employee, a special penalty is in order. When the employee takes the initiative, it is reasonable to allow the employer a somewhat longer interval in which to procure the money to pay off the worker, but at the same time it is grossly unfair to leave the latter without any assurance from the law that he will be paid. Probably the majority of wage claims are submitted by employees who have resigned their jobs, often because they become discouraged with repeated and unfulfilled promises to pay. Unless the wage-payment law requires payment on demand, at the time of quitting, or within a reasonable time, the worker is greatly handicapped in collecting his claim, through either the department of labor or by civil suit. The draft bill allows a 3-day period.

Employers sometimes seek to prevent strikes by withholding from their employees wages in whole or in part if they go on strike. The provision declaring that the wages of striking employees must be paid on pay days, the same as if the employee had not struck, is aimed at such undesirable practices.

SEC. 5. Unconditional payment of wages conceded to be due. The requirement that wages conceded to be due must be paid without delay has been found to facilitate greatly the work of the department by reducing the amounts to be collected. Moreover, if there is to be an upper limit on the size of claims that the commissioner of labor may accept for collection through civil suit, this clause operates to bring within the permissible range a number of claims that would be too large if the employer were permitted to withhold the entire amount owed until the exact amount and validity of the claim had been established. Furthermore, the worker usually needs what money he can get promptly.

SEC. 6. Provisions of law may not be waived by agreement.--To permit employers and employees to waive the provisions of the law with respect to pay by mutual agreement would enable the employer, on account of his superior bargaining power, to nullify the provisions of the act, by making employment conditional upon terms at variance with the act; for instance, stipulating that employees shall be paid monthly instead of semimonthly, as required by this draft, or paid in orders on company stores instead of in cash.

The practices which the law seeks to make general are already followed by the vast majority of employers. The relatively few employers who wish to withhold wages for longer periods than this law would permit, or who wish to pay their employees in scrip, are responsible for the abuses against which this bill is directed. SEC. 7. Responsibility for contractor's pay roll.—The object of this section is to hold those who contract out their work-whether or not they are actual employers-responsible for seeing that the contractor meets his pay-roll obligation.

SEC. 8. Enforcement.-Like other labor laws which rest upon the police power of the State, the law dealing with times and methods of wage payment should be enforced by the department of labor. The present tendency is to centralize the enforcement of the wage-payment laws in the labor department, and to authorize the labor commissioner to use these laws to make collections for employees. A number of States have recently amended their laws to vest this power and authority in the labor commissioner. Those States in which the largest sums are collected annually for workers on wage claims are States in which the labor department has been given the broadest authority.

Except in States where the labor commissioner can conduct his own prosecutions, district attorneys and prosecuting attorneys should be directed to prosecute all cases, both civilly and criminally, referred to them by the labor commissioner. If it is thought desirable to supplement the work of the labor department, the prosecuting and district attorneys can be authorized to enforce the act independently. In States where such duplication of effort seems undesirable, clause 8 (c) can be omitted.

SEC. 9. Records, subpenas, etc.-In order that this law be helpful in settling disputes over the amount of wage claims, there should be a provision requiring

employers to notify employees at the time of hiring of the rate of pay (sec. 3 (a)), and also a provision requiring employers to keep a record of the time worked and the wage paid on file for a certain period—at least a year (sec. 9 (a)). While such a requirement, applying to all employers and all employees, may provoke some protests, employers are rapidly becoming accustomed to it, for record keeping is mandatory under an increasing number of laws, including hour laws, minimumwage laws, and the Federal tax connected with unemployment compensation.

The records should be available for inspection by the wage-claim adjuster either at the plant, or at the department of labor, depending upon the nature of the ease. If the labor commissioner and his deputies do not already possess a general right of entry, power to inspect books, and power to subpena witnesses and payroll records, in connection with the duty to enforce all labor laws, these powers should be specifically conferred for the purpose of enforcing this law, as is set forth in section 9. This will enable the commissioner to hold hearings on wage-claim cases, to which both parties can be brought by summons, in an effort to arrive at the facts preliminary to court action.

SEC. 10. Personnel.-No law can be effectively administered without personnel, yet the personnel requirements of this type of law are not great. Provision should be made for a wage-claim division within the department of labor to receive complaints regarding nonpayment of wages, to hold hearings and to administer the wage-collection provision.

SEC. 11. Forfeitures and penalties.-The consensus of opinion among labor law administrators today is in favor of holding an employer liable for meeting his payroll obligation in the same manner as he is held liable for workmen's compensation in States having compulsory coverage. Simple failure to pay in accordance with the terms of the law should constitute a violation, and the enforcing agency should not be required to prove willful or fraudulent character of failure to pay, in order to obtain a conviction.

The proposed draft submits several penalty sections. It is believed that some States may wish to include all of them, in order to meet the varied situations that arise, including first offenders, habitually careless or irresponsible employers, and cases in which fraudulent intent is obvious. However, in some States it may prove inexpedient to try for the enactment of all three sections. The question has been raised whether a criminal penalty involving a sentence of imprisonment may be construed by the courts as imprisonment for debt. The question has been studied by the legal advisers of the committee that drafted this bill, and it is their opinion that in nine States the question will not arise because these State constitutions contain no prohibition on imprisonment for debt. In most of the remaining States the State courts have not passed upon the question as to whether imprisonment for violation of a wage-payment statute constitutes imprisonment for debt as defined by the State constitutions. A legal memorandum dealing with this question will be sent upon request, by the Division of Labor Standards, United States Department of Labor, Washington, D. C.

Whatever the penalty provided-forfeiture, fine, or imprisonment-it will be most effective if the law provides that employers and officers and agencies of corporations will be held personally liable for violations.

SEC. 12. Assignment of wage claims.-Criminal penalties and forfeitures as provided in earlier sections of the draft do not necessarily bring about settlement of all claims. The employee, of course, retains his right to bring an action in contract to collect wages to which he is entitled. The wage earner, however, usually has not the financial resources necessary to hire a lawyer and advance court costs. Thus, to make available to the average wage earner judicial machinery in the col*These 9 States are: Connecticut, Delaware, Louisiana, Maine, Massachusetts, New Hampshire, New York, Virginia, and West Virginia.

lection of wage claims, liens and accrued penalties, such plaintiffs may, under section 12, assign their claims to the labor commissioner for collection. The labor commissioner will enter suit on behalf of the complainant for the collection of the amounts due. If there are several complaints against one employer, the commissioner should be authorized to join the claims in a single action, thus saving a great deal of duplication of effort for both courts, employers, and plaintiffs. The aggrieved wage earner can then go about his own affairs and if necessary leave the State in search of work elsewhere, secure in the knowledge that his claim is in competent hands, and that whatever legal steps are necessary will be taken for him. States which have given this power to the labor commissioners include California, Michigan, Nevada, Oregon, Washington, and Wisconsin.

To prevent the misuse of this authority it is usual to place an upper limit on the size of claims that may be handled in this way. The draft bill suggests $200 per claim as a reasonable limit. The operation of section 12 is further limited to persons who in the judgment of the commissioner are entitled to such a service, and whose claims he deems valid and enforceable in the courts. Thus the commissioner can rule out claims which are too old, or exaggerated, or concerning which there is insufficient evidence, and can also decline to assist claimants who have adequate means to take their own cases to court.

SEC. 13. Costs of civil action by the labor commissioner.—This section proposes to permit the labor commissioner to bring civil action as assignee on behalf of wage earners without any cost to the department of labor. In this way an insufficient appropriation will not operate completely to prevent court action by the labor commissioner. The separate subsections define in detail the manner in which

costs are to be apportioned.

SEC. 14. Separability.-In the event that any section of the bill is held unconstitutional, this section is intended to limit the operation of such a decision to the offending section.

Discussion

Chairman TONE. I now call on Mr. Russell J. Eldridge, of the State Employment Service of New Jersey.

Mr. ELDRIDGE. My discussion will take the form, at least at the outset, of a description of the processes and the situation in New Jersey.

The State of New Jersey, a populous industrial and agricultural Commonwealth, as far back as 1899 recognized the necessity of protecting the wage earner, and so enacted legislation in his behalf designating and directing the department of labor through the commissioner to enforce its provisions. The early statute, with its subsequent amendments, is quasi criminal in application, and provides, in the main, for the payment of wages in full at least every 2 weeks in lawful money of the United States, with a penalty, to the use of the State, of $50 for the first violation of its provisions and $100 for each subsequent violation thereof, the alternative being a jail commitment not exceeding 200 days. The penalty is imposed by a district court, justice of the peace, or magistrate, after issue of process by summons or warrant at the suit of the department of labor as plaintiff, based upon the complaint of an authorized employee of the department of labor, and prosecuted by the attorney general. The statute further provides that the employee may have a civil remedy in any court

of competent jurisdiction. Agricultural workers and water men are excluded as employees benefiting under this act.

To carry out the provisions of the statute, the commissioner of labor of the State of New Jersey designated an assistant known as a wage-claim adjuster to entertain and investigate wage complaints, to adjust wage disputes, to prepare and sign the complaints that put in motion the legal machinery to prosecute an alleged violator of the wage-payment law.

The work of the adjuster was voluminous and the results not altogether satisfactory. In many instances the defendant employer, after issuance of summons or warrant, paid the wages claimed and costs assessed rather than submit to the fine which might be imposed or its alternative, but when the wages claimed were in excess of the penalty the defendant paid the fine and thus left the employee to his remedy of a civil action, the institution of which meant delay and expense.

Under the law, the commissioner or his adjuster had no authority to compel the attendance of witnesses or defendants at a hearing to determine the merits of a wage complaint, and as an administrative officer had to content himself with the practice of dunning alleged violators of the law, intimidating individual employers by threats of prosecution, and hoping for the best from corporations by his adeptness in the use of honeyed and convincing phraseology. Yet, notwithstanding the inadequacy of the legislation, many thousands of dollars went into the coffers of the wage claimants.

It became increasingly evident that the application of the early statutes was not producing the desired results. Greater and greater were the number of claims presented for collection. The wage earner was not particularly concerned with the penalties imposed for the benefit of the State. He wanted his wages and more ardently did he want them without delay or expense, and so despite the usual difficulties attending the presentation of labor legislation, there was enacted in April of 1934, a statute, the provisions of which have given the wage claimant a more adequate, quicker, and nonexpensive remedy.

The 1934 statute did not commence to function until November of 1935. To understand more clearly its operations and effects a summary of the routine followed is herewith submitted. In the first place a distinctive advantage is gained by the creation of a wagecollection division of the department of labor. This branch of the department is subdivided into two districts, each manned by a wage-claim adjuster designated by the commissioner as a referee, one in charge of the northern counties and the other the southern counties of the State. The function of the referee is quasi judicial as well as administrative, and his hearings are had in what is popularly referred to by the legal fraternity and the layman as the "wage claim court."

A claimant submits his case in the form of a petition containing such questions as will elicit information pertaining to the merits and legality of the claim. If the facts submitted warrant, a civil suit is entertained by the division through summons and complaint attested in the name of the commissioner of labor and sealed with the seal of the Department of Labor of the State of New Jersey. A State process server or constable is designated to make service for a return date indicated on the face of the summons. On the return date a hearing is had, at which the parties to the suit and their witnesses are sworn and testimony adduced, at the conclusion of which the referee makes an award, in some instances with costs, which can only be assessed against a defendant, and in others without costs, particularly in cases where the defendant has at all times been willing to pay the amount claimed and the plaintiff has never accepted. It must be understood here that the referee is empowered to investigate any claim for wages and in such investigation may summon the defendant, subpena witnesses, administer oaths, take testimony, and make a decision or award where the sum in controversy, exclusive of costs, does not exceed $200. It will be further noted that the defendant may file a set-off or counterclaim for any liquidated damages he may have against the plaintiff, and an employee may be any natural person who works for another for hire.

After the award is made and the notation indicated on the docket, which docket is a permanent file of the division, containing a complete record of each claim filed with the department, the defendant is notified that he has 5 days within which to pay the award. At the expiration of 5 days, if the award is not satisfied, a certified copy thereof is filed with the clerk of the court of common pleas of the county in which the defendant resides, a judgment is therein entered against the defendant, and the sheriff is instructed to levy execution thereon. This procedure, of course, entails added costs to the defendant, all of which must be paid before the judgment can be marked satisfied.

The statute provides that either party may appeal from the award of the referee to the court of common pleas, provided a notice of appeal and bond in double the amount of the judgment and costs are filed with the division within 20 days of the date of the award. The appeal in reality is a trial de novo and either party may bring on the hearing at any time upon 10 days' notice to the other party or his attorney.

The wage claimant is not precluded from seeking his remedy in a court of competent jurisdiction, and when a claim is filed with the wage-collection division either party may make application for a jury trial, in which event the wage-collection division shall file the entire record in the case in a district court or justice's court for trial by jury of the issues presented by the claimant or defendant. A