Petitioner, a Maryland corporation having its principal office,
place of business and a manufacturing plant in Baltimore, is
engaged there in commercial and industrial wiring, electrical
contracting, and dealing in electrical motors and generators for
private, commercial, and industrial uses. It had approximately
1,000 active accounts, 99% of which were commercial or industrial
firms. Of its 33 larger and most active accounts, one was a
telephone company engaged in interstate commerce, four were engaged
in the repair of ships, tugs, barges, and other boats intended for
movement in interstate commerce, and (with one exception) the
remainder were engaged in the production of goods for commerce as
defined in § 3 of the Fair Labor Standards Act, shipping at least a
substantial portion of their total production out of Maryland. All
of petitioner's mechanics worked, in practically every work week,
for some of these 33 customers, either in the repair of their
motors or generators, the reconstruction of used motors sold to
them, or in performing electrical work at their respective
establishments. The Wage and our Administrator brought suit to
enjoin petitioner from violating the minimum wage, maximum hour,
and report-making provisions of the Fair Labor Standards Act.
Held:
1. Petitioner's employees are engaged "in the production of
goods for [interstate] commerce" so as to bring them within the
coverage of §§ 6 and 7 of the Fair Labor Standards Act. P.
326 U. S.
662.
2. They are not exempted from the Act on the ground that
petitioner is a "service establishment" within the meaning of §
13(a)(2). P.
326 U. S.
666.
3. Section 6(a) of the Act, when read with the definitions of
"commerce," "goods," and "produced" in § 3(b), (i), and (j),
requires every employer to pay not less than the required minimum
wages to each of his employees who is employed in any process or
occupation necessary to the production, in any State, of any part
or ingredient of any articles or subjects of trade, commerce or
transportation, of any character, for trade, commerce, or
transportation among the several States. P.
326 U. S.
663.
Page 326 U. S. 658
(a) This does not require the employee to be directly "engaged
in commerce" among the several States. P.
326 U. S.
663.
(b) It does not require the employee to be employed in the
production of an article which itself becomes a subject of commerce
or transportation among the several States. P.
326 U. S.
663.
(c) It is enough that the employee be employed, for example, in
an occupation which is necessary to the production of a part of any
other "articles or subjects of commerce of any character" which are
produced for trade, commerce, or transportation among the several
States. P.
326 U. S.
663.
(d) It does not require an employee to be employed exclusively
in the specified occupation. P.
326 U. S.
664.
(e) It does not require the occupation in which he is employed
to be indispensable to the production under consideration. P.
326 U. S.
664.
(f) It is enough that his occupation be "necessary to the
production." P.
326 U. S.
664.
(g) Even though there may be alternative occupations that could
be substituted for it, it is enough that the one at issue is needed
in such production and would, if omitted, handicap the production.
P.
326 U. S.
664.
4. The work of petitioner's employees has such a close and
immediate tie with the process of production for commerce, and was
such an essential part of it, that the employees are to be regarded
as engaged in an occupation "necessary to the production of goods
for commerce."
Kirschbaum Co. v. Walling, 316 U.
S. 517. P.
326 U. S.
665.
5. When read in the light of the declared purpose of the Act,
its legislative history, and its administrative interpretation, §
13(a)(2), exempting employees "engaged in any retail or service
establishment the greater part of whose selling or servicing is in
intrastate commerce," does not exempt employees "engaged in the
production of goods for [interstate] commerce." P.
326 U. S.
666.
(a) When so read, it exempts employees of only such retail or
service establishments as are comparable to local merchants, corner
grocers, or filling station operators who sell to or serve ultimate
consumers. P.
326 U. S.
666.
(b) Its origin has nothing to do with establishments "producing
goods for [interstate] commerce." P.
326 U.S. 667.
6. To the extent that sales or services are necessary for the
production of goods for interstate commerce, they generally are not
sales or services to an ultimate consumer for his personal use,
and, accordingly, are neither retail sales nor services of a
comparable character within the meaning of § 13(a)(2) . P.
326 U.S. 667.
Page 326 U. S. 659
7. To fail to cover in this Act the multitude of employees who
are engaged in establishments which supply the materials and
services currently needed for the maintenance of productive
machinery used by those who produce goods for interstate commerce
would take the heart out of the Act. P.
326 U. S.
668.
8. Its primary purpose is not so much to regulate interstate
commerce, as such, as it is to prohibit the shipment in interstate
commerce of goods produced under substandard labor conditions, and
thus to raise living standards. P.
326 U. S.
669.
9. This purpose will fail of realization unless the Act has
sufficiently broad coverage to eliminate in large measure from
interstate commerce the competitive advantage accruing from savings
in costs based upon substandard labor conditions. P.
326 U. S.
670.
10. In the legislative history of the Act, there never was an
intent expressed to exempt retailers other than local merchants of
the type dealing with the ultimate consumer. P.
326 U. S.
671.
11. The debates in Congress show an intent to restrict the word
"retail" to such transactions with ultimate consumers as are
commonly carried on at local dry goods, butchering, or grocery
stores. P.
326 U. S.
672.
12. This is confirmed by the general usage of the word "retail,"
which makes a distinction not merely between the size and volume of
sales, but also between types of purchasers. It relates to sales to
ultimate consumers, as distinguished from those who buy to resell
or to use for business needs. P.
326 U. S.
673.
13. Government usage makes the same distinction on the basis of
the use for which the goods are purchased. P.
326 U. S.
674.
14. The word "service" is associated with the word "retail" in
this Act so as to restrict its meaning similarly to services to
ultimate users of them for personal, rather than commercial,
purposes. P.
326 U. S.
675.
15. This interpretation of the term "retail and service
establishments" is reinforced by the administrative interpretations
of the Wage and Hour Administrator, which are entitled to great
weight. P.
326 U. S.
676.
16. Although the motors sold by petitioner were not purchased by
its customers for resale or to be processed for resale, and
although they were to be used and probably ultimately "consumed" in
the hands of petitioner's customers, they remained actively in use
in the great field of the production of goods for interstate
commerce to which the Act is directed. P.
326 U. S.
678.
Page 326 U. S. 660
17. The record establishes the character of petitioner's
customers as "commercial and industrial," and not "retail,"
customers in the same sense as is the customer of the local
merchant, grocer, or filling station operator who buys for his own
personal consumption. P.
326 U. S.
678.
18. The Act is concerned with goods in the stream of commerce,
but not with those in "the actual physical possession of the
ultimate consumer thereof other than a producer, manufacturer, or
processor thereof." P.
326 U. S.
678.
146 F.2d 745 affirmed.
Certiorari, 325 U.S. 849, to review reversal of an order, 54 F.
Supp. 733, dismissing a complaint of the Administrator of the Wage
and Hour Division of the Department of Labor seeking to enjoin
violations of the Fair Labor Standards Act of 1938.
MR. JUSTICE BURTON delivered the opinion of the Court.
The questions presented are (1) whether petitioner's employees
are engaged "in the production of goods for commerce" so as to
bring them within the coverage of §§ 6 and 7 of the Fair Labor
Standards Act of 1938 (52 Stat. 1060, 1062, 1063, 29 U.S.C. §§ 206
and 207), and (2), if so, whether they are exempted from the Act
because "engaged in any retail or service establishment the greater
part of whose selling or servicing is in intrastate commerce"
within the meaning of § 13(a)(2), 29 U.S.C. § 213(a)(2).
Respondent sought a permanent injunction in the United States
District Court restraining petitioner from continued violation of
the minimum wage, maximum hour, and report-making provisions of the
Act. 29 U.S.C.
Page 326 U. S. 661
§§ 206, 207, 211(c). As to the coverage by the Act, the District
Court said that "the view of the Administrator should not be
accepted," but it rested its dismissal of the complaint upon the
ground that the petitioner was exempted under § 13(a)(2). 54 F.
Supp. 733, 736. The Circuit Court of Appeals, on the other hand,
held that petitioner's employees "were engaged in the production of
goods for commerce," and that the petitioner was not a "retail or
service establishment" within the exemption prescribed in §
13(a)(2). It accordingly reversed the order of dismissal and
remanded the cause for further proceedings in accordance with its
opinion. 146 F.2d 745, 746. We granted certiorari especially
because of the divergence of opinions among the Circuit Courts of
Appeals as to the interpretation of § 13(a)(2). [
Footnote 1]
Most of the relevant facts were stipulated. Petitioner is a
Maryland corporation "having its principal office, place of
business and a manufacturing plant" in Baltimore. It is there
engaged in "commercial and industrial wiring, electrical
contracting, and dealing in electrical motors and generators, for
private, commercial, and industrial uses."
Petitioner had "approximately 1,000 active accounts . . . 99
percent of which are commercial or industrial firms." Its "larger
and most active accounts" were 33 in number. Of such 33 customers,
one was a telephone company "engaged in interstate commerce;" four
were "engaged in the repair of ships, tugs, barges, and other boats
which were intended for movement in interstate commerce,"
Page 326 U. S. 662
and
"the remaining companies on said list, with the exclusion of the
American Ice Company [a small account in the period stipulated to
be representative], were engaged in the production of goods for
commerce as defined in Section 3 of the Fair Labor Standards Act of
1938, shipping at least a substantial portion of their total
production to points outside the Maryland."
During the period stipulated,
"every mechanic of the defendant [petitioner] worked, in
practically every workweek, for some of the said [33] customers,
either in the repair of their motors, generators, the
reconstruction of used motors sold to them or in performing
electrical work at their respective establishments."
To carry on its entire business, the petitioner had 36
employees, consisting of a foreman, 4 troubleshooters, 14
mechanics, 11 helpers, and 6 office employees. No claim of coverage
is made on the ground that any of the petitioner's employees were
engaged "in [interstate commerce]," but only that they were engaged
"in production of goods for [interstate] commerce."
I
As to coverage, the Act is unambiguous, and the petitioner's
employees come squarely within it as employees "engaged . . . in
the production of goods for commerce." This turns on §§ 6(a), 7(a),
3(b), 3(i), and 3(j). Section 6(a) provides:
"Every employer shall pay to each of his employees who is
engaged in commerce of
in the production of goods for
commerce wages at the following rates. . . ."
(Italics supplied.) Section 7(a) likewise provides:
"No employer shall, except as otherwise provided in this
section, employ any of his employees who is engaged in commerce or
in the production of goods for commerce"
at wages less than 1 1/2 times the regular rate, where an
employee is employed for more than the maximum number of hours
prescribed. (Italics supplied.)
Page 326 U. S. 663
Section 3 includes the following:
"(b)
'Commerce' means trade, commerce, transportation,
transmission, or communication
among the several States or
from any State to any place outside thereof."
"
* * * *"
"(i)
'Goods' means goods (including ships and marine
equipment), wares, products, commodities, merchandise, or
articles or subjects of commerce of any character, or any part
or ingredient thereof, but does not include goods after their
delivery into the actual physical possession of the ultimate
consumer thereof other than a producer, manufacture, or processor
thereof."
"(j) 'Produced' means produced, manufactured, mined, handled, or
in any other manner worked on in any State, and, for the purposes
of this Act,
an employee shall be deemed to have been engaged
in the production of goods if such employee was
employed in producing, manufacturing, mining, handling,
transporting, or in any other manner working on such goods, or
in any process or occupation necessary to the production
thereof, in any State."
(Italics supplied.)
Putting these definitions together in their own terms, § 6(a),
as applied to the facts of this case, provides, in effect, that
"Every employer shall pay [not less than the required minimum
wages] to each of his employees who is employed in any process or
occupation necessary to the production, in any state, of any part
or ingredient of any articles or subjects of trade, commerce or
transportation, of any character, for trade, commerce or
transportation among the several states."
This does
not require the employee to be directly
"engaged in commerce" among the several states. This does
not require the employee to be employed even in the
production of an article which
itself becomes the subject
of commerce or transportation among the several states. It is
enough that the employee be employed, for example, in an occupation
which is necessary
Page 326 U. S. 664
to the production of a part of any other "articles or subjects
of commerce of any character" which are produced for trade,
commerce, or transportation among the several states. This does
not require an employee to be employed exclusively in the
specified occupation. This does
not require that the
occupation in which he is employed by
indispensable to the
production under consideration. It is enough that his occupation be
"
necessary to the production." There may be alternative
occupations that could be substituted for it, but it is enough that
the one at issue is needed in such production, and would, if
omitted, handicap the production.
The
necessity to the petitioner's customers, in their
productive work, of the sales made and the services supplied to
them by the petitioner's employees is the foundation of
petitioner's business. The essential need for motors and wiring in
the conduct of electrically operated productive processes of
manufacture is beyond question. When commercial or industrial
producers, such as the petitioner's customers, use electric motors
in the production of goods for interstate commerce, services such
as those of petitioner's employees are necessary to the continuity
of such production. Such sales and services must be immediately
available to petitioner's customers, or their production will stop.
If not supplied to the customers by employees of the petitioner,
such customers would have to employ comparable employees of their
own, or of other contractors. [
Footnote 2]
Page 326 U. S. 665
The work of petitioner's employees has
"such a close and immediate tie with the process of production
for commerce, and was therefore so much an essential part of it,
that the employees are to be regarded as engaged in an occupation
'necessary to the production of goods for commerce.'"
"
Kirschbaum Co. v. Walling, 316 U. S.
517,
316 U. S. 525-526. The
relation of petitioner's employees to the production of goods for
interstate commerce by petitioner's customers is fully as close and
'necessary' as was that of the loft building watchmen and porters
to the petitioner's tenants in
Kirschbaum Co. v. Walling,
supra; the manufacturing plant watchman of the respondent in
Walton v. Southern Package Corp., 320 U. S.
540; or the fire guards subject to call in
Armour
& Co. v. Wantock, 323 U. S. 126. In the latter
case, this Court said (p.
323 U. S. 130):"
". . . no hard and fast rule may be transposed from one industry
to another to say what is necessary in 'the production of goods.'
What is practically necessary to it will depend on its environment
and position. . . . What is required is a practical judgment as to
whether the particular employer actually operates the work as part
of an integrated effort for the production of goods."
The foregoing conclusions follow so clearly from the language of
the statute as to make unnecessary a discussion of the declared
purpose or the legislative history of the Act to support them.
[
Footnote 3]
Page 326 U. S. 666
II
The second question is whether or not petitioner's employees are
exempted from the Act on the ground that petitioner is a "service
establishment" within the meaning of § 13(a)(2). [
Footnote 4] The language of that clause is
capable of two interpretations. If read in a detached and broad
sense, it can be made to exempt from the Act the employees of the
petitioner, together with hundreds of thousands of other employees
like them, to the serious detriment of the effectiveness of the
Act. However, if read in connection with the declared purpose of
the Act and in the light of its legislative history and
administrative interpretation, the clause does not reach employees
"engaged . . . in the production of goods for commerce," as were
those in this case. When so read, the exemption reaches employees
of only such retail or service establishments as are comparable to
the local merchant, corner grocer, or filling station operator who
sells to or serves ultimate consumers who are at the end of, or
beyond, that "flow of goods in commerce" which it is the purpose of
the Act to reach.
See § 2,
infra. Without this
clause, such local establishments might find themselves technically
covered by the Act not because they were "producing goods for
[interstate] commerce," but because, for example, they were
retailing milk near a state line and therefore might be regarded as
actually in interstate commerce when delivering retail sales of
milk to local customers. all of whom were ultimate consumers of it
for their personal use, but a small proportion of whom lived across
the state line from the milk dealer.
Walling
v.
Page 326 U. S. 667
Jacksonville Paper Co., 317 U.
S. 564,
317 U. S. 571;
A. H. Phillips v. Walling, 324 U.
S. 490,
324 U. S. 497.
Similarly, it was felt that, without this exemption clause, the
employees of a local merchant who purchased his goods from outside
his state but retailed them all within his state to ultimate
consumers across his counter, might nevertheless technically be
covered by the Act as being actually "in [interstate] commerce"
because of his purchases, although his sales all might be at
"retail" and beyond the end of the "flow of goods in commerce." 83
Cong.Rec. 7393, 7394, 7436-7438. The origin of this clause, §
13(a)(2), had nothing to do with establishments "producing goods
for [interstate] commerce."
It is rare, if not impossible, for an employee who is engaged in
an occupation necessary to the production of goods for interstate
commerce to be said to be at the same time an employee engaged in a
retail or service establishment whose selling and servicing is
confined to ultimate consumers. These employments are largely
mutually exclusive. To the extent that sales or services are
necessary for the production of goods for interstate commerce, they
generally are, by that hypothesis, not sales or services to an
ultimate consumer for his personal use, and, accordingly, are
neither "retail" sales nor services of a comparable character
within the meaning of § 13(a)(2).
The logic of this result is as clear as the declared purpose,
legislative history, and administrative practice which combine to
produce it.
The purposes of the Act are declared as follows in § 2:
"(a) The Congress hereby finds that
the existence, in
industries engaged in commerce or in the production of goods for
commerce, of labor conditions detrimental to the maintenance of the
minimum standard of living necessary for health, efficiency,
and general wellbeing of workers (1) causes commerce and the
channels and instrumentalities of commerce to be used to spread and
perpetuate
Page 326 U. S. 668
such labor conditions among the workers of the several States;
(2)
burdens commerce and the free flow of goods in
commerce; (3)
constitutes an unfair method of competition
in commerce; (4) leads to labor disputes burdening and
obstructing commerce and the free flow of goods in commerce, and
(5) interferes with the orderly and fair marketing of goods in
commerce."
"(b) It is hereby declared to be the
policy of this Act,
through the exercise by Congress of its power to regulate
commerce among the several States, to correct, and as rapidly
as practicable
to eliminate, the conditions above referred to
in such industries without substantially curtailing employment
or earning power."
52 Stat. 1060, 29 U.S.C. § 202. (Italics supplied.)
To fail to cover in this Act the multitude of employees who are
engaged in establishments like that of the petitioner and which
supply the materials and services currently needed for the
maintenance of productive machinery used by those who produce goods
for interstate commerce would take the heart out of this Act.
Savings resulting from substandard labor conditions would be
reflected directly into competitive costs. This would weaken the
governmental mechanism for sustaining "the minimum standard of
living necessary for the health, efficiency, and general wellbeing
of workers" referred to as the purpose of the Act. [
Footnote 5]
Page 326 U. S. 669
The primary purpose of the Act is not so much to regulate
interstate commerce as such as it is, through the exercise of
legislative power, to prohibit the shipment of goods in interstate
commerce if they are produced under substandard labor conditions.
Such a prohibition is an appropriate exercise of the power of
Congress over interstate commerce.
United States v. Darby,
312 U. S. 100,
312 U. S. 115;
United States v. Carolene Products Co., 304 U.
S. 144,
304 U. S. 147.
This Act seeks to eliminate substandard labor
Page 326 U. S. 670
conditions, including child labor, on a wide scale throughout
the nation. The purpose is to raise living standards. This purpose
will fail of realization unless the Act has sufficiently broad
coverage to eliminate in large measure from interstate commerce the
competitive advantage accruing from savings in costs based upon
substandard labor conditions. Otherwise, the Act will be
ineffective, and will penalize those who practice fair labor
standards as against those who do not.
The original Bill provided for a labor standards board which was
given broad authority to issue regulations and orders to carry out
the provisions of the Act, including authority to determine some
questions of coverage. It listed no specific exemptions such as are
now contained in § 13. In the joint hearings on this Bill (Joint
Hearings, 75th Cong., 1st Sess., on S. 2475 and H.R. 7200, pp.
1-89,
see especially pp. 24-25, 24-29, 35
et
seq.), the Chairman of the Senate Committee on Education and
Labor, asked the Assistant Attorney General (p. 35) --
"Would you explain under just what circumstances, and under what
circumstances only, it would be possible for the regulation of
retail establishments and small business enterprises to come under
this bill?"
to which he replied --
"It was not intended by this bill to apply generally to
retailers or apply to the service trades, such as the filling
station attendant, and the pants presser and small business
generally."
"
* * * *"
"Practically, the situation in which a local merchant might be
affected would be if he were moving his goods in the course of
delivery across the State line to a substantial extent, so that he
were engaging in interstate commerce; but, generally speaking, the
policy of the bill is not to include the service trades and small
businesses and the retailing enterprises. "
Page 326 U. S. 671
Section 6(a) of the original bill proposed to exempt the
employees of any employer employing less than a fixed minimum
number of employees except in those circumstances where the Labor
Standards Board found that the maintenance of appropriate fair
labor standards by even such a class of employers was necessary or
appropriate in order to carry out the purposes, or prevent the
circumvention, of any provision of the Act. The requirement of a
minimum size for an included establishment, and the provisions for
the Board and its discretionary power, were later eliminated, but
the purpose of all of these provisions is served to a substantial
degree by the insertion of § 13 in their place.
While its language and coverage were changed in details, the
Bill did not depart substantially from its original purpose. This
purpose remains the key to the meaning of the words defining its
coverage, and also to those defining exemption from its coverage.
There never was an intent expressed to exempt retailers other than
the local merchants of the type dealing with the ultimate consumer.
Section 13(a)(2) clarified the exemption of such of these as were
near state lines and of local merchants whose purchases might be
interstate, although the greater part of their sales were
intrastate. [
Footnote 6]
Page 326 U. S. 672
In the Bill as reported to the House of Representatives, April
21, 1938, the declaration of purposes referred to "substandard
labor conditions in occupations in commerce, in the production of
goods for commerce
or otherwise affecting commerce."
[
Footnote 7] (Italics
supplied.) The breadth of the phrase "affecting commerce" was so
uncertain and difficult of definition that it was at first proposed
in the Bill to grant to a labor standards board, and later to the
Secretary of Labor, authority to determine what should be
considered as actually "affecting commerce" within the meaning of
the Act. This proposal proved unsatisfactory and Congress finally
chose to forego the exercise of its full constitutional power and
eliminated from the Act the clause "affecting commerce." The
remaining coverage relates only to employees (1) "in [interstate]
commerce" -- from whom § 13(a)(2) exempts employees of retail and
service establishments the greater part of whose selling or
servicing is in intrastate commerce -- and to those (2) "in
production of goods for [interstate] commerce." The debates in
Congress show an intent to restrict the word "retail" to such
transactions with ultimate consumers as are commonly carried on at
local dry goods, butchering, or grocery stores. The words "service
establishments" and "servicing," however, were introduced in the
final Conference Report, and were not discussed on the floor.
[
Footnote 8] 83 Cong.Rec. 9161,
9249.
Page 326 U. S. 673
Returning to the text of the Act and to its authoritative
administrative interpretation, further confirmation is apparent. In
general usage the noun "retail" means "The sale of commodities in
small quantities or parcels;-opposed to
wholesale." The
verb "retail" means "To sell in small quantities, as by the single
yard, pound, gallon, etc.; to sell directly to the consumer; as, to
retail cloth or groceries." Webster's New International Dictionary,
Unabridged (2d ed., 1938).
In the suggested use of the word "retail", as opposed to the
word "wholesale," a distinction appears not merely between the size
and volume of the sales but between types of purchasers. For
example --
Page 326 U. S. 674
"Wholesaling includes all marketing transactions in which the
purchaser is actuated solely by a profit or business motive in
making the purchase."
"Retailing includes all marketing transactions in which the
purchaser is actuated solely by a desire to satisfy his own
personal wants or those of his family or friends through the
personal use of the commodity or service purchased."
(Beckman and Engle in Wholesaling Principles and Practice (1937)
p. 25.) Similarly, the Encyclopedia of Social Sciences states that
"The distinguishing feature of the retail trade . . . consists in
selling merchandise to ultimate consumers" (Vol. 13, p. 346),
whereas wholesaling is said to cover sales
"to a retailer, a wholesaler, or an industrial consumer so long
as the purpose of the customer in buying such goods is to resell
them in one form or another or to use them for business needs as
supplies or equipment."
(Vol. 15, p. 411.)
Governmental usage makes the same distinction on the basis of
the use for which the goods are purchased. The Bureau of the Census
states in its definition of "wholesale" that,
"in general, the distinguishing characteristic is that goods
sold at wholesale are to be used for business purposes (such as
materials for further processing and fabrication, merchandise for
resale unchanged, etc.), rather than for personal or household
consumption."
U.S. Census of Business, 1939, Instructions to Enumerators For
Business and Manufactures, p. 18; also Vol. 1, Retail Trade, p. 1;
Vol. II, Wholesale Trade, p. 1. It classifies as "wholesale sales,"
sales of goods or merchandise "to trading establishments of all
kinds, to institutions, industrial, commercial, and professional
users, and sales to governmental bodies." (
Ibid. ) The
Bureau of the Budget in its Standard Industrial Classification
Manual, likewise classifies "wholesale trade" to include
"all establishments or places of business engaged primarily in
selling merchandise to retailers, to industrial or commercial
Page 326 U. S. 675
users, or to other wholesalers. . . ."
Vol. II -- Nonmanufacturing Industries, 1942, p. 35. It defines
"retail trade" to include "establishments engaged in selling
merchandise for personal or household consumption and rendering
services incidental to the sales of goods." (
Ibid.)
Similarly the Social Security Board, in its Industrial
Classification Code, Vol. I, Description of Industries, 1942, pp.
99, 100, prepared for use of the Board and State agencies
administering employment security legislation, distinguishes
between wholesale and retail establishments on the basis of whether
the goods they sell are to be used for business purposes or for
personal or household purposes.
The word "retail" because of its ready contrast with "wholesale"
is generally more restrictive than the word "service." The two,
however, are used so closely together in this statute as to require
them to be interpreted similarly. This makes it appropriate to
restrict the broader meaning of "service" to a meaning comparable
to that given the narrower term "retail." The words are put on a
like level especially by their use in the alternative with the
single word "establishment" in the phrase "any
retail or
service establishment the greater part of
whose selling or
servicing is in intrastate commerce." (Italics supplied.)
Accordingly, in proportion as the meaning of the word "retail" is
restricted to sales made in small quantities to ultimate consumers
to meet personal, rather than commercial and industrial uses of
those articles, so it is correspondingly appropriate to restrict
the word "service" to services to ultimate users of them for
personal, rather than commercial, purposes. This is supported by
judicial interpretation of the clause. [
Footnote 9]
Page 326 U. S. 676
The administrative interpretation by the Administrator of the
Wage and Hour Division of the terms "retail and service
establishments," "retail sales," and "services," as used in this
connection, reinforces the interpretations above stated, [
Footnote 10] and this Court, in
speaking of interpretations of this Act by the Wage and Hour
Division, has said: "In any case, such interpretations are entitled
to great weight."
Page 326 U. S. 677
United States v. American Trucking Assn., 310 U.
S. 534,
310 U. S. 549.
See also Skidmore v. Swift & Co., 323 U.
S. 134,
323 U. S. 140.
The Administrator classifies as "nonretail" many types of sales
closely comparable to those made by the petitioner in this case, of
motors, generators and similar equipment to commercial and
industrial customers for their use in producing goods for
interstate commerce. [
Footnote
11]
Page 326 U. S. 678
Although, in this case, the motors sold by the petitioner were
not purchased by its customers for resale or to be processed for
resale, and although they were to be used and probably ultimately
to be "consumed" in the hands of the petitioner's customers, these
motors remained actively in use in the production of the "flow of
goods in commerce." It is to this great field of the production of
goods for interstate commerce that the Act is directed.
The record establishes the "commercial and industrial" character
of the petitioner's customers. The petitioner's circular advertises
its business as that of "electrical engineering, motor dealers,
commercial and industrial wiring." (Italics supplied.) The
circular offers "service for
all types of commercial and
industrial wiring." (Italics supplied.) The stipulation filed
by the petitioner shows that 99% of its "active accounts as
reflected in its Accounts Receivable Ledger . . . are
commercial or industrial firms." (Italics supplied.) These
are not "retail" customers in the same sense as is the customer of
the local merchant, local grocer, or filling station operator who
buys for his own personal consumption. The Fair Labor Standards Act
is concerned with goods in the stream of commerce, but not with
those in "the actual physical possession of the ultimate consumer
thereof other than a producer, manufacturer, or processor thereof."
See § 3(i),
supra.
For these reasons, the employees of the petitioner were properly
held to be engaged in the production of goods for interstate
commerce under the coverage of the Fair Labor Standards Act, and
were not taken out of that coverage by the exemption stated in §
13(a)(2). The judgment of the Circuit Court of Appeals accordingly
is
Affirmed.
MR. JUSTICE JACKSON took no part in the consideration or
decision of this case.
[
Footnote 1]
Compare Fleming v. A. B. Kirschbaum Co., 124 F.2d 567,
572, and
Fleming v. Arsenal Bldg. Corp., 125 F.2d 278,
280,
both aff'd sub nom. Kirschbaum Co. v. Walling,
316 U. S. 517,
without disposing of the question now presented;
Guess v.
Montague, 140 F.2d 500;
Bracey v. Luray, 138 F.2d 8;
with Lonas v. National Linen Corporation, 136 F.2d 433,
cert. denied, 320 U.S. 785;
Martino v. Michigan Window
Cleaning Co., 145 F.2d 163,
cert. granted, 325 U.S.
849.
[
Footnote 2]
The dependence of the commercial and industrial customers of the
petitioner upon such sales and services is well presented in the
petitioner's advertising circular:
"It costs more to operate a faulty motor than to buy a new one.
But it isn't necessary to buy a new motor. We'll recondition your
present motors to give you the same service and satisfaction as new
ones. And we'll save you 25% to 50% on new motor costs. . . ."
"When a motor suddenly goes dead or lags, when trouble in
electrical equipment arises, you need service and you need it
quick! Every second of delay means more dollars lost. How well do
we appreciate what speed means to our patrons, as well as
dependable workmanship . . ."
"No job is too small or too large to handle promptly. Temporary
replacements can be made immediately from our stocks. No charge is
made for equipment that is loaned while repairs are being
made."
[
Footnote 3]
The decision does not rest on the small quantities of scrap
annually sold, melted down, and shipped in interstate commerce, nor
on the small amount of work performed by the petitioner in Maryland
directly for customers outside of the State, nor upon the small
numbers of sales of rebuilt motors to customers outside of the
State. The result reached makes it unnecessary to consider whether
any or all of the petitioner's employees were engaged "in
[interstate] commerce," as distinguished from the "production of
goods for [interstate] commerce."
[
Footnote 4]
"Sec. 13. (a) The provisions of sections 6 and 7 shall not apply
with respect to . . . (2) any employee engaged in
any retail or
service establishment the greater part of whose selling or
servicing is in intrastate commerce. . . ."
52 Stat. 1060, 1067, 29 U.S.C. § 213(a)(2). (Italics
supplied.)
[
Footnote 5]
Phillips Co. v. Walling, 324 U.
S. 490,
324 U. S. 493.
The Bill was introduced May 24, 1937, as S. 2475 and H.R. 7200,
accompanied by a Presidential message. The sponsor of the Bill
agreed that the Bill was "intended to carry out the suggestions
made by the President in his message." 81 Cong.Rec. 4960, 4961. The
President said,
"to protect the fundamental interests of free labor and a free
people, we propose that only goods which have been produced under
conditions which meet the minimum standards of free labor shall be
admitted to interstate commerce. Goods produced under conditions
which do not meet rudimentary standards of decency should be
contraband, and ought not to be allowed to pollute the channels of
interstate trade."
Id. at 4961. The President emphasized his purpose to
follow the reasoning of Mr. Justice Holmes' dissenting opinion in
the 5 to 4 decision in
Hammer v. Dagenhart, 247 U.
S. 251,
247 U. S. 277.
This Court has now overruled that decision and unanimously upheld
the constitutionality of the Fair Labor Standards Act of 1938.
United States v. Darby, 312 U. S. 100,
312 U. S.
115-117. The Bill became known as the "Wage and Hour
Bill." Later it received its official title of the "Fair Labor
Standards Act of 1938." The respective Bills were referred to the
Committee on Education and Labor in the Senate and the Committee on
Labor in the House. Joint hearings were had before these Committees
June 2-5, 7-15, 21 and 22, 1937. Hearings on S. 2475 and H.R. 7200,
75th Cong., 1st Sess. It was reported to the Senate July 8, 1937,
with amendments. Sen.Rep. No. 884, 75th Cong., 1st Sess. After full
discussion, it was passed by the Senate July 31, 1937, with
amendments. 81 Cong.Rec. 7957. In that form, it was referred to the
Committee on Labor of the House, and was reported out August 6,
1937 (H.Rep. No. 1452, 75th Cong., 1st Sess.), without significant
changes as to coverage or exemptions. After debate, it was
recommitted to the Committee on Labor December 17, 1937 (82
Cong.Rec. 1835), including particularly the substitution of a
single Administrator in place of the Fair Labor Standards Board
proposed in the original Bill. It was again reported favorably by
the House Committee on Labor April 21, 1938, with amendments.
H.Rep. No. 2182, 75th Cong., 3d Sess. After debate, it was passed
by the House May 24, 1938. 83 Cong.Rec. 7449. It went to conference
between the two Houses, and was reported out of conference with
several amendments in substantially its present form, and the
conference reports were adopted in both Houses June 14, 1938. 83
Cong.Rec. 9158, 9246. It was approved by the President June 25,
1938. The questions of coverage and exemption are closely related
to each other in the discussion in Congress and in the amendments
adopted.
[
Footnote 6]
The original Senate Committee report said (Sen.Sep. No. 844,
75th Cong., 1st Sess., p. 5):
"The bill carefully excludes from its scope business in the
several States that is of a purely local nature. It applies only to
the industrial and business activities of the Nation insofar as
they utilize the channels of interstate commerce, or seriously and
substantially burden or harass such commerce. It leaves to State
and local communities their own responsibilities concerning those
local service and other business trades that do not substantially
influence the stream of interstate commerce. For example, the
policy in this regard is such that it is not even intended to
include in its scope those purely local and small business
establishments that happen to lie near State lines, and, solely on
account of such location, actually serve a wholly local community
trade within two States."
See also note 8
infra; Walling v. Jacksonville Paper Co., 317 U.
S. 564,
317 U. S. 571,
and
Phillips Co. v. Walling, 324 U.
S. 490,
324 U. S.
497.
[
Footnote 7]
Section 2(a), S. 2475 accompanying report No. 2182 on Union
Calendar No. 804 in the House of Representatives, 75th Cong., 3d
Sess.
[
Footnote 8]
See Debates in House of Representatives, 83 Cong.Rec.
7393-7394, 7436-7438. It is here that § 13(a)(2) had its origin in
an amendment presented by Representative Celler and accepted by
Chairman Norton of the House Committee on Labor. It provided for
the insertion of the words "but no such order shall be applicable
to any retail industry, the greater part of whose sales is in
intrastate commerce."
It was intended "to eliminate retailing" and to prevent the
classification of employees of retail establishments as employees
engaged in interstate commerce because of either purchases or sales
made by such employers across state lines. Representative Celler
said (83 Cong.Rec. 7438):
"The courts will look to the debates in this House for what is
meant by these words. . . . If you want to eliminate retailing, you
should say so in clear-cut language, and this amendment which I
offer indicates in the clearest way that retailing is exempted. . .
. Accept it and then retail dry goods, retail butchering, grocers,
retail clothing stores, department stores will all be exempt."
Representative Norton replied:
". . . in view of the great misunderstanding there must be about
this retailing feature of the bill, the committee will accept the
amendment. There has been a great deal of doubt as to the
understanding of that particular section, and I think this
amendment will not weaken our bill, but will in fact strengthen
it."
The amendment thereupon was agreed to. (Ayes, 145 -- Noes,
56.)
Representative Johnson of Oklahoma, in withdrawing an amendment
which would have expressly stricken out interstate purchases as a
basis for bringing within the Act employees of an industry making
such purchases, then said:
". . . the amendment . . . offered by the gentleman from New
York [Mr. Celler], which amendment has been approved by this body,
is to protect the little corner store, filling station, and other
retailers who purchase a substantial part of their goods across the
State line."
[
Footnote 9]
Guess v. Montague, 140 F.2d 500, 503;
cf. Fleming
v. Arsenal Bldg. Corp., 125 F.2d 278, 280,
aff'd sub nom.
Kirschbaum Co. v. Walling, 316 U. S. 517,
316 U. S.
526.
[
Footnote 10]
Interpretative Bulletin No. 6 of the Wage and Hour Division of
the United States Department of Labor and under the title of
"Retail and Service Establishment -- The Scope and Applicability of
the Exemption Provided by Section 13(a)(2) of the Fair Labor
Standards Act of 1938," originally issued December, 1938, and
revised June, 1941, 2 C.C.H. Labor Law Service, �32,106.
Some of these interpretations are as follows:
"Section 13(a)(2), was intended to apply typically to the
grocery store, butcher shop, haberdashery, clothing store, filling
station, beauty parlor, hotel, and similar commonly recognized
retail and service establishments."
Par. 3.
"A retail sale is a sale of goods for direct consumption, and
not for purposes of resale or redistribution in any form."
Par. 12.
"A retail establishment sells goods to private individuals for
personal or family consumption."
Par. 14.
"The term 'service establishment,' as used in section 13(a)(2),
may be considered to include generally that large miscellaneous
assortment of business enterprises which are similar in character
to retail establishments, but which may not be accurately
classified as such. Such an interpretation is suggested by the
manner in which section 13(a)(2) is drafted. Service and retail
establishments are considered in the same sentence, and the same
criterion of intrastate commerce is made applicable to both."
Par. 22.
See also Pars. 23-29.
"As already indicated, establishments which perform a
substantial amount of work for industrial or business users,
government agencies, institutions, and similar customers may not be
considered service establishments. A service establishment is one
which performs service for private individuals for personal or
family use."
Par. 27.
In paragraph 29, the Administrator lists many examples of
"establishments not considered service establishments under
exemption," and says of them --
"Although we recognize that the foregoing companies
perform
service, it is nevertheless our opinion that establishments
engaged in such businesses are
not, in the ordinary case,
sufficiently similar in character to retail establishments to be
considered service establishments within the meaning of section
13(a)(2)."
(Italics supplied.)
Among the companies so listed in paragraph 29, and to which the
above quotation refers, are the following which have special
significance in connection with this case: engineering firms,
machine shops and foundries, establishments engaged in sharpening
and reconditioning industrial tools, in resistance welding, in
armature rewinding, or in making electric signs, companies engaged
in the repair of business machines or in repairing elevators.
[
Footnote 11]
"Thus, many establishments are engaged in selling goods which
have only an industrial or business market --
e.g.,
establishments engaged in selling production machinery, freight
trailers, oil well drilling machinery and equipment, etc. These
establishments are
not retail establishments within the
meaning of section 13(a)(2), since they do not sell regularly to
the general consuming public."
(Italics supplied.) Interpretative Bulletin No. 6, Par. 11, 2
C.C.H. Labor Law Service, �32,106. A footnote to paragraph 11 in
the same bulletin contains the following statement:
"Ordinarily, the following types of goods have only an
industrial or business market, and are not sold to the general
consuming public. Accordingly, sales of such goods, in the ordinary
case, are not retail. It should be noted that the types of goods
listed below are merely examples, and do not comprise an exhaustive
enumeration."
The note then lists many illustrations, some of which are
closely comparable to the types of goods sold and serviced in this
case. Among the illustrations are butchers' equipment, filling
station equipment, construction equipment, machine tools,
mechanical rubber goods (such as belting, packing, gaskets, and
recoil pads), power engines, powerhouse equipment, welding
equipment, hospital equipment (such as X-ray machines) plumbers'
equipment, shoe repairers' equipment, commercial aircraft
equipment, railroad equipment, and commercial ship equipment.