Fair Labor Standards Act of 1938

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Article I, Section 8, Clause 3:

[The Congress shall have Power . . . ] To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes; . . .

In 1938, Congress enacted the Fair Labor Standards Act (FLSA), which prohibited shipping goods in interstate commerce that were manufactured by workmen whose employment did not comply with prescribed wages and hours.1 The FLSA defined interstate commerce to mean “trade, commerce, transportation, transmission, or communication among the several States or from any State to any place outside thereof.” The FLSA further provided that “for the purposes of this act an employee shall be deemed to have been engaged in the production of goods [for interstate commerce] if such employee was employed . . . in any process or occupation directly essential to the production thereof in any State.” 2 Sustaining an indictment under the FLSA, Chief Justice Harlan Stone, writing for a unanimous Court, stated:

The motive and purpose of the present regulation are plainly to make effective the congressional conception of public policy that interstate commerce should not be made the instrument of competition in the distribution of goods produced under substandard labor conditions, which competition is injurious to the commerce and to the States from and to which the commerce flows.3

In support of the decision, the Court invoked Chief Justice John Marshall’s interpretations of the Necessary and Proper Clause in McCulloch v. Maryland and the Commerce Clause in Gibbons v. Ogden.4 The Court rejected objections purporting to be based on the Tenth Amendment, stating:

Our conclusion is unaffected by the Tenth Amendment which provides: ‘The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.’ The amendment states but a truism that all is retained which has not been surrendered. There is nothing in the history of its adoption to suggest that it was more than declaratory of the relationship between the national and State governments as it had been established by the Constitution before the amendment or that its purpose was other than to allay fears that the new National Government might seek to exercise powers not granted, and that the States might not be able to exercise fully their reserved powers.5

Subsequent decisions of the Court took a broad view of which employees should be covered by the FSLA,6 and in 1949, Congress narrowed the permissible range of coverage and disapproved some of the Court’s decisions.7 But, in 1961,8 with extensions in 1966,9 Congress expanded the FSLA’s coverage by several million persons, introducing the “enterprise” concept by which all employees in a business producing anything in commerce or affecting commerce were covered by the minimum wage-maximum hours standards.10 Sustaining the “enterprise concept” in Maryland v. Wirtz,11 Justice John Harlan, writing for a unanimous Court, held the FSLA’s expanded coverage legal based on two theories: (1) all of a business’s significant labor costs, not just those costs attributable to employees engaged in production in interstate commerce, contribute to the business’s competitive position in commerce; and (2) ending substandard labor conditions that affect all employees, not just those actually engaged in interstate commerce, facilitates labor peace, and smooth functioning of interstate commerce.12

1: The Fair Labor Standards Act of 1938, ch. 676, 52 Stat. 1060 et seq.
2: 52 Stat. 1060, as amended, 63 Stat. 910 (1949). The 1949 amendment substituted the phrase “in any process or occupation directly essential to the production thereof in any State” for the original phrase “in any process or occupation necessary to the production thereof in any State.” In Mitchell v. H.B. Zachry Co., 362 U.S. 310, 317 (1960), the Court noted that the change “manifests the view of Congress that on occasion courts . . . had found activities to be covered, which . . . [Congress now] deemed too remote from commerce or too incidental to it.” The 1961 amendments to the Act, 75 Stat. 65, departed from previous practices of extending coverage to employees individually connected to interstate commerce to cover all employees of any “enterprise” engaged in commerce or production of commerce; thus, there was an expansion of employees covered but not, of course, of employers, 29 U.S.C. §§ 201 et seq. See 29 U.S.C. §§ 203(r), 203(s), 206(a), 207(a).
3: United States v. Darby, 312 U.S. 100, 115 (1941).
4: Id. at 113, 114, 118.
5: Id. at 123–24.
6: E.g., Kirschbaum v. Walling, 316 U.S. 517 (1942) (operating and maintenance employees of building, part of which was rented to business producing goods for interstate commerce); Walton v. S. Package Corp., 320 U.S. 540 (1944) (night watchman in a plant the substantial portion of the production of which was shipped in interstate commerce); Armour & Co. v. Wantock, 323 U.S. 126 (1944) (employees on stand-by auxiliary fire-fighting service of an employer engaged in interstate commerce); Borden Co. v. Borella, 325 U.S. 679 (1945) (maintenance employees in building housing company’s central offices where management was located though the production of interstate commerce was elsewhere); Martino v. Mich. Window Cleaning Co., 327 U.S. 173 (1946) (employees of a window-cleaning company the principal business of which was performed on windows of industrial plants producing goods for interstate commerce); Mitchell v. Lublin, McGaughy & Assocs., 358 U.S. 207 (1959) (nonprofessional employees of architectural firm working on plans for construction of air bases, bus terminals, and radio facilities).
7: Cf. Mitchell v. H.B. Zachry Co., 362 U.S. 310, 316–18 (1960).
8: 75 Stat. 65.
9: 80 Stat. 830.
10: 29 U.S.C. §§ 203(r), 203(s).
11: 392 U.S. 183 (1968).
12: The Court overruled another aspect of this case in Nat’l League of Cities v. Usery, 426 U.S. 833 (1976), which the Court also overruled in Garcia v. San Antonio Metro. Transit Auth., 469 U.S. 528 (1985).