Social Security Legislation, January-June 1948: Legislative History and Background

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Social Security Legislation, January-June 1948: Legislative History and Background Social Security Legislation, January-June Historical Background One of the first significant steps 1948: Legislative History and Background leading to the passage of the news vendors law occurred in April 1944, By Wilbur J. Cohen and James L. Calhoon* when the Supreme Court declared that vendors making street sales at established locations and working The following article outlines the legislation in the field full time for the Hearst Corporation of social security enacted by the Eightieth Congress in the and other publishers in Los Angeles first 6 months of 1948. Because of the divergent viewpoints were employees of the newspapers for underlying the development of some of the amendments purposes of the National Labor Re• and the implication of the provisions for the social security lations Act (National Labor Relations program, the authors have also sketched in briefly, as a Board v. Hearst Publications, Inc., 322 matter of record, the legislative history and background of U. S. 111). This decision seemed to the various provisions. indicate that the vendors might be employees under the Social Security THERE was considerable legislative cording to the sponsor of the legis• Act. In 1946 the District Court of the activity in the field of social security lation, are affected immediately.1 United States for the Northern Dis• during the second regular session of The new law does not change the trict of California, Southern Division, the Eightieth Congress. Numerous status of the ordinary newsboy. Most heard the cases, Hearst Publications, bills to amend the Social Security Act newsboys are not covered by the Social Inc. v. United States and The Chron• were introduced. One, H. R. 6777, Security Act, either because they are icle Publishing Company v. United would have extended coverage, in• in fact independent contractors or be• States (70 F. Supp. 666, 1946), which creased benefits, and made other cause they come within the terms of dealt specifically with the status, for changes in the old-age and survivors the 1939 amendments to the act, which employment-tax purposes, of vendors insurance program. It had already exclude "service performed by an in• in the San Francisco area.2 passed the House and was pending in dividual under the age of 18 in the The District Court found that these the Senate Committee on Finance delivery or distribution of newspapers vendors were employed by the Hearst when Congress recessed on June 20. or shopping news, not including deliv• Corporation under agreements nego• Of the five bills passed by both the ery or distribution to any point for tiated for them by an American Fed• House and the Senate in the first 6 subsequent delivery or distribution." eration of Labor union of their own months of 1948, the President vetoed The amendments to the taxing pro• choosing. Under these agreements four. Three of the four vetoes were visions of the old-age and survivors the publishers selected the vendors, overridden. designated their place, days, and insurance program and to the Federal hours of service within certain con• News Vendors Bill Unemployment Tax Act are applicable ditions in the contract, and fixed the with respect to services performed profits they were to derive from the On April 20, 1948, the so-called after December 31, 1939. For the pur• sale of each newspaper. The ven• News Vendors Bill, H. R. 5052, intro• poses of the Federal unemployment dors were expected to be at their duced by Representative Gearhart, tax, services performed before July 1, corners at press-release time, stay was passed over the President's veto 1946, shall be considered as if the there for the sales period, be able to and became Public Law No. 492. amendment had been in effect since sell the papers, and take an interest The purpose of Public Law No. 492 the enactment of the Social Security in selling as many papers as they is "to exclude certain vendors of news• Act Amendments of 1939. could. To see that they complied papers or magazines from certain pro• The act prohibits any credit or re• with the publisher's rules, the ven• visions of the Social Security Act and fund of any amount paid before its dors were supervised by the publish• the Internal Revenue Code." Specif• enactment which is an overpayment er's employee, the "wholesaler." ically, it excludes from coverage under of tax solely because of the new The wholesaler was authorized to re• old-age and survivors insurance and amendment. port the vendor if the vendor failed the Federal Unemployment Tax Act To avoid wiping out benefits and in any of his duties, and was required services performed by newspaper and benefit rights which already have ac• to report any infraction to the pub• magazine vendors who sell directly to crued under old-age and survivors lisher, who could then discontinue the public, even though their contract insurance and on which the worker further sales to the vendor or report with the publisher may vest the pub• and his family may have placed re• him to the union for disciplinary ac• lisher with substantial control of the liance, old-age and survivors insur• tion. The vendor was required to sell vendor's activities. Probably not ance wage credits based on services his papers complete with sections in more than a thousand workers, ac• performed before enactment of the amendment are not affected. *Mr. Cohen is Technical Advisor to the 2Reprinted in Newspaper Vendors: Commissioner for Social Security, and Mr. Hearings Before the Committee on Ways Calhoon is on the staff of the Bureau of 1 Congressional Record (daily edition), and Means, House of Representatives . Old-Age and Survivors Insurance. Apr. 14, 1948, p. 4535. on H. R. 3997, pp. 30-37. the order designated by the publisher attack and to slow undermining. We employees depend almost completely and to display only newspapers on must, instead, devote our energies to upon the form in which their employ• the stands or racks that were fur• expanding and strengthening that ers might choose to cast their em• nished by the publisher at the latter's system." ployment contracts. Employers de• expense. He was not allowed to sell On January 20, 1948, Representative siring to avoid the payment of taxes a competitor's newspaper without the Gearhart introduced H. R. 5052, a bill which would be the basis for social publisher's consent. The vendor in• identical with the one vetoed the pre• security benefits for their employees curred no expense or risks save that ceding year. The Committee on Ways could do so by the establishment of of having to pay for papers delivered and Means reported the bill for pas• artificial legal arrangements govern• to him which by reason of loss or de• sage on February 3 (H. Rept. 1320), ing their relationships with their em• struction he was unable to return for saying "whatever effect it may have ployees. It was this sort of manipu• credit. Moreover, a vendor "was on the extension or restriction of ex• lation which the Supreme Court ef• guaranteed by contract a minimum isting coverage provisions is purely in• fectively outlawed in June of 1947 weekly profit." In effect, the vendors cidental to its main purpose, which is when the Court unanimously declared were subject to the publisher's con• the removal of a substantial area of that employment relationships under trol. ambiguity and confusion in the appli• the social security laws should be de• The District Court on January 2, cation of the coverage provisions of termined in the light of realities 1947, held that these particular ven• the act. The bill has the unqualified rather than on the basis of technical dors were employees of the publish• endorsement of the newspaper pub• legal forms. I cannot believe that this ers for employment-tax purposes. lishers, the vendors concerned, and sound principle announced by the The Hearst Corporation appealed the their union representatives." The Court should be disregarded, as it decision to the Circuit Court of Ap• House of Representatives passed the would be by the present bill." peals for the Ninth Circuit, which af• bill without debate and without a The President also declared that he firmed, per curiam, the District Court record vote on March 4. was opposed to other congressional decision on June 23, 1948.3 In the Senate the Committee on proposals that would deprive workers Finance reported the bill on March of coverage under the Social Security Legislative History 13 to the Senate without amendment Act. "In withholding my approval In June 1947, Representative Gear- (S. Rept. 985). The Senate, without from H. R. 3997 last August," he said, hart introduced a series of three bills, debate, adopted the bill on March 23, "I expressed my concern that such a H. R. 3704, H. R. 3920, and H. R. 3997,4 again without a record vote. bill would open our social security which would have excluded all news President Truman vetoed the sec• structure to piecemeal attack and to vendors from coverage under the So• ond news vendors bill on April 5, 1948.7 slow undermining. That concern was cial Security Act. The Committee on In his message he called attention to well founded. The House of Repre• Ways and Means of the House of the danger of the bill. "This legis• sentatives has recently passed a joint Representatives on June 12 conducted lation," he said, "has far greater sig• resolution which would destroy the so• public hearings on H. R. 3997, at nificance than appears on the sur• cial security coverage of several hun• which representatives of the pub• face.
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