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on or handling ingredients or other goods received from outside the state or delivered or sent outside the state would be covered, even though the annual sales of the establishment are under $250,000, and in a small establishment it is ordinarily impossible to segregate such work or to discriminate between those and other employees.

It is the general coverage of all interstate employees which is significant to small retailers, rather than the coverage of intrastate employees in enterprises with annual sales of $250,000 or more. That coverage of all interstate employees, regardless of the annual sales of the enterprise, was the only coverage before 1961. It was then and it is now the reason why the exemptions provided in sections 13(a) (2) and 13(a) (4) are necessary, if small retail establishments are not to be brought under the Act when their employees become involved in interstate commerce.

The Exemption Is Strictly Limited

The exemption is strictly limited. A retail bakery or similar establishment qualifies for exemption only if

(1) it qualifies as an exempt retail establishment under section 13(a)(2), that is, 75 percent of its annual sales must not be for resale and must be recognized as retail in its industry, over 50 percent of its annual sales must be

made within the State in which it is located, and its annual sales must be under $250,000, and

96-478 - 73 - 34

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(2) it is recognized as a retail establishment in the

particular industry, and

(3) the goods which it makes or processes must be made or processed at the establishment which sells them (a retail baker loses the exemption if he has two stores and bakes at one for both), and

(4) more than 85 percent of its annual sales of goods it makes or processes must be made within the State in which it is located. (Ibid, section 779.346).

Retail Bakeries Are Small Neighborhood Retailers

Most retail bakeries have annual sales far less than the annual maximum of $250,000 provided in section 13(a)(4). Most are operated by husband and wife, and many have no employees. As to those having one or more employees, the latest (1967) Census of Business reports that there were 12,703 establishments, employing a total of 87,003 employees, or an average of only 6.8 per establishment.

only $80,690.

Their average annual sales were

Those are the figures for retail establishments which bake

and sell, and they include establishments which have annual sales

of $250,000 or more, or which transfer some products to another

outlet or outlets, and which therefore are not exempted by section 13(a)(4).

We estimate that the largest exempt retail bakery, that is, one with annual sales of $250,000, would have approximately thirteen full-time and two part-time employees. Obviously, however, there are very few that large, since the average number of employees of both exempt and non-exempt retail bakeries is only 6.8, and the average annual sales of both exempt and non-exempt retail bakeries were only $80,690.

The Practical Need for Section 13(a)(4) Is Critical

By repealing section 13(a) (4) of the Act, section 6(a)(3) of S. 1861 would subject small retail bakeries and similar establishments to the burdens of Federal regulation of their wages and hours.

They already are burdened to the point of oppression by other governmental actions and regulations. As small handcraft establishments, with only a store in the front and bakeshop in the rear, with no office or clerical or legal staff, with the husband working as head baker and usually his wife as head saleswoman, retail bakeries must now try to cope not only with numerous state and local laws, ordinances, regulations and rulings but with a growing number of Federal requirements and restrictions, many of them incomprehensible to small businessmen, some incomprehensible even to legal specialists, Federal Food, Drug and Cosmetic Act, the Federal Labor Management Relations Act, the Federal Civil Rights Act and Equal Em-ployment Opportunities Enforcement Act, the Federal Consumer

with the

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Credit Protection Act, the Federal Occupational Safety and

Health Act, the Federal Egg Products Inspection Act, the

Federal Economic Stabilization Act, etc., and all the complexities they impose.

The Federal Government is rapidly creating an environment in which it would be impossible for these small businesses

to survive.

Compounding their problems is the inflationary squeeze

of Government extravagance and mismanagement.

Costs of ingre

dients and other materials and of labor have skyrocketed.

Wheat flour, as all should know, is up sharply, so also

shortening, dry milk, frozen eggs, raisins, sugar, most of the and with no relief in sight. Consumer dis

baker's costs,

tress and resistance are strong and he cannot recover these

costs, even though within the small business exemption from. price control.

We respectfully appeal to your Committee to allow the exemption provided in section 13(a) (4) of the Fair Labor Standards Act to continue.

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529

Statement of the

American Frozen Food Institute

Before the Committee on Labor and Public Welfare
United States Senate

on S.1861 June 7, 1973

Don

SENATOR WILLIAMS N.J.)

JUN 8 10 21 AM

The American Frozen Food Institute appreciates the opportunity to submit this statement on S. 1861 for the Committee's consideration. The membership of the Institute packs some 85 percent of the national production of frozen vegetables, fruits, and juices, and a large volume of other frozen foods. The Institute opposes S. 1861 insofar as it would repeal the seasonal industry and first processing exemptions provided in Sections 7(c) and 7(d) of the Fair Labor Standards Act [21 USC 207(c) and (d)], as amended in 1966 (P.L. 89-601). The Institute takes no position on other provisions of S. 1861. On the other hand, the Institute favors S. 1725 (Dominick, R-Colo. and Taft, R-Ohio) since it provides for a three year study on overtime exemptions.

Congress, at the time of enactment of the Fair Labor Standards Act of 1938, and every Congress since that date which has considered the matter, understood the need for exemptions from the penalty overtime provisions of the Act in the case of industries of a seasonal nature and enterprises in such industries which are engaged in the first processing or packing of perishable fresh fruits and vegetables. established seasonal overtime exemptions to stimulate the production of food products. In 1973 it is apparent that this goal is still applicable. The cost of food would be increased if these exemptions were reduced or eliminated. It is clear that the American consumer, if given a choice, would vote for retention of the exemptions.

It is a matter of record that Congress

Current law [Sections 7(c) and 7(d)], permits an employer to employ employees, for a period of not more than 10 workweeks, up to ten hours in any workday, or up to fifty hours in any workweek, without payment of the time