sickness benefits for that period. But whether or not he will ultimately be paid for his injury is uncertain. To alleviate hardship, however, during the time that it may take him to obtain payment for the injury, the individual is paid such benefits, subject to recovery by the Board if and when payment for the injury is made to him. If no payment is made to him he keeps the benefits paid, but if he does recover, it is only proper that he pay back what was in substance a loan to him during a period of his incapacity because he is not entitled to sickness benefits for periods during which he is paid remuneration. The bill, therefore, places a lien, in favor of the Board, upon such payment, but only to the extent of the amount of sickness benefits paid to the individual. If Mr. Miller objects to this procedure (it does not appear that he does), the basis for his objection is not clear.

19: Objection to the Board's engaging in research activities.-The bill authorizes the Board to engage in, and conduct, research projects, investigations, and studies with respect to the cause, care, and prevention of, and benefits for, accidents and disabilities, and other subjects deemed by the Board to be related thereto, and to recommend legislation deemed advisable in the light of such research projects, investigations, and studies. This authority in the Board is objected to by Mr. Miller. Since the Board would administer a sickness insurance system for railroad employees, it is only logical that the authority to conduct such research, investigations, and studies with respect to further legislation on the subject be vested in the Board. Such a provision in an act is not novel; it may be found in other Federal statutes with respect to other agencies. Section 702 of the Social Security Act provides as follows:

"SEC. 702. The Board shall perform the duties imposed upon it by this Act and shall also have the duty of studying and making recommendations as to the most effective methods of providing economic security through social insurance, and as to legislation and matters of administrative policy concerning old-age pensions, unemployment compensation, accident compensation, and related subjects."

In any event, as pointed out by Mr. Miller, there is already precedent for such authority in the Board by Senate Resolution No. 128, which on July 2, 1941, authorized the Board to make a study and investigation with respect to injuries and diseases incurred by employees through employment in the railroad industry. It is true that due to the manpower shortage the Board has been unable to complete this study, but we have good reason to believe that the manpower shortage will not continue indefinitely and that the Board will soon be able not only to complete the report requested of it by Senate Resolution No. 128, but to conduct such studies and investigations as is proposed in this bill.

In conclusion, aside from the fact that Mr. Miller's proposals contain the undesirable features discussed above, the additional tax that would be required, if his proposals were adopted, is, also as shown above, 3.01 percent of pay roll. This would change the ultimate tax rate on employers and employees from 6.25 percent of pay roll, as proposed in the bill, to 7.75 percent of pay roll.

REBUTTAL STATEMENT OF MARTIN H. MILLER, NATIONAL LEGISLATIVE REPRESENTATIVE BROTHERHOOD OF RAILROAD TRAINMEN BEFORE SENATE COMMITTEE ON INTERSTATE COMMERCE ON S. 293

In behalf of the Brotherhood of Railroad Trainmen, I desire to thank your committee for the privilege of submitting this additional statement on S. 293. While we respectfully call your attention to my original statement before your committee, we desire to further comment on three items referred to by Mr. Schoene for the Railroad Labor Executives' Association and Mr. Latimer, Chairman of the Railroad Retirement Board.

It is apparent that those who now claim authorship of the several provisions of the bill do not regard the individual, the employee taxpayer, as having any rights in the event of a difference of opinion in a determination of the facts in his claim by the Board.

It is also apparent that the same parties do not want to retain the right of the individual to appeal his case to the courts, where, if he desires, he can have he facts tried-a trial de novo. After all, the individual may not be as capable in the assembling and presentation of the facts as the persons directed by the Railroad Retirement Board to handle his claim. It is difficult to predict what might happen to the individual's claim, that is the facts in the record of the claim, if the Congress, in accord with the plea of Attorney Schoene and Chairman

Latimer, agree to limit the right of appeal to a review of the facts by the Board, and also agrees to limit the right of appeal to a review of the facts found by the Board, and also agrees to eliminate provision for the district boards and substitutes therefor the provision for a referee or other reviewing body, with no provision for employee representation on such. Attorney, Schoene's rebuttal argument is that the cases are tried on the record that is made administratively and contends that is desirable, for anything else might put a claimant to a great deal of unnecessary expense. Then he attempts to scare and befuddle the railroad employee with a warning that he would have to go through the whole process again, subject to the rules of evidence, in court.

Mr. Schoene sort of leaned back on a reference to Mr. Robertson's testimony before the House committe on H. R. 4805, but, gentlemen of the committee, Mr. Schoene's argument denying the individual the right to have his case tried in court-de novo-does not seem to be in keeping with Mr. Robertson's testimony on H. R. 4805, which he referred to. Mr. Robertson said:

"Now, if you will permit me, I would just like to say on matters of principle on the subject which has been under discussion (the right of the individual to appeal to the courts-Representative O'Hara had questioned Mr. Latimer on the proposal to limit appeal to a review of the facts found by the Board. Mr. Latimer did not seem to be concerned with the individual's rights), that the Railroad Labor Executives' Association as the proponents of this bill want the principles of the rights of appeal of their individual members preserved."

Both Mr. Schoene and Mr. Latimer excuse the propsed limitations of appeal on the grounds that the Board is careful, that there have been very few appeals and the Board, is reversed in the district court, always appeals to the circuit court of appeals, and it all might be more expensive to the individual. Now, that is not in keeping with Mr. Robertson's statement, that his association "want the principles of the rights of appeal of their individual members preserved." Mr. Robertson did not say anything about the principle involved might cost too much-no, he made a plain straightforward statement, which their attorney now attempts to twist around to suit Mr. Latimer's bill.

The right to appeal to court, where, if it is desired, the case can be tried, that is a new record made, should always be open to the individual. It should be his guaranty that the Board, with its increasing authority, as requested in this bill, could not become arbitrary in any determination of his claim. The right of appeal, as I have suggested, should be retained much for the same reasons that we of the labor organizations want the right to strike preserved. It will serve as a safeguard against the unbearable.

There is another important matter which should be called to your attention. Mr. Latimer only mentioned it after being questioned, and that is the requirement of a current connection with the industry to be able to qualify for a disability annuity under section 205 and a minimum annuity under section 210 of the bill. Mr. Latimer says that to eliminate the requirement in section 205 would cost an additional one-tenth of 1 percent and from section 210 would cost an added two-tenth of 1 perecent. Now, because of a little total cost of three-tenths of 1 percent, they want to keep in the bill provisions which could make the disability and minimum annuity provisions meaningless and useless to the employees who happened to be so unfortunate as to be furloughed due to reduction of force or on leave of absence account of a temporary sickness or disability and under the circumstances I mentioned in my original statement.

A copy of a letter or a part of a report from the Bureau of the Budget was put into the record of this hearing, which indicated that President Truman favored legislation provided for in S. 293 and H. R. 1362. I seriously doubt that President Truman would support or in any way favor the provisions in S. 293 which provide requirements that would deny railroad employees the right to participate in annuities under the circumstances I have recited in our objections to the words "having a current connection with the railroad industry and" in sections 205 and 210. It is also very doubtful that the President would be favorable to limiting the right of the individual to appeal to the courts, except only on the facts found by a governmental agency.

In my original statement your attention was called to the immediate need for improvement in both of the acts. Let me again repeat it, that the amounts of annuities, pensions, and benefits should be increased; the disability annuity provisions should be liberalized, for the benefit of the worker; and the taxes adjusted to insure solvency of the funds. The rotherhood of Railroad Trainmen supports such improvements as being needed and necessary to carry out the original purposes of the acts.

The Honorable BURTON K. WHEELER,

RAILROAD RETIREMENT BOARD,
Washington, June 28, 1945.

Chairman, Committee on Interstate Commerce,

United States Senate, Washington, D. C.

DEAR SENATOR WHEELER: There is enclosed a report on S. 293, prepared in response to your request on January 19, 1945. There are also enclosed, in accordance with your request, two copies of an analysis showing changes in existing law proposed to be made by S. 293. The bill, S. 293, introduced in the Senate on January 15, 1945, by Senator Wagner (for himself and for you), and referred to your committee for consideration, makes a number of amendments to the Railroad Retirement Act of 1937, the Railroad Unemployment Insurance Act, and subchapter B of chapter 9 of the Internal Revenue Code (commonly referred to as the Carriers Taxing Act).

For the reasons set forth at length in the report, the Railroad Retirement Board favors the enactment of S. 293; Mr. F. C. Squire, member of the Board, does not join in the report and is not in accord with the conclusion and recommendation of the majority of the Board.

This report has been submitted to the Bureau of the Budget and I have been advised that there is no objection to its transmission. There is enclosed a copy of a letter from the Director of the Bureau of the Budget regarding the relationship of the proposed legislation to the program of the President.

Sincerely yours,

Hon. MURRAY W. LATIMER,

MURRAY W. LATIMER, Chairman. EXECUTIVE OFFICE OF THE PRESIDENT,

BUREAU OF THE BUDGET, Washington 25, D. C., June 22, 1945.

Chairman, Railroad Retirement Board,

Chicago 11, IN.

MY DEAR MR. LATIMER: I have recently discussed with the President legislative proposals for the expansion of the railroad social insurance program. The President informed me that he favored legislation along the line of H. R. 1362 and S. 293.

Very truly yours,

HAROLD D. SMITH, Director.

REPORT OF THE RAILROAD RETIREMENT BOARD ON S. 293, SEVENTY-NINTH CONGRESS, FIRST SESSION

This report is divided into an introduction and six main sections. The introduction concerns itself with a brief description of the amendments, except thosewhich are purely verbal. The amendments are grouped by topic and are not in the order in which they come up in the bill. In order that the amendments may be followed in the bill, however, page and line references are given. The five divisions which follow the introduction are answers, in considerable detail, to the major questions of policy which, it seems to us, are raised by the bill. The sixth and final section deals with suggestions for amendment.

INTRODUCTION

I. Definition of employer

1. The definition of employer is clarified by:

(a) Including as an employer any "person," other than a carrier regulated under part I of the Interstate Commerce Act, which performs, for hire, any service included in the term "transportation" as defined in section 1 (3) of the Interstate Commerce Act, if such service involves passengers or property being or to be transported by a carrier (p. 2, lines 3-10);

(b) Amplifying the test applicable to a determination as to whether a carrierowned or controlled company is an employer-such test now being the "performance of a service in connection with the transportation of passengers or property by railroad"-by adding specific criteria related to purpose of such a company; namely, acquiring, holding title to, maintaining or operating property substantially devoted to use in the transportation conducted by the controlling carrier or carriers; performance of services necessary or incidental to the con75978 4526

duct of transportation by such carrier, or services in the manufacture of equipment or equipment parts or in the processing of materials for use in the operation, servicing, or maintenance of way, structures, or equipment devoted to use in transportation; facilitation or promotion of transportation conducted by such carrier; and engaging in transportation by motor vehicle (p. 3, line 10 to p. 4, line 2);

(c) Limiting control to control by property interest (p. 3, lines 10-11);

(d) Making control rest specifically on power rather than actual exercise of control (p. 3, line 11);

(e) Including as an employer a contractor rendering service for a carrier, susceptible of indefinitely continuous performance and constituting a part of or necessary or incidental to various specified transportation operations (p. 2, line 23, to p. 3, line 9);

(f) Specifically permitting, in certain cases, segregation of carrier from other activities of a person engaged in carrying on both (p. 6, line 10, to p. 8, line 12). 2. The scope of the term "employer" is narrowed by the specific elimination of a person which holds itself out directly to the public as a common carrier by air or water (p. 5, lines 3-12).

3. The scope of the term "employer" is broadened by inclusion of

(a) Freight forwarders not controlled by a carrier (p. 2, lines 11-22);

(b) A "person" controlled by a carrier and performing trucking service (p. 4, line 2).

II. Definitions of employment relation and employment

4. The definition of employment relation is simplified: (i) By limiting application of employment relationships to a single date, August 29, 1935; (ii) by eliminating from among those deemed to have an employment relation, persons "on furlough, subject to call for service, and ready and willing to serve" and by including as persons deemed to have an employment relation on August 29, 1935, those who returned to service after August 29, 1935, and who, between that date and prior to January 1, 1945, rendered 6 months of service, unless precluded by sickness or disability; and (iii) by eliminating the requirement that a leave of absence be granted in accordance with a rule or practice and providing for proof of such leave prior to July 1946 (p. 15, line 19, to p. 17, line 11).

5. The definition of employment relation is expanded by the inclusion of persons who were

(a) Discharged unjustly before August 29, 1935, and reinstated within 9 years, if protest of the discharge was filed with the appropriate body or person within 1 year after it occurred (p. 16, lines 17-24); or

(b) Absent from service or not called to service or failed to respond to a call in the 9 years before August 1944 solely by reason of disability and were not discharged or retired before August 29, 1935 (p. 16, lines 4-17).

6. The test as to whether professional and technical persons are employees is made "integrated into the staff of the employer" (p. 8, lines 18-19).

7. A contractor working alone on property used in the employer's operations and rendering services integrated into such operations is specifically made an employee (p. 8, lines 19-25). The changes enumerated in this and the preceding paragraph are largely in the nature of clarification.

III. Definitions of compensation and years of service

8. The definition of compensation is expanded by the inclusion, under certain circumstances, of sums received in settlement of a personal injury claim (p. 10, lines 3-16).

9. The language employed is such as to expand, in effect, the definition of "years of service" to include periods for which compensation is paid as indicated in the preceding paragraph.

10. Compensation is made creditable after 1945, up to an average of $300 per month of employment in any calendar year rather than up to $300 in each calendar month (p. 23, lines 16-19). A corresponding change is made for tax purposes (p. 11, line 16 to p. 12, line 6).

11. Credit for service for redcaps and other other employees with similar duties, who were compensated by tips prior to the effective date of the Fair Labor Standards Act, is extended for service prior to September 1941 on the basis of the average monthly compensation in the 12 months, September 1940 to August 1941, inclusive (p. 22, line 21 to p. 23, line 14).

12. Compensation after 1945 is to be credited on a paid rather than a payable basis, except that compensation paid by February 1, for service in the previous

calendar year, may be reported as having been paid in the period for which it was payable, irrespective of the date of actual payment (p. 9, lines 12–16; p. 10, lines 19-23; p. 22, lines 16-18; p. 41, lines 6-8).

13. Credit for Canadian service for a railroad labor organization which is a subordinate unit of such an organization which is national in scope is eliminated unless the amount of such credit, calculated by the present formula, is at least 10 percent of the total compensation for such service (p. 9, lines 7-11).

14. Service is creditable to the end of the calendar year rather than to the end of the month in which age 65 is attained (p. 22, lines 12-15).

15. An ultimate fraction of six or more months is counted as a year of service only for individuals having at least 54 months of service (p. 17, lines 19-22).

16. Where service before 1937 is creditable it may include service rendered to a nonemployer if the performance of operations involved the use of standard railway equipment and if such operation was performed by an employer on August 29, 1935 (p. 17, lines 14-17).

IV. Disability annuities

17. The period of service required as a prerequisite for award of an annuity to an employee under 60, based on permanent and total disability, is reduced from 30 to 10 years (p. 21, lines 3–6).

18. The language of the definition of disability, for the purposes of the preceding paragraph is changed from "permanent and total disability for regular employment for hire" to "permanently unable to engage in any regular employment" (p. 21, lines 3-6).

19. For an employee who has a "current connection with the railroad industry" an annuity, without reduction by reason of the individual's age, would be payable if his permanent physical or mental condition is such that he cannot perform the duties of his "regular occupation," and if he has completed 20 years of service, or has attained the age of 60. The employee's "regular occupation" is (i) the one in which he has spent more months than in any other occupation in the last 5 years in which he earned wages or salary, or (ii), if the employee chooses, the other occupation (if such there be), in which, in the preceding 15 years, he was engaged in one-half or more of all the months in which he earned wages or salary (p. 19, line 10 to p. 21, line 2).

20. An employee receiving a disability annuity who earns more than $75 per month in each of any six consecutive months will be deemed to have recovered from disability in the sixth such month and the annuity will cease (p. 21, line 23, to p. 22, line 3).

21. The Railroad Retirement Board is directed, with the cooperation of employers and employees, to attempt to secure uniform standards with respect to the physical requirements for the several occupations in the industry (p. 19, lines 15-22).

22. The reductions in annuities granted on the basis of permanent and total disability for regular employment for hire, but where the employee had less than 30 years of service, and the reductions in age annuities by reason of the payment of full disability annuities to employees who recovered prior to age 65 are both eliminated. (Page and line references cannot be given for reductions in disability annuities since no such reductions are mentioned in the bill. For reductions in age annuities, see p. 60, lines 9-12.)

V. Other changes affecting retirement annuities

23. The existing provisions for minimum annuities are deleted and in place thereof it is specified that for employees having a "current connection with the railroad industry and not less than 5 years of service" the minimum annuity shall be whichever is least of the three following amounts: (a) $50; (b) $3 multiplied by the years of service; or (c) the average monthly compensation on which the annuity is based (p. 23, line 21 to p. 24, line 2).

24. A person is deemed to have a current connection with the railroad industry at the time his annuity begins to accrue, or at death, if he has 12 months of service in any 30 consecutive calendar months before the month in which the annuity begins to accrue (or in which he dies if that first occurs), and, if such 30 months do not immediately precede such month, he has not engaged in regular employment (except for an employer) between the end of the 30 months and the month in which his annuity begins to accrue or in which he dies (p. 17, line 24 to p. 18, line 18). In the case of annuities beginning to accrue before 1946, a current connection is presumed, only for the purposes of paragraph 32 below, if the annuity was based on 5 or more years of service (p. 59, lines 18-21).