US SUPREME COURT DECISIONS

The Fair Labor Standards Act, as enacted in 1938, required every employer to pay each of his employees "engaged in commerce or in the production of goods for commerce" certain minimum wages and overtime pay. The definition of employer excluded States and their political subdivisions. In 1961, the Act's coverage was extended beyond employees individually connected to interstate commerce to include all employees of certain "enterprises" engaged in commerce or production for commerce. In 1966, the Act was amended to cover certain hospitals, institutions, and schools, and to modify the definition of employer to remove the exemption of the States and their subdivisions with respect to employees of hospitals, institutions, and schools. Appellants, 28 States and a school district, sought to enjoin enforcement of the Act as it applies to schools and hospitals operated by the States or their subdivisions. They argued that the "enterprise concept" of coverage and the inclusion of state-operated hospitals and schools were beyond Congress' power under the Commerce Clause, that the remedial provisions of the Act, if applied to the States, would conflict with the Eleventh Amendment, and that school and hospital enterprises do not have the statutorily required relationship to interstate commerce. A three-judge district court declined to issue a declaratory judgment or an injunction, and concluded that the adoption of the "enterprise concept" and the extension of coverage to state institutions do not, on the face of the Act, exceed Congress' commerce power. That court declined to consider the Eleventh Amendment and statutory relationship contentions.

Held:

1. The "enterprise concept" of coverage is clearly within the power of Congress under the Commerce Clause. Pp. 392 U. S. 188-193.

(a) A rational basis for Congress' finding the scheme necessary to the protection of commerce was the logical inference that the pay and hours of employees of an interstate business who are not production workers, as well as those who are, affect an chanrobles.com-red

Page 392 U. S. 184

employer's competition with companies elsewhere. United States v. Darby, 312 U. S. 100, followed. Pp. 392 U. S. 188-191.

(b) Another rational basis is the promotion of labor peace by the regulation of wages and hours, subjects of frequent labor disputes. Pp. 392 U. S. 191-192.

(c) The class of employers subject to the Act, approved in Darby, supra, was not enlarged by the addition of the "enterprise concept." P. 392 U. S. 193.

2. The commerce power provides a constitutional basis for extension of the Act to state-operated schools and hospitals. Pp. 392 U. S. 193-199.

(a) Congress has "interfered with" state functions only to the extent that it subjects a State to the same minimum wage and overtime pay limitations as other employers whose activities affect commerce. Pp. 392 U. S. 193-194.

(b) Labor conditions in schools and hospitals can affect commerce, and are within the reach of the commerce power. Pp. 392 U. S. 194-195.

(c) Where a State is engaging in economic activities that are validly regulated by the Federal Government when engaged in by private persons, the State may be forced to conform its activities to federal regulation. United States v. California, 297 U. S. 175. Pp. 392 U. S. 195-199.

3. Questions concerning the States' sovereign immunity from suit and whether particular state-operated institutions have employees handling goods in commerce are reserved for appropriate concrete cases. Pp. 392 U. S. 199-201.

269 F.Supp. 826, affirmed. chanrobles.com-red

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