e*HERBERT S. M I N O T a n d LOUIS ZASLOFF

225 Broac/vvOy> New York 7, U. Y.

Probably. But you'll have to wait while long red tape thaws frozen salaries.

Your boss can turn on the heat and give you a raise sooner if he gives Government the facts in the right w a y

f-pHE function of the Wage Stabilization •*- Program, as set forth by Cyrus S.

Ching, chairman of the Economic Stabili­zation Agency, is to "discharge its respon­sibilities under the provisions of the De­fense Production Act of 1950. . . (so as ) to stabilize wages, salaries and other com­pensation. . ." in order to curb the dele­terious effects of inflation.

On Jan. 25, 1951, the Wage Stabiliza­tion Board commenced to function by-placing every employer, and every em­ployee, in an absolute wage deep freeze. Since then there has been a gradual de­frosting. Almost immediately a series of general wage regulations was released covering general, individual, and cost-of-living adjustments. In order to clarify this series of regulations WSB supplemented this stream of paper with brochures cover­ing modifications and interpretations to the wage regulations. ( See "Salary Stabili­zation Board, GSSR, Stabilization of Salaries and Other Compensation of Per­sons Employed in Bona Fide Executive, Administrative, Professional, or Outside Salesman Capacities, Not Represented by Labor Organizations" and other regula­tions and interpretations of SSB.)

How Deep Is My Freeze? Professional employees of chemical and

other industries suffer under the mistaken belief that their employer cannot give them any pay adjustment. A great many employers are equally mistaken in think­ing they cannot make a salary adjustment without government consent. As a re­

sult of these misconceptions, professional employees are leaving satisfactory jobs to accept other positions that offer better sal­aries. And their equally7 well satisfied em­ployers are regretfully- allowing them to leave because theyr think it is impossible for them to improve their salary* positions. Much of this reluctant job-hopping can be avoided. The Government does permit certain kinds of salary- adjustments. Lack of knowledge on both sides has largely-been the cause of this unwholesome situa­tion which is costly to trie employee who loses the results of many y-ears of loyal effort and the employer -who loses a valu­able experienced employee.

How Is It Done? Because of the enormous complexity of

the problem of freezing 62 million em­ployees in one fell swoop, the Government pulled from its archives the entire stabili­zation procedure used during World War II. Some refinements, of course, had to be made. In the last war two agencies existed: one to cover rank and file and the other to cover the top group. This program was commenced with one agency—WSB—to cover all employees. Shortly thereafter, from the loth rib there was formed the Salary Stabilization Board which then as­sumed the full jurisdiction of the so-called top group of employees.

SSB, because of its more restricted coverage, functions only out of Washing­ton, D. C, whereas W S S functions within 13 distinct regions of the United States. Further, because of limited personnel.

WSB uses the Wage and Hour Division of the Department of Labor for initial screen­ing.

To obtain relief from either of the boards it is necessaryr to file an application, with complete factual information on the employees for whom relief is sought and such supplemental information as the ap­plicant feels will adequately establish his right to the relief he seeks. The applica­tions are filed with the Wage and Hour Division of the Labor Department in your region. The Wage and Hour Divi­sion, upon receiving these applications, does an initial screening and forwards them to the proper group for final process­ing and decision.

A large part of the confusion which exists concerning wage and salary regula­tions arises from the delays caused by the procedures of die respective boards. The time lag between the release of board policies by either the Wage or the Salary Stabilization Boards to the general public often makes the policy statements mean­ingless by the time it reaches the business organization, in addition, the waiting period between the filing of an applica­tion for board approval and the receipt of a ruling is so long as to cause irrepar­able damage to die employer and his employees. These aforementioned delays are unwarranted and arise solely from the studies and hearings conducted by the administrators ad infinitum. The business man demands a prompt decision for the solution of his immediate problem. He cannot be suspended in a state of un-

1190 C H E M I C A L A N D E N G I N E E R I N G N E W S

*fy<uc <£et a ^cUte? oeitainty with reference to daily require­ments in dealing with his employees, while the control boards take many months t o arrive at a decision. All of these failures t o render a prompt service to the business oomniunity and its employees has caused serious dislocations. If the Government were to recognize its own shortcomings, ft would not be subject to the extreme attaeks leveled at the renewal of the whole stabilization program.

THe catalyst for speeding up your ap­plication is the proper preparation and ^presentation of the specific wage and salary information adequately describing the problem. A voluminous presentation of information which is not pertinent will not only be disregarded by the processing sections, but may be injurious.

Often the employer is compelled to make ^in adjustment to one or more of his em­ployees under circumstances of compelling urgency. He knows that a wage and salary stabilization law exists. He has heard of the difficulty of obtaining a ruling and of tlie cost of proper professional help.

Me balances these beliefs against the seeming lethargy of the Government in exposing the violator of these laws. He JFeels that the stabilization laws, whatever filiey may be, are a scheme of the politi­cians to create a large number of bureau­cratic jobs. Instead of determining -whether he has a proper legal right to srnake an adjustment without the approval of tHe Government, or even reporting his intent to make an adjustment, he totally -disregards the existence of the law.

Tfiis sort of adjustment is most fre­quently a violation not because the em­ployer needed the approval of the Gov­

ernment to make the adjustment, but be­cause he has failed to inform the Govern­ment of his intent to do so or to main­tain such records as the Government re­quires. The employer becomes subject to penalty for no reason other than ignorance.

The same employer with proper under­standing and guidance not only could give such adjustments as he may require from • time to time but may in effect improve relations with his employees. The Govern­ment by its many regulations is encourag­ing the employer to use tried, tested, and true methods of wage and salary ad­ministration to the benefit of both the employer and employee.

The regulations of both boards do con­tain various self-administering provisions. Under these sections the employer must assume the responsibility for qualifying under the criteria set forth and, thereafter, must make adjusments strictly in accord­ance therewith. The record keeping and administrative responsibility of these self-administering sections create a real di­lemma for the employer, since he is never certain that he has qualified correctly or that he is administering correctly. In the event that he finds himself in error under these sections, such error may prove costly to his company and to his employees. As a practical matter employers are urged to obtain an advisory opinion from the Wage or Salary Stabilization Board before act­ing under such" self-administering provi­sions.

Even though the law says "ignorance is no excuse," here it is indeed a poor in­vestment. From a short range view and for the duration of the stabilization pro­gram an employer who ignores the regula-

HLerbert S. Minot, and Louis Zasloff are members of the New York and Federal Bar and associates of

the firm of Minot

Louis Zasloff

& Zasloff. Both are in active prac­tice as labor law­yers. They have widespread experi­ence in administra­tive law affecting all phases of indus­try and govern­m e n t r e l a t i o n s . Their papers and books have been accepted by pro­fessional societies. Their law firm has served as special counsel to numerous trade sociations on industry wide problems.

Herbert S. Minot

tions is courting extreme difficulty. The consequence of a violation is the disallow­ance, not only of the total wage and salary, but also a roll-back of the unauthorized portion of such wage or salary, to the em­ployee or employees involved. The first consequence hits the company financially, since an unauthorized adjustment of only $10 a week given to a $100-a-week em­ployee, may cost the company over $5500 in penalties, or $55,000 for 10 employees similarly involved. The second conse­quence involves a "roll-back" of the $110 employee to his former $100 status, caus­ing irreparable damage to the employee-employer relationship. In addition this may cause the employee to leave the com­pany. The latter consequence cannot be measured in terms of dollars and cents, since each employee represents a substan­tial investment in training and overhead cost. Furthermore, this unfavorable pub­licity is extremely detrimental in the busi­ness community. Little need be said as to the difficulty of hiring additional personnel for a company that has been a party to a government-forced roll-back.

All of the foregoing has dealt with the unintentional violator. Where, however, it appears evident that the violations were intentional and in total disregard of the existing laws, the penalities are severe. These cases are dealt with by the Govern­ment as criminal prosecution matters. The convicted violator is subject to a penalty of imprisonment of one year or $10,000 fine or both.

Many organizations are currently en­gaged in the sale of goods or services to the Government directly or indirectly. These companies have a further, separate vulnerability. A violation may result in the loss of all of this business in addition to the foregoing penalties.

While the Government lias not as yet really exposed its fangs, they are there nonetheless. No company desires to be the one to be tire "lamb led to slaughter." The New York Times recently featured a story about the large scale drive now tak­ing place in New York and Xcw Jersey to round up all violators and present them to justice. ·

It's Simple Actually the procedures of the stabiliza­

tion boards are so simple and elementary that they present no special difficulty to any employer trying to determine whether or not he requires government approval.

The procedures are logical and based upon management practices that experi­enced practitioners of industry and labor

V O L U M E 3 0, N O . 1 2 » » M A R C H 2 4, 1 9 5 2 1191

A special panel set up by WSB holds hearings on wage increase for steel workers

relations have always recommended. These procedures arc now the law. It has always been good business for the employer to compensate his employee on the basis of standard methods rather than by a hit or miss method. It has always been good business to evaluate employees b y an ob­jective standard. It has always been good business to keep employees classified within minimum and maximum rate ranges; and to permit the employee to realize that he has an opportunity for ad­vancement based on his achievement. If we accept these truisms the various regu­lations of the stabilization program are not complicated or detrimental t o the em­ployer or the employee but are often bene­ficial.

WSB has only one form at present covering every type of relief. Certainly this factor alone establishes simplicity.

In effect SSB says to the employer: "present the facts as you see fit." This is the essence of simplicity. Both boards in­vite inquiries and applications, and re­gional and district offices have been pro­vided throughout the land for this pur­pose. Both boards supply ample literature and material for guidance.

Where Do You Fit?

In a n effort to clarify the jurisdiction of the two boards, they jointly accepted the definitions in the Fair Labor Stand­ards Act of 1938 as amended pursuant to Section 13 (a) (1 ) . This section provides that "any employee employed as a bona fide executive, administrative, professional . . . o r outside salesman . . ." shall be placed under t h e jurisdiction of the SSB. The president and every excutive official of the company is just as frozen with reference to his compensation 'as the pro­fessional employee and salesmen in his company—and no more. All other em­ployees were placed under the jurisdic­tion of the WSB.

The incorrect filing of an application re­sulting from incorrect jurisdictional facts inevitably results in procedural delays, im­proper rulings, and other difficulties.

The two boards grant adjustments based upon different criteria and within differ­

ent rules. The submission, therefore, of such information which would qualify an employee for an adjustment under the rules of WSB if filed with the SSB will result in a negative ruling.

Each of these boards has been com­pelled to adopt variations in its rules,^ as the Wage Board deals with large num­bers of employees, while the Salary Board with the individual or small group. Any prospective applicant to either board would do well to crystallize the nature of his problem, attempt to locate the par­ticular regulation under which h e feels relief may b e granted, and comply with the board's procedural requirements in connec­tion with such regulation, giving full and adequate information, both on a qualitative and quantitative basis. All of this will in­crease the probability of success.

If an applicant were to obtain relief from WSB h e would use Form 100 as most recently revised. This form covers every possible type of application and in general terms indicates the information required. However, this does not 'confine the ap­plicant in the extent of his information nor restrict the nature of the proof the appli­cant can submit to maintain his need for relief. Therefore, the applicant must sup­ply in a supplementary statement all the facts affecting his problem, and the spe­cific type of relief required, in accordance with the particular regulation .covering the relief sought. The approach is most fre­quently a quantitative approach involving average straight time earnings, rates or rate ranges for groups of employees and other pertinent material gleaned from rec­ords of the applicant.

W h e n making an application to the SSB no specific form is required nor does the board actually supply any form. The board suggests that the applicant file a petition in which he succinctly states his problem, the reasons why the SSB should grant him relief, and pursuant to what authority the board may grant such relief. In effect the board says to the applicant: "Tell us how we can legally approve the relief you request and b e certain that you convince us by adequate reasoning that we should act in your behalf."

WSB tends to favor, in review, the ap­

plication based on scheduled d a t a that in­cludes job titles, job descriptions, and wage rate ranges for particular payroll periods together with present company procedures. SSB tends to favor an individual or small group case history, consisting of salary and bonus information, plus detailed descrip­tions of the duties and responsibilities of the individual or small group involved. Both boards, when processing inequity applications, seek comparable wage or salary information. WSB utilizes going wage rates as supplied by the Bureau of Labor Statistics. SSB has no going salary rate information and, therefore, the bu r ­den is upon the employer to supply such information in his own application. Gener­ally the proof required by WSB refers to payroll records while the proof required by the SSB refers to corporate minutes, data, and written instruments as well as payroll records.

By congressional act in 1938, executive, administrative, professional personnel, and local retail and outside salesmen \yere completely defined under the Fa i r Labor Standards Act publicly known as the Wage-Hour Law. These categories of em­ployees are known as the .exempt group of employees. All other employees are re­ferred to as the nonexempt group. T h e exempt group is t h e group which has been assigned to the SSR, the nonexempt group to the WSB.

The authors have attempted to clarify by simplification the essential character­istics of each group which is adequately il­lustrated in the "check list of criteria to determine jurisdiction." The reader should carefully examine the chart. He xvil\ prob­ably find that he is within the executive or professional group within t h e jurisdic­tion of t h e SSB. Very seldom, if ever, will a trained chemist or chemical engineer be included in t h e group of production workers who are under the jurisdiction of the WSB.

W h o Makes Application?

Except in dispute cases, no adjustments may be made in the wages or salaries of employees without the voluntary action or consent of the employer. Where , how­ever, an application b y the employer is being filed to grant adjustments resulting from collective bargaining with a union, such application must b e joint o n the par t of the employer and the union.

Wha t Is Acceptable?

The first general category of relief is per­mitted as a cost-of-living adjustment Exed at 1 0 % as a quota figure, based upon the payroll of an employer as existent on Jan. 15, 1950, with deductions for all adjust­ments on a general basis after such date. The next great segment of permissible ad­justments is based on merit a n d length of service and may be granted t o groups or individual employees. If an employer had, prior to stabilization, maintained a formal plan of wage and salary administra­tion, then such plan may be continued. Where an employer failed to have such

A N D E N G I N E E R I N G N E W S 1192 C H E M I C A L

Check List of Criteria to Determine Jurisdiction

T Y P E O F JOB COMPENSATION PRIMARY DUTY PRIMARY W O R K

D I S C R E T I O N -N O . OF ARY P O W E R S OR

E M P L O Y E E S R I G H T TO H I R E INDIVIDUAL UNION M E M -SUJPEIIVISEO AND FLRE JUDGMENT BERSHXP

Salary Stabilization Board Jurisdiction Executive

Group A Group Β

Administrative employee

Group A Group Β

3. Professional ployee

Group A

Group Β

4. Technical em­ployee ( Does not have special definition under Fair Labor Standards Act.)

5. Outside salesman

$100 a week Management of com- Less than 2 0 % or more pany or department of time $55 a week or Management of de - Less than 2 0 % more partment or special of time

division

$100 a week Office or nonmanual Less than 2 0 % or more field work of time· $75 a week or Assists executive. Spe- Less than 20% more cial assignments. Spe- of time

cial training, experi­ence, and knowledge

$100 a week Requires advanced Less than 2 0 % or more knowledge relating to of time

science, invention, imagination, or artistic endeavor

S75 a week or Specialized intellectual Less than 20% more learning—requires in- of time

vention, imagination, and talent

Note: This employee is either professional or ad­ministrative, depending upon the manner in which he is assigned or appears on the com­pany's organizational chart. If he is assigned to assist executive heads, then he most fre­quently belongs to the administrative group. If his origin is professional and is assigned to research for the production division heads, then he is most frequently classified as pro­fessional

NO specific Customarily away Less than 2 0 % amount from place of business, of time

Function to make sales, get orders and contracts

W a g e Stabilization Board Jurisdiction 6. Inside salesman No specific

amount

7. Office employees No specific amount

8. Warehouse and No specific delivery amount

9. Working foreman No specific amount

10. Production No specific workers amount

Customarily sells with­in company office only, or "delivery sales" physical route, makes physical delivery and collection Fills normal function of particular job Fills normal function of particular job Fills normal function of particular job Fills normal function of particular job

2 or more Yes 2 or more Yes

No require­ment No require­ment

No require­ment

No require­ment

In excess 2 0 %

In excess 2 0 % In excess 2 0 % In excess 2 0 % In excess 2 0 %

of

of

of

of

of

None

None

None

None

None

Not neces­sary Not neces­sary

Not neces­sary

Not neces­sary

Yes Yes

Yes Yes

Yes

Yes

No No

No No

N o

N o

No UNION A F F I L I A T I O N

Yes Yes

Yes Yes

Yes

Yes

No require- No require­ment ment

None

No require­ment

None

None

None

None

None None None None

No

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

actual plan in existence, he must live within the confines of the rules. In tin's case he cannot grant any adjustments un­less he obtains previous permission, or re­ports his intent citing the particular regu­lations under which he proposes an ad­justment. T h e Government, in recogniz­ing that the greatest number of employers prior to stabilization did not have in actual existence a formal plan of wage and salary administration, has recently opened the door under an amendment made to GWR 5 to permit every employer to create a formal plan for wage and salary adminis­tration based upon the criteria set forth in the regulation.

Wha t Is a Formal Wage Plan?

Many employers mistakenly believe that they have fully complied with the law and are already operating under a wage and salary schedule. This misapprehension stems from their erroneous conclusion that payroll records constitute a schedule. WSB under G W R 5 as amended sets forth the criteria for a wage and salary schedule. Every employer should test his wage and

salary schedule against these legal require­ments. It is suggested by the authors that if this test proves negative, that the em­ployer seek to establish a formal wage and salary schedule and thereby recapture most of his discretionary rights to grant ad­justments to his employees.

In Brief

Cost of Living. The so-called 1 0 % cost of living raises are based on a budgetary figure derived from 10% of the total pay­roll as existent on the payroll week span­ning Jan . 15, 1950. Chargeable against it are all general adjustments since such date. The 1 0 % limit does not apply to individ­ual salaries but to the increase in t he total payroll of the company for a given pro­duction.

Merit and Length of Service. A com­pany wi th a formal plan of wage and sal­ary administration may make such adjust­ments as are permissive under their plan within the maximums of the rate ranges; while a company without such formal plan is permitted to grant adjustments not in excess of 6% (as a budgetary figure) of

the current payroll within the calendar year.

Bonuses. Generally only such bonuses as were pa id in the year 1950 may be paid in the same dollar amount in future years except u p to the sum of $40. Bonuses which exceed these limits require approval. SSB, because of the individual nature of the employee under its jurisdiction, has created myriad rules covering approval of proposed bonuses. It is suggested that a problem tinder this category be thoroughly researched under the SSB regulations to determine the propriety of granting a bonus, or an adjustment of a bonus, with or without approval.

Over t ime For SSB Personnel. I n recog­nition of the fact that many executive and /o r professional employees, particularly in research, are frozen in their particular categories and devote considerable extra time to their company's affairs, SSB is honoring applications submitting a plan of overtime payment for such personnel'. Based upon the required information as set forth in the regulation, past history of the company, and reasons in support of the request, t he board will grant such relief.

V O L U M E 3 0, N O . 1 2 M A R C H 2 4, 1 9 5 2 1193