Section 13: Exclusiveness of provisions; transfers from State unemployment compensation accounts to railroad unemployment insurance account. Section 14: District of Columbia Unemployment Compensation Act. Section 15: Transitional provisions. Section 17: Short title. Following is a brief summary of main provisions: 1. Coverage: Identical with that of Railroad Retirement Act of 1937, namely, interstate railroads, certain of their operating subsidiaries, sleeping-car and express companies, traffic and similar associations maintained by the railroads, and railroad labor organizations. 2. Contributions: After July 1, 1939, covered employers will pay 3 percent of wages payable, excluding any amount in excess of $300 per month payable to any employee. The rate is the same as the combined rate under a typical State unemployment compensation law and title IX. The wage exclusion is the same as that in the Carriers' Taxing Act. 3. Railroad unemployment insurance account: 90 percent of the contributions will be deposited in the railroad unemployment insurance account, to be maintained, like the State unemployment compensation accounts, by the Secretary of the Treasury in the unemployment trust fund established by section 904 of the Social Security Act. Provision is also made for the transfer to the railroad unemployment insurance account from State unemployment compensation accounts of the balance of the amounts paid to them by the employers covered by this bill. The railroad unemployment insurance account can be used solely for the payment of benefits. 4. Railroad unemployment insurance administration fund: 10 percent of the contributions, together with any additional appropriations which Congress may make, will be maintained in the Treasury as the railroad unemployment insurance administration fund, to be used solely for the payment of administrative costs. If this fund has excessive balances after 1946, such part thereof as the Railroad Retirement Board deems proper may be transferred to the railroad unemployment insurance account. 5. Qualifications for benefits: An employee of a covered employer will be qualified to receive benefits (a) Prior employment: If, within the appropriate preceding calendar year, he has earned $150 or more from covered employment. (b) Waiting period: If, within 6 months preceding the beginning of any benefit year, he had had 15 consecutive days of unemployment or 2 half-months in each of which there were 8 days of unemployment, for which benefits were not paid. 6. Disqualifications: An employee will be disqualified for benefits for defined periods of 15, 30, 45, and 75 days for such reasons as unavailability for suitable work, refusal to accept suitable work, voluntarily quitting without good cause, discharge for misconduct, and the making of fraudulent claims for benefits. An employee will also be disqualified for benefits, while on a strike in violation of the Railway Labor Act or of the rules of his labor or ganization; while in receipt of an annuity or pension under the Railroad Retirement Act, or old-age insurance under title II of the Social Security Act, or unemployment benefits under any State unemployment compensation law; and during any month or half month during which he performs 50 percent-25 percent of the maximum employment allowable to him under a contract of employment providing for the determination of his compensation, wholly or partially, on a mileage basis. 7. Benefits: Benefits will be paid for each day of total unemployment in excess of 7 during any period of 15 days, in an amount ranging from $1.75 to $3 according to the employee's total earnings from covered employment in a preceding calendar year. The maximum total amount of benefits payable to any employee during a period of 12 months will be 80 times his so-called "daily" benefit amount. Benefits are paid on a "daily" basis for administrative convenience. They are paid for days of unemployment in excess of 7 in order not to pay benefits to a worker who has earned about 50 percent of his normal semimonthly wage. Translated into more customary terms, the rates range from $14 to $24 per half month of total unemployment; the maximum duration is a flat 5 months. 8. Administration: (a) General: The plan is to be administered by the Railroad Retirement Board, which is given the necessary powers, among which is that of appointing, subject to civil-service rules and regulations, a director of unemployment insurance at a salary of $10,000 per year. . The Board is authorized to establish special employment offices for railroad workers and to enter into arrangements with employers, labor organizations, State unemployment compensation and employmentservice agencies, and others to assist in its work, particularly that of registering the unemployed for work and receiving claims for benefits, and to pay for such service. (b) Claims for benefits: Duly authorized employees of the Board make the first determination on any claim for benefits. From this determination a worker may appeal to a district board, consisting of one representative each of the Board, of employees, and of employers. The Board may review the decisions of the district boards, or permit a worker to appeal such a decision to the Board itself. After all administrative remedies within the Board have been exhausted, any claim may be appealed to the Federal courts. (c) Reciprocal arrangements with other unemployment-compensation agencies: With respect to workers who have been employed both by railroad and nonrailroad employers, the Board is authorized to enter into arrangements by which (a) if a State agency pays benefits. to such workers, in part on the basis of their railroad employment, the Board will equitably reimburse the State agency, or (b) if the Board pays benefits to such workers, in part on the basis of their nonrailroad employment, the State agency will equitably reimburse the Board. (d) Advisory councils: The Board may appoint, without compensation, national or local advisory councils of representatives of employers, employees, and the public to discuss problems in connection with the administration of the plan and to help in the formulation of policies. 9. Social Security Act and Social Security Board: (a) Title III: Section 303 is amended by providing that the Social Security Board shall make no certification for payment of an administrative grant to any State unemployment compensation agency if it finds that the agency (1) does not make its records available to the Railroad Retirement Board, or (2) does not afford reasonable cooperation to every Federal agency administering an unemployment insurance law. (b) Title IX: Sections 904 (a) and 904 (e) are amended to provide for the railroad unemployment insurance account in the unemployment trust fund. Section 907 (c) is amended to exempt employment covered by this bill from the title IX tax. (c) Transfer from State funds: The Social Security Board is directed to determine, by agreement with the Railroad Retirement Board and after consultation with each State, a rough approximation of the balance of the amounts collected by each State unemployment compensation fund prior to November 1, 1939, from employers covered by this bill. Unless a State shall direct the Secretary of the Treasury to transfer this balance to the railroad unemployment insurance account, the Social Security Board shall deduct this amount from its administrative grants to the State, until the total balance has been so deducted, and certify such amount for deposit in the railroad unemployment insurance account. Notwithstanding the present restrictions in sections 303 (a) (5) and 903 (a) (4) of the Social Security Act, the State may then withdraw from the unemployment trust fund the amounts which the Social Security Board finds to be necessary for proper administration of its unemployment compensation law. 10. District of Columbia Unemployment Compensation Act: The District of Columbia Unemployment Compensation Act is amended, effective July 1, 1939, to exclude employment as defined in this bill from coverage both for contribution and benefit purposes and to direct the Secretary of the Treasury to make the transfer of the amount required to be transferred to the railroad unemployment insurance account. 11. Transitional provisions: These provide that if a worker has started a benefit year under a State law between July 1, 1938, and June 30, 1939, he shall be eligible during the balance of such year to receive benefits under this bill— (a) if qualified as of July 1, 1939, at the rate to which he is entitled under this bill, until he has drawn, including the amounts already received under the State law, the maximum payable to him under this bill; (b) if not qualified as of July 1, 1939, but solely because of the passage of this bill is ineligible to continue to receive benefits under the State law, at the minimum rate herein provided until he has drawn the balance of the benefits which he would otherwise have been entitled to under the State law. I want to thank your committee for your courtesy and the privilege of this hearing in order to bring this bill before you and discuss it. Judge Hay will address you now. STATEMENT OF CHARLES M. HAY, ST. LOUIS, MO., ATTORNEY, UNEMPLOYMENT INSURANCE COMMITTEE, RAILWAY LABOR EXECUTIVES' ASSOCIATION Mr. HAY. Mr. Chairman and gentlemen of the committee, my name is Charles M. Hay. I live in St. Louis. I am attorney for the committee headed by Mr. Cashen, appointed by the Railway Labor Executives' Association to sponsor a railroad unemployment insurance bill; that is, a bill providing for unemployment compensation applicable only to the railroad industry. PURPOSE OF BILL To state the purpose of the bill in a sentence, it is this: It is to do for the railroad industry with respect to unemployment compensation what the Railroad Retirement Act does for that industry with respect to old-age benefits; that is to say, to set up a separate system applicable only to the railroad industry. The CHAIRMAN. That is, you want to take it out of the general law? Mr. HAY. We want to lift it out of the general social security system and apply this system to the railroad industry alone. The CHAIRMAN. Why do you want to take it out of the general law? EXISTING SITUATION Mr. HAY. I will develop that, if I may, Senator, in just a moment, by explaining the situation that we are in at the present time in attempting to apply to the workers in this industry a Ñation-wide system that is administered by 51 different jurisdictions; that is to say, the 48 States and the law applicable to the District of Columbia, Hawaii, and Alaska. Under the present system, as you know, each State sets up its own unemployment insurance system. All of the States except two cover railroad employees as well as other employees, Wisconsin and Alabama not covering those employees, but insofar as the railroad system is covered at all at the present time, it is covered by the many acts passed by the various States and by Congress for the District of Columbia, Hawaii, and Alaska. Senator WAGNER. Judge, may I ask you a question at this point? Mr. HAY. Yes. Senator WAGNER. When the Social Security Law was originally introduced it had a provision for old-age pensions to railroad employees, and subsequently a separate bill was introduced to take care of the old-age pensions for railroad employees, and it was then eliminated from the general social security law, and it dealt specifically with that by separate legislation. Mr. HAY. Yes. Your Congress passed at the last session the third act applicable to the railroad industry. The original act, as you will Then recall, was passed back in 1934 and held to be unconstitutional. an act was passed in 1935, and finally a third act was passed. Senator WAGNER. The original bill that was introduced by me for social security also dealt with old-age pensions for the railroad employees. As soon as we dealt with it separately it was taken out. The law was amended to eliminate that and it was dealt with separately. That is what you want to do? Mr. HAY. That is what we want to do. In other words, you did, with respect to the retirement system, what has been done in a long line of legislative enactments with respect to the railroad industry. You have the Railroad Labor Act on the one hand and the National Labor Relations Act, covering other industries, on the other. You have the Hours of Service Act. You have a number of acts that. deal with the railroad industry alone. Senator WAGNER. We have the Pension Act. Mr. HAY. The Pension Act in particular. In other words, we take this position that the situation which the railroad industry is in today with respect to unemployment insurance is out of line with the situation of the railroads with respect to other fields, such as old-age annuities and in the mediation, the adjustment of disputes in the field, that are being covered by the Railroad Labor Act. BILL CONSISTENT WITH RAILROAD LEGISLATION For over 50 years certainly since the enactment of the Interstate Commerce Act in 1887-the policy has been to deal with the railroad industry through legislation applicable to that industry alone, that, of course, resulting from the recognition of it as distinctly a national industry engaged in interstate commerce, and the States being unable, as was conclusively shown by the Granger laws, to deal satisfactorily with problems that have to do with the railroad industry. A separate measure for railroads dealing with unemployment compensation was contemplated at the time the Social Security Act was passedin fact, before the enactment of the Social Security Act and in the studies that were made of the whole social security program, a separate system for railroads relating to unemployment compensation was recommended. Mr. Eastman recommended it in 1934 and went so far as to submit a suggested bill covering the railroad industry. The Interstate Commerce Commission approved his recommendation, although not commenting on it. The President's committee on national security likewise recommended a separate system of unemployment compensation for the railroads. When the States came to enact their unemployment compensation laws, 40 of them, and perhaps one or two more somewhere around 40-carried a provision showing clearly that the States contemplated the ultimate enactment of a separate system for railroads, because there was a provision to lay the basis for the correlating of the State systems to the system that might be enacted by the Congress covering the railroad industry alone. That is the background. We submit, in the first place, that we are bringing here a proposal that is consistent with the logic of railroad legislation history for more than 50 years. The CHAIRMAN. Let me ask you this question: Does this cost the railroads any more than what they are paying? Mr. HAY. Not only does it not cost them more, Senator, but it. costs them less than what they are paying under the present system. |