Walsh-Healey Public Contracts Act of 1936

One of the important economic recovery provisions of the National Recovery Act during the New Deal set minimum wages and maximum hours per week. Even before the 1935 Supreme Court decision overturning the NRA, Secretary of Labpr Frances Perkins had the Labor Department draft a bill setting wage and hour standards for work on federal contracts. With this bill and a related one up her sleeve, she told FDR not to worry about the NRA because she had two bills "locked in the lower left-hand drawer of my desk against an emergency." The one bill was introduced immediately after the Supreme court decision and was enacted a year later as the Walsh Healey Public Contracts Act, to be administered by the Department of Labor. For goods manufactured under government contracts worth at least $10,000, it required an 8-hour day and 40-hour week, it prescribed that the work be done under safe and healthful conditions, and it authorized the Secretary to set minimum wages based on locally prevailing rates.

The Walsh-Healey Act eventually had a major effect on wages and hours for contract workers, but its main immediate impact was to prepare the way for much broader wage and hour legislation. The second bill in Perkins' desk was a "fair labor standards" bill providing for the setting of minimum wages and maximum work hours for most industrial workers. FDR was fearful that the conservative Supreme Court would overturn such a far-reaching bill if enacted, as it had the NRA, and he embarked on his famous attempt to "pack" the Court. The Congress refused to go along, so he had to leave the fair labor standards bill to its fate. The more restricted Walsh-Healey Act had passed fairly easily, but Congress balked at this broader legislation. Both the AFL and the National Association of Manufacturers opposed it.

Finally, after numerous modifications were made and signs of broad public support emerged, the Fair Labor Standards Act (FLSA) became law in 1938. Administered by the Department of Labor, the Act set a minimum wage of 25 cents per hour and a maximum workweek of 40 hours (to be phased in by 1940) for most workers in manufacturing. The 40-hour week has not changed in 50 years, but the wage level has risen steadily and the coverage has broadened to include most salaried workers.

The Walsh-Healey Public Contracts Act, as amended (41 U.S.C. 35-45), was enacted ``to provide conditions for the purchase of supplies and the making of contracts by the United States.'' It is not an act of general applicability to industry. The Supreme Court has described it as an instruction by the Government to its agents who were selected and granted final authority to fix the terms and conditions under which the Government will permit goods to be sold to it. Its purpose, according to the Supreme Court ``was to impose obligations upon those favored with Government business and to obviate the possibility that any part of our tremendous national expenditures would go to forces tending to depress wages and purchasing power and offending fair social standards of employment.'' (``Perkins v. Lukens Steel Co.,'' 310 U.S. 113, 128 (1940); ``Endicott Johnson Corp. v. Perkins,'' 317 U.S. 501 (1943).)

To this end, the Act requires those who enter into contracts to perform Government work subject to its terms to adhere to specifically prescribed representations and stipulations as set forth in 41 CFR 50-201.1 pertaining to qualifications of contractors, minimum wages, overtime pay, safe and sanitary working conditions of workers employed on the contract, the use of child labor or convict labor on the contract work, and the enforcement of such provisions. Except as otherwise specifically provided, these representations and stipulations are required to be included in every contract ``for the manufacture or furnishing of materials, supplies, articles, and equipment in any amount exceeding $10,000'' which is made and entered into by an agency of the United States or other entity as designated in section 1 of the Act, hereinafter referred to as ``contracting agency.'' Contractors performing work subject to the Act thus ``enter into competition to obtain Government business on terms of which they are fairly forwarned by inclusion in the contract.'' (``Endicott Johnson Corp. v. Perkins, supra,'' 317 U.S. at 507.)

The Walsh-Healey Public Contracts Act requires payment of overtime compensation at a rate not less than 1 times the employee's basic rate for weekly overtime hours.

Source: http://www.dol.gov/dol/asp/public/programs/history/dolchp03.htm; http://www.dol.gov/dol/esa/public/regs/cfr/41cfr/toc_Chapt50/50_206.1.htm.