time standards under the 1961 amendments was a significant factor in this increase. The number of employees found to be underpaid increased from 364,000 in 1964 to 406,333 in 1965 or by about 12 percent. With regard to the back wage payments agreed to by employers in fiscal year 1965, 73 percent of the employers in establishments where monetary violations were disclosed agreed to pay 48 percent of the employees entitled to back wages, 32 percent of the total amount of back wages found due. Of the 59,625 investigations completed in fiscal year 1965, about 14,000 were made in connection with the compliance survey designed to develop measures of overall noncompliance with the Fair Labor Standards Act. To insure statistical validity of the survey, establishments were selected for investigation based upon a scientific sampling of the 1.1 million establishments having employees subject to the act. The usual programing of investigations is on the basis that violations are occurring or that there is a probability of violations in the establishment visited. The selection process used for the compliance survey resulted in more investigations of firms in compliance with the law and therefore a greater number of investigations than could normally be made. The increase of about 1.3 million during 1965 in the number of covered employees in establishments investigated reflects the greater number of investigations completed as well as differences in the types of establishments normally investigated. All field work for the survey was completed in fiscal year 1965. The compliance survey will provide information as to the levels of compliance in geographic areas, major industry groups and by size-of-establishment groups. Conclusions developed from the compliance survey will aid in directing the enforcement program toward those firms which are not now complying or where it is deemed that noncompliance is most likely to occur. In fiscal years 1966 and 1967 emphasis will be placed upon identifying and investigating establishments in which substantial violations are occurring with respect to employees in the lower ranges of the economic ladder who have the greatest economic need. In each of the years 1966 and 1967 it is estimated that about 56,000 investigations will be completed, or about the same number of investigations that were completed in 1964 and would have been completed in 1965 had the compliance survey not been undertaken. Underpayments disclosed in investigations completed in 1966 and 1967 will approximate $85 million. The estimated increase in underpayments for 1966 and 1967 is based upon (1) the higher minimum wage standard of $1.25 which will be in effect for the full 2-year investigation period, (2) the higher minimum wage and overtime standards applicable to newly covered employees which will be in effect for the full 2-year investigation period, and (3) the expected increase in the number of complaints which will be received as a result of the Division's program to extend office hours to provide increased service to the public. A. Wage and fringe benefit provisions of the Service Contract Act During the latter part of fiscal year 1966 primary emphasis in connection with the Service Contract Act will be directed to information activities, investigator training, and the development of investigation procedures. A limited number of investigations will be conducted during this period on the basis of complaints and notices of awards received from contracting agencies. In 1967 it is estimated that some 2,500 investigations will be scheduled primarily to determine compliance with the wage and fringe benefit provisions of the act. In addition, where it is determined in connection with an investigation scheduled under the Fair Labor Standards Act that there is concurrent coverage under the Service Contract Act the investigation will include a check for compliance with both laws. Until experience has been gained, enforcement of the wage and fringe benefit provisions of the Service Contract Act will be absorbed under the Division's existing enforcement program. B. Equal pay The Equal Pay Act of 1963, which amended the Fair Labor Standards Act, became generally effective on June 11, 1964, and fully effective on June 11, 1965. The statute provided an enforcement delay of 1 year with respect to employees subject to certain collective bargaining agreements. The equal pay provisions apply to some 29.6 million employees covered by the Fair Labor Standards Act of whom over 8 million are women. While enforcement of the equal pay provisions represents an added important investigative and administrative responsibility it is fully integrated with the enforcement and administration of the other provisions of the act. No significant enforcement problems have been encoun tered in connection with the equal pay provisions. In 1965 a total of 960 employees were found due $156,202 under the equal pay provisions. It is estimated that some 2,000 employees will be found due more than $500,000 in 1966. Underpayments disclosed in 1967 are expected to continue at about the same level. C. Safety and health Prior to May 1964, safety and health inspections under the Public Contracts Act were conducted by both investigators and safety engineers. Since that time this function has been performed exclusively by safety engineers. In addition, specialized studies directed to the control of environmental hazards in establishments subject to the act are conducted by an industrial hygienist who is assigned to the chief safety engineer's staff. In 1965, safety engineers made 1,577 inspections under the Public Contracts Act which disclosed safety and health violations in 1,480 of the establishments inspected. About 1,600 such inspections will be made in each of the years 1966 and 1967. Some 1,400 additional inspections are made annually by State personnel in those States with which the Division continues to have working arrangements for the making of inspections. A limited number of safety and health inspections will be conducted under the Service Contract Act in 1966 by the seven safety engineers provided for this purpose. In 1967 it is planned to conduct about 1,000 such inspections. Nationally accepted standards developed by authorities such as American Standards Association, National Fire Protection Association, and other standard-developing authorities will be applied, where pertinent, in determining whether, in specific cases, service contracts are being performed under safe and healthful conditions as required by the act. Mandatory changes.. Financing changes. Changes for 1967 $336, 800 -12, 000 -70,000 Management improvement reductions (positions, none). 1966. 1967. ACTIVITY 2. WAGE DETERMINATIONS AND REGULATIONS NARRATIVE DESCRIPTION OF PROGRAM 110,000 $1,344, 600 1, 787, 100 Special minimum wage rates are established by industry committees for Puerto Rico, the Virgin Islands, and American Samoa. Regulations are formulated governing the employment at special minimum wage rates of learners, student learners, student workers, full-time students, apprentices, and messengers and of handicapped workers in regular commercial industries and sheltered workshops. Special minimum wage certificates are issued for learners and student workers, and for full-time students in retail establishments requesting a certificate for the first time and in retail establishments asserting unusual conditions. Regulations under the Fair Labor Standards Act, the Public Contracts Act and the Service Contract Act and administrative policies with respect to interpretations of these acts are developed to provide guidance in obtaining compliance with the acts. A program for collecting data and issuing determinations of prevailing wage rates and fringe benefits for classes of employees covered by the Service Contract Act will be initiated in 1966. A. Wage order program During 1965, 10 industry committees were appointed to review minimum wage rates in 31 industries in Puerto Rico. A total of 32 economic reports were prepared. To assist with the increased workload in connection with the greater number of industries reviewed and economic reports prepared during fiscal year 1965, personnel were detailed from the public contracts wage determination program. Substantive refinement in the content of economic reports prepared for use by industry committees has substantially increased the amount of time required to prepare these reports. These improvements were instituted in fiscal year 1965 following discussions with employer and employee representatives who participated in key committee hearings. In fiscal year 1966 a committee was appointed to review minimum wage rates in all industries in American Samoa, and another was appointed to review all industries in the Virgin Islands. A committee also was appointed to review the sweater and knit swimwear industry in Puerto Rico in 1966. In all, minimum wage rates for 13 industries will be reviewed in 1966. Because of the reduction in the number of industry committee meetings in 1966 due to the biennial nature of the program, the budget request for this program for 1966 was reduced by $35,500. In 1966 work will be initiated in connection with the preparation of economic reports for committee meetings to be held in 1967. The reduced schedule of meetings in 1966 will permit some personnel to assist in establishment of the wage determination program to be initiated in 1966 under the Service Contract Act. The biennial review of the wages in Puerto Rico will require that committees be appointed for 27 industries in fiscal year 1967. This will complete the review of all industries in Puerto Rico for the 1966-67 biennium. In accordance with the statutory provision of the Fair Labor Standards Act (sec. 14) and regulations, certificates authorizing the employment of learners, full-time students, handicapped workers, etc., at rates below the statutory minimum wage may be issued to the extent necessary to prevent curtailment of opportunities for employment. The following tabulation reflects the total number of applications received, certificates issued and employment authorized by such certificates for the years indicated. Of the more than 13,000 certificates issued annually, about 3,000 are issued by this activity which, in addition, has responsibility for review of the remaining regional certification actions for conformance to regulations and existing policies. The staff provided for 1966 and 1967 reflects the reassignment of two positions to assist in the service contract wage determination program. In fiscal year 1965 there were 123 sheltered workshop investigations to determine compliance with applicable wage standards. The number of certificated sheltered workshops increased by 70 to a total of 787. During fiscal years 1966 and 1967, no substantial change is anticipated in the level of section 14 applications. The number of certificates issued by regional offices will not vary widely in fiscal years 1966 and 1967. The number of sheltered workshop certificates is expected to increase by 50 or more during fiscal years 1966 and 1967. The estimated increase in employment authorized by certificates in 1966 and 1967 reflects the greater number of sheltered workshop certificates which will be in effect. C. Public contracts wage determinations program As a result of unfavorable court decisions by the U.S. District Court for the District of Columbia and the Court of Appeals for the District of Columbia in the case of Baldor Electric Co. v. Wirtz, now new wage determinations were issued in 1965 under the public contracts wage determination program. The issue in volved is the confidentiality of wage data supplied to the Government. Pending the completion of court action or the development of alternative methods for making wage surveys, no new wage determination proceedings will be initiated. Interpretations under the Public Contracts Act and existing regulations will continue to be developed. Questions which arise, such as the eligibility of bidders and coverage under certain types of contracts also will continue to be resolved. During fiscal year 1965, personnel were detailed to assist with the wage order program and compliance survey which resulted in a reduction in staff time used in connection with the public contracts wage determination program. Further adjustments in staffing are being made in fiscal year 1966 which will result in the reassignment of employees in 11 positions in the Branch of Public Contracts Wage Determinations by the end of the current fiscal year. These staffing adjustments are reflected in the budget request for fiscal year 1967. D. Regulations and interpretations under the Fair Labor Standards Act In both fiscal years 1966 and 1967 it is estimated that some 25 regulations, interpretative bulletins or statements and other explanatory materials will be developed or significantly revised. Included in the program are the following: Completion of the review of seasonal industry determinations. Development of an interpretative bulletin on coverage. Revision of part 531 on the reasonable cost or fair value of board, lodging, and other facilities furnished to employees. Publication of the expanded interpretative bulletin on equal pay. Review of comments on the proposed amendments to part 541 with respect to driver salesmen and publication of amplified interpretations on this subject. Publication of new regulations part 551 with respect to the exemption for local delivery drivers and helpers contained in section 13 (b) (11). Development of an interpretative bulletin on minimum wages. Development of amendments to the recordkeeping regulations (pt. 516). Development of amendments to the interpretative bulletin on overtime (pt. 778). Development of amendments to the interpretative bulletin on retail and service establishments (pt. 779). Development of amendments to the interpretative bulletin on agriculture (pt. 780). Development of amendments to the interpretative bulletin on hours worked (pt. 785). In connection with the Service Contract Act which applies to all contracts entered into pursuant to negotiations concluded or invitations for bids issued on or after January 20, 1966 interim regulations have been issued to provide timely guidance to the various procurement agencies so that they might adjust procurement policies, practices, and regulations prior to the effective date of the act. It is anticipated that more comprehensive rules and interpretations will be formulated during 1966 and 1967 with opportunity afforded for public participation. E. Service contract wage determinations program A continuing program for the collection of data and issuance of determinations of prevailing minimum wage rates and fringe benefits will be developed and initiated in 1966. Discussions are being held with the Bureau of Labor Statistics in connection with the development of survey procedures and the collection of data. It is planned to utilize the Bureau of Labor Statistics to the fullest extent practicable for the collection of data on wages and fringe benefits. The wage determination program also is being coordinated with the Civil Service Commission's program to develop uniform wage scales for the various classes of Federal blue-collar workers. It is estimated that more than 50,000 contracts subject to the wage and fringe benefit provisions of the act are entered into annually by Government contracting agencies. This is based in part, upon estimates of the Department of Defense that it enters into some 25.000 service contracts annually which are in excess of $2,500 and the Post Office Department, which estimates it enters into some 14,000 such contracts annually. It is planned to maintain a current register of wage rates for key occupations by locality. Such registers will be maintained for several hundred significant labor areas. In localities not covered by an area wage determination, separate determinations will be issued where such action is warranted. In the latter part of 1966 some individual determinations may be issued where there is sufficient data available upon which to base a determination. Data collected in regular community wage surveys conducted by the Bureau of Labor Statistics will be utilized where possible. Data will be collected and determinations issued for the major metropolitan areas in 1967. Where no determination has been issued the minimum wage specified under the Fair Labor Standards Act applies. Mandatory changes- Financing changes-- Changes for 1967 Management improvement reductions (positions, 11)- 19661967--- ACTIVITY 3. RESEARCH AND LEGISLATIVE ANALYSIS NARRATIVE DESCRIPTION OF PROGRAM $21, 100 -225, 200 621, 000 25, 600 $1,730, 800 1, 770, 300 This activity is concerned with planning and conducting economic research and analysis of the effects of the wage, hour, and equal pay provisions of the Fair Labor Standards Act and the Public Contracts Act, providing advice on economic and legislative matters in connection with the administration of these acts, and conducting statistical and economic analysis programs connected with enforcement activities. Beginning in the latter part of fiscal year 1966 additional responsibility will be undertaken in these areas in connection with administration of the Service Contract Act. WORKLOAD STATISTICS Section 4(d) of the Fair Labor Standards Act requires the Secretary of Labor to submit annually to the Congress a report including an evaluation and appraisal of the minimum wages established by the act and recommendations for further legislation in connection with matters covered by the act. Studies undertaken in accordance with the requirements of section 4(d) of the act involve obtaining information on wages, hours, and employment for a base period prior to the effective date of changes in the provisions of the act, and obtaining corresponding information at several predetermined intervals after the effective date. Other studies are conducted to provide data necessary for determining the implications of various legislative proposals and predicting the effects on the economy of these proposals. In this connection, studies of nursing homes, hired farm workers and the hours of work of over-the-road drivers and other trucking employees subject to the 13(b) (1) exemption will be completed in 1966. In 1965 fieldwork was completed in connection with the compliance survey which is being conducted to develop measures of overall noncompliance with the Fair Labor Standards Act. The survey will provide information as to the levels of noncompliance by geographic areas, major industry groups and by size of establishment groups. The last such survey was made in 1956-57 based on a statistical sample which resulted in a reorganization of the Division's investigation programing procedures. Since 1956-57 there have been changes in both the economic picture and in the Fair Labor Standards Act. The new survey will be used to update estimates of noncompliance which will be useful in program planning and investigation scheduling. In 1966 studies will be made of annual wage plans in industry, agricultural products processing, and the exemption for executive, administrative, and professional employees to determine the need for legislation in these areas. As part of a continuing program of studies designed to develop current data pertinent to the minimum wage and maximum hours standards established by the Fair Labor Standards Act surveys of wages and hours will be conducted in 1966 in both metropolitan and nonmetropolitan areas of the South and in nonmetropolitan areas of the north-central regions. A study has been completed in 1966 on the extent of differential treatment of men and women under collective bargaining agreements and the changes in |