Mr. LUTES. I beg your pardon. It wasn't the broker we were discussing. It was the insurance company. It was the different plans we went over. Mr. GRAHAM. The trustees? Mr. LUTES. The trustees. Mr. GRAHAM. When you arrived at the type of an insurance policy you wanted, did the trustees select the broker? Mr. LUTES. Well, they hired this Mr. Lever, his name is, that the union proposed. We, on the surface, I guess did do some investigating, and he had had extended experience in that field and had had a lot of contracts in other locations. The CHAIRMAN. A little louder, please. Your voice is dropping. Mr. GRAHAM. What did you learn? Mr. LUTES. Well, somebody in the meeting, I don't recall just who, was selling me the idea that we liked this Occidental policy, we had to do business with Mr. Lever, or that he had a contract with Occidental. I contacted a local broker and he called long distance to the Occidental Insurance Co. in Los Angeles, and I heard part of the conversation myself, and they told us definitely they didn't care who the broker was as long as they wanted the insurance. Mr. GRAHAM. Why didn't you give it to a local broker? Mr. LUTES. I was outvoted. The CHAIRMAN. In other words, you voted for a local broker? Mr. LUTES. As I recall, I don't believe it was brought to a vote. It wouldn't have been any use. Mr. MCCABE. Mr. Lutes, in connection with this appropriation of $500, do you know whether that money was actually paid? You mentioned that you were out voted on the question of appropriating it from the welfare fund. Mr. LUTES. That is true. Mr. MCCABE. Do you know of your own knowledge whether that money was ever disbursed from the fund? Mr. LUTES. I checked this morning and it was. I signed the check. I had forgotten it, but I signed the check myself. Mr. MCCABE. You, as a trustee, signed the check. Was that part of your regular duties to sign all checks? Mr. LUTES. I was authorized to sign certain checks for certain bills and as I recall now I must have signed the check. I don't recall it, but I talked to our secretary, and she said I did. Mr. MCCABE. I don't know if the record shows, but you are here in response to a subpena, are you not, Mr. Lutes? Mr. LUTES. I am. The CHAIRMAN. Keep your voices up, everyone. You are dropping your voices down. Mr. GRAHAM. Mr. Lutes, when you purchased insurance, would you describe the coverage of the insurance? In other words, who was eligible, just roughly, to the benefits? Mr. LUTES. The employee that belonged to the union only, that was in good standing with the union. Mr. GRAHAM. And that was Mr. LUTES. Providing, sir, that the employer was in good standing in the trust fund. It worked two ways there. Mr. GRAHAM. Did that apply to life insurance? Mr. LUTES. I think there is a thousand dollars. Mr. GRAHAM. Who is eligible to receive life insurance? Mr. LUTES. The beneficiary. Do you mean who is eligible? The insured, the employee. Mr. GRAHAM. But what is the restriction on his eligibility. Do you recall? Maybe you don't. Mr. LUTES. I don't think I quite understand. Mr. GRAHAM. Well, in order to receive certain health-medical benefits, I notice in the agreement or the explanation of it-no, it is the agreement-it states that in order to receive this medical benefit that you have to be a member in good standing in local 535 for 6 consecutive months and that your employer has to contribute and so on, in order for you to be eligible. But for life insurance, the eligibility requirement is that any member in good standing with local 535 who completes 1 year of membership in good standing after June 1952, and who is not eligible for benefits under the welfare plan, shall be eligible for life insurance on the first day of the month following completion of 1 year of membership in good standing. Then it has a note: You must continue to be a member in good standing at all times to remain eligible. You may be a retired member and be eligible for life insurance, provided you fulfill the above requirements. There will be no duplication of life insurance. If you are insured under the welfare plan, you will be covered for life insurance under the welfare plan only. In other words, it appears that the life-insurance eligibility goes to any member in good standing of that local union, regardless of whether he is employed, ever has been employed, or whether anybody is contributing. Is that your understanding? Mr. LUTES. I think, as I recall, before this trust fund was set up, the union had or carried a thousand-dollar policy on each member. Évidently that policy came out of their dues. When this was set up, they put it into the trust fund. I think I mentioned it at the time, but it didn't seem like too big an issue. As I recall, it was. In other words, they transferred it from their side into the trust fund, that thousand dollars. Mr. GRAHAM. In other words, if there happen to be people that are working and employers are making contributions, the money that is contributed for the work of those people is deducted to pay for those people that are no working, or where there are no contributions made, or are not part of the trust fund in any way whatsover; is that correct? Mr. LUTES. That is a little vague in my mind, but I believe you are right. Mr. MCCABE. I have no further questions, Mr. Chairman. The CHAIRMAN. I have one question at this time. The purpose of these hearings is to suggest legislation or recommend legislation to Congress for the regulation of welfare funds. Can you give us some suggestions at this time as to what we should regulate or how they should be regulated, whether it should be by State or Federal, or what are your ideas on that matter? Mr. LUTES. Well, my personal opinion is that the State-I would like to see that. It is just like you have your State bank examiners. I think in an operation that is handling a hundred thousand dollars, more or less, a year, somebody from the outside should examine it, and not leave it up to 6 or 8 people in their own organization. I was there, and it is a big responsibility, and I think there should be somebody that comes in and checks the figures. I definitely do. The CHAIRMAN. You feel that it should be done by State authority? Mr. LUTES. It is closer. The CHAIRMAN. By any existing authority, like for instance, insurance commissions, or what? Mr. LUTES. There is nothing wrong with that. But somebody should check the figures. The CHAIRMAN. Is there any specific type of regulation that you have in mind, or is it just a general regulation of the handling of the welfare funds? The CHAIRMAN. Mr. Holt? Mr. HOLT. I will ask the committee counsel first. Are we going to have somebody from the company or somebody that knows a little more about the operation of this particular fund? Mr. MCCABE. We are going further into it. Mr. HOLT. I am interested in this employers council, Mr. Lutes. Once, again, I know you don't know the exact number of people that probably had a contract with the union. You said about 30 members belonged to the association of the employers? Mr. LUTES. There may be 35,000. Mr. HOLT. Thirty-five. Mr. LUTES. Possibly, one way or the other. Mr. HOLT. But the union had an agreement in effect with 200 or 220 different contracts; is that right? Mr. LUTES. I didn't swear to that. Mr. HOLT. It affected more than 30 places of business? Mr. LUTES. Yes; more than double. Mr. HOLT. Do you feel that the insurance plan, health, accident, and life, whatever it was, was fairly administered? You did not hear of any complaints or anything; or did you follow it? Mr. LUTES. I think it was very well administered. Mr. HOLT. It would be your impression that the employer should take more interest, the other employers should take an interest in the fund, or were these 30 people representative of all 200 or 220? Mr. LUTES. I think the other people should have a voice in it. They are paying just as much or more. Mr. HOLT. Were they invited to have a voice? Mr. LUTES. Under the existing contract, my impression is they can't. Mr. HOLT. My point being, were other employers asked to sit on this council? Mr. LUTES. They can join for a fee. Mr. HOLT. For a fee. They had to pay a fee to sit on this association? Mr. LUTES. To belong to the council the same as the union employee belongs to the union. it? Mr. HOLT. What did it cost to belong? Mr. LUTES. Four dollars per employee per year. Mr. HOLT. What benefits did you get out of that, belonging to Mr. LUTES. We got a separate contract, with a no-strike clause to run for 5 years at the starting of the contract. Mr. GRAHAM. Mr. Holt, they would also have the right to serve as trustee on the welfare fund. Mr. HOLT. If they are a member of the association. Mr. GRAHAM. Yes. But they are prohibited under the trust agreement unless they join the club. Mr. HOLT. Unless they join the club? Mr. GRAHAM. The association, yes. Mr. HOLT. Taking an individual restaurant, with the culinary workers, if you take an individual restaurant where the member does not belong to the association, the emuployees only representative on that would be the union, the union member, he would be administering the fund 100 percent, and it would be from a deduction of his salary, the employees' salary? Mr. GRAHAM. No; it is in lieu of salary. Mr. HoĻт. I guess I will ask any further questions later. Do you have a copy of this agreement, of this particular fund that I can look at? Mr. GRAHAM. Yes. Mr. HOLT. Thank you very much. Mr. LUCAS. Mr. Lutes, I take it you are a restaurant owner in San Bernardino? Mr. LUTES. Yes. Mr. LUCAS. How many employees have you? Mr. LUTES. Approximately 22. Mr. LUCAS. Are they all members of the union that you have been dealing with, or that you have been describing? Mr. LUTES. I believe all of them, yes, they have to be, but my janitor. Mr. LUCAS. Are they required to be members of the union in order to work with you, or for you? Mr. LUTES. Yes, sir. Mr. LUCAS. Before you can employ them, you inquire whether or not they are members of this union? Mr. LUTES. Well, that is pretty flexible. In other words, the union in San Bernardino cannot supply the restaurant operators with labor. So they give us a free hand to hire anyone we want. But after they are there a short period, they are required to join the union. Mr. LUCAS. A union-shop contract? Mr. LUTES. Yes, sir. Mr. LUCAS. What union is this? Mr. LUTES. It is the Culinary and Bartenders, local so and so. The number I don't know. Mr. LUCAS. Approximately how many members are represented by that union under this contract that we are talking about? Mr. LUTES. Do you mean the separate contract, the one we have? Mr. LUCAS. No; not your own business contract, but how many are represented under this overall insurance contract. Mr. LUTES. It is strictly a guess. You have a lady here who can give those figures. I am guessing 200 or 250. I think I heard some of the union members quote that figure. I am not positive. Mr. LUCAS. Do those union members contribute to this fund or are these funds paid by the employer? Mr. LUTES. By the employer only. Mr. Lucas. It is related to the amount of money that the employee earns; isn't it? Mr. LUTES. No, sir; it is strictly 30 cents a day whether they belong to the union or not. If they are on your payroll they are not eligible for this plan until after 30 days of work or belonging to the union. But the minute they go to work you pay 30 cents on that particular day, every day they work. Mr. LUCAS. As an example, you have 22 employees, you pay 30 cents a day times 22 employees? Mr. LUTES. That is correct. Mr. LUCAS. And that goes into this fund? Mr. LUTES. That is right. Mr. LUCAS. Mr. Lutes, if you weren't paying that 30 cents a day into that fund, would the employees be receiving it in salary? I Mr. LUTES. Í doubt it. Not under the existing contract. We are pretty well pushed as it is. Mr. LUCAS. Yet us go into this who was suing who. I did not quite understand it. You said that while you were serving as a trustee, someone brought suit against the association, of which you are a member. Who was it that brought suit, Mr. Lutes? Mr. LUTES. Well, it is a Chinese restaurant in Barstow. sorry I can't think of the name. It is a Chinese name. I am Mr. LUCAS. For what purpose? Why was the suit brought? Mr. LUTES. To start with, he did not-if you do not pay into this trust fund, you automatically make your contract with the union. It has to tie in. He wasn't paying into the trust fund, and I guess he evidently tore up the contract with the union. It was a long, drawn out affair. So when he found out something about the council and the union, that we got through discussing, this tie-in, he in turn sued the union and the council. I don't know. The attorneys What was the basis of the Mr. LUCAS. For what-for damages? Mr. LUTES. Possibly damages. handled it. I just know that he sued. Mr. LUCAS. Do you know, Counsel? suit? Simply because he withdrew from the association would not give him any authority to bring suit or his right thereunder. Well, I am told that will be developed later, Mr. Lutes. Have you given us the names of the trustees with whom you served? Mr. LUTES. You have them right there in that book. It is on the flyleaf, I believe. Mr. LUCAS. Are all these people whose names are on this flyleaf presently serving as trustees? Mr. LUTES. I believe there are 2, 2 from the operators. Mrs. Mapes is on there? Mr. LUCAS. Shall I read this? Mr. GRAHAM. Off the record. (Discussion off the record.) Mr. LUCAS. Well, Mr. Lutes, was there any other employer trustee who disagreed as did you at the time of the bringing of this suit? Mr. LUTES. There were probably in the discussing point, but when it came to a vote, as I recall, there wasn't any other vote except mine that didn't approve of it. Mr. Lucas. I think that is all, Mr. Chairman. The CHAIRMAN. Mr. Miller? |