr. Chairman and members of the committee, retailing would like to ask that you allow us to retain the 40 percent nonexempt work test. It is basic and essential to the retail industry. It is not used in any way to circumvent the law. This does not affect poor people. We are talking about executives. We can think of no reason why this test needs to be repealed, nor has there been any legislative history to bear out the need for its repeal. We urge that you retain this test or at least give us some idea of why it is considered objectionable so that all segments of our industry may join together to provide a detailed answer to any questions raised.

Thank you.

The CHAIRMAN. Thank you very much, Mrs. Geerlofs.

Mr. KEENEY. In conclusion, there is one other issue in which there is great concern in the retail community; that is the provision contained in both S. 1861 and S. 1725 which would amend section 16C of FLSA permitting the Secretary of Labor to sue an employer for double damages on amounts that may be due to an employee or employees for underpayment of wages.

The federation is, quite honestly, confused as to the need for this provision. Under current law an employee is allowed to bring suit on his own behalf and collect double damages if an employer has been found to be in violation of this act. This provision was allowed so that the employee could, besides getting what may be due him in back pay or back overtime from an employer, also pay lawyers fees or other costs which he might have incurred because of the action brought.

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