All amounts withheld as security for defaulting employees’ return travel were deposited weekly to a special bank account entiteld "Holmes & Narver, Inc., Contract No. AT-(29-1)-507, Trustee for Travel Fund Account.” These deposits through June 30, 1951, totaled $982,007.16. The corresponding credits were entered to the individual employee's Return Travel Fuad Account on the records. In the eveut of default om the part of the employee, the balance centained in his Return Travel Fund Account was applied to the costs incurred in connection with his return travel, by drawing a check on the Trustee for Travel Pund Account and depositing it to the Contract Advance Fund Account. At the inception-of the Contract, the maximum amount of return travel fund payroll deduction stipulated by Contract Appendix "A" and the Eaployment Agreement was $250.00. As directed by the AEC,~ this amount was increased to $450.00, and Appendix "A" of the Contract was revised accord- ingly. In accordance with later instructions the amount was increased to $40.00 on on-continent hires. The latter revision was incorporated in Revised Euployment Agreements, execution of which was required by all new hires on and after October 16, 1950. The revised Employment Agree- ments were also submitted to all Jobsite employees for execution at Jobd- site, bearing an effective date of February 5, 1951. Because of the in- clusion of provisions for increased hourly rates in the Revised Eaployment Agreements, most of the manual employees found the Revised Agree- ments acceptable and executed them, thus rescinding the Bupleyment Agreements previously signed. Inasgmich as the Revised Employment Agreenents contained essentially no additional benefits for non-manual employees, efforts to obtain their signatures were, in the main, unsuccessful. In compliance with specific written instructions of the ARC, H & N withheld payment of amounts due defaulting employees at time of termi- nation, in addition to and im excess of the $250.00 maximum Return Transpertation Fund prescribed by the original Eaployment Agreements, but not exceeding $450.00. Subsequently, claims were filed with the State of California Labor Commissioner by some of these defaulting employees, protesting withholding of wages and other amounts due them, in compliance with the Client's instructions requiring collection of $450.00 retura travel costs instead of $250.00. ‘The Labor Commissioner ruled, on Feb- ruary 1, 1951, File No. 63055-M, that in his opinion withholding of amounts in excess of $250.00 from defaulting employees whose executed Employment Agreement specified a maximum Return Travel Fund deduction of $250.00 was not permissible, As of June 30, 1991, H & NW had received a nuaber of communications from the Labor Commissioner pressing for information as to the disposition of amounts withheld in excess of the $250.00 prescribed in Employment Agreements as a maximum Return Travel Fund deduction. LagC letter 8D-6099, September 21, 1950 (HN-9811). 2t0c from Director of Procurement to H & N Controller, dated October 19, 1950, recording instructions received by the Director of Procurement and the Chief Fiscal Officer at a Los Alamos meeting on October 17, 1950. 11-33