United States v. Darby: Commerce Clause, Manufacturing, and the FLSA

In United States v. Darby, 312 U.S. 100, 61 S. Ct. 451 (1941), the Supreme Court held that Congress had power under the Commerce Clause of the Constitution to enact the Fair Labor Standards Act (“FLSA”). The Court held that the Commerce Clause permitted Congress, through the FLSA, to regulate the working conditions of employers whose manufacturing activities were purely intrastate, when the employer intended or expected at least some of its goods to eventually move in interstate commerce. The case is important because it upheld the FLSA and represents an expansive reading of the Commerce Clause as authorizing Congress to regulate working conditions in businesses with even a slight relationship to interstate commerce.

Constitutional and Statutory Background

The Commerce Clause is found in Article 1, Section 8, Clause 3 of the United States Constitution. That clause gives Congress the power:

To regulate commerce with foreign nations, and among the several states, and with the Indian tribes.

The Tenth Amendment to the United States Constitution states:

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. 

This amendment is often referred to as the “states rights” amendment. It expresses the principle of federalism, in which the federal government only has the powers given to it by the Constitution. All other powers not prohibited to the states by the Constitution are reserved to the states, or the people. 

The Fair Labor Standards Act is the federal law requiring covered employers to pay minimum wages and overtime compensation to certain categories of employees, and to comply with the FLSA’s recordkeeping requirements.

Facts

Darby had a lumber company in Georgia. He acquired his raw materials in Georgia, which he manufactured into finished lumber with the intent of shipping it in interstate commerce to customers outside the state. The manufacturing happened in Georgia. Darby shipped a large part of his lumber to out of state customers. The United States charged Darby with violating the FLSA by, inter alia, paying his workers less than minimum wage, not paying them overtime compensation, and failing to comply with the FLSA’s recordkeeping requirements. 312 U.S. at 111.

Darby challenged the validity of the FLSA under the Commerce Clause and the Fifth and Tenth Amendments. The district court sided with Darby. It threw out the indictment on the grounds that the FLSA, which it interpreted as a regulation of manufacturing within the states, was unconstitutional. It decided that manufacturing was not interstate commerce and that the FLSA’s regulation of wages and hours of employment of those engaged in the manufacturing of goods with the intent to later sell the goods in interstate commerce was not within the congressional power to regulate interstate commerce. 312 U.S. at 111-12.

The Court’s Decision

The Court reversed. It held that the Commerce Clause gave Congress the power to enact the FLSA and regulate labor conditions in manufacturing operations since they have a significant impact on the production of goods that touch interstate commerce.

The Court first observed that while manufacturing is not itself involved in interstate commerce, the shipment of manufactured goods across state lines is interstate commerce, and a prohibition by Congress of shipping across state lines is regulation of interstate commerce. 312 U.S. at 113.

Second, the Court observed that under the Commerce Clause, Congress is free to exclude from interstate commerce goods whose use in a state Congress deems to be damaging to the public health, morals, or welfare, even if the state has not sought to regulate the use of the goods. Id. at 114. The Court decided that this kind of federal regulation is not a “forbidden invasion” of state power just because either the regulation’s motive or consequence is to restrict the use of goods shipped in commerce within their destination states. Therefore, the Court determined that the regulation of goods shipped in interstate commerce is valid unless prohibited by other Constitutional provisions. Id.

Third, the Court observed that the purpose of the FLSA was to carry out the Congressional public policy that interstate commerce should not be made the instrument of competition in the distribution of goods produced under substandard labor conditions. The Court reasoned that such competition would be harmful to the commerce and to the states from and to which the commerce flows. Id. at 115. The Court further reasoned that the motive and purpose of a regulation of interstate commerce were matters of Congressional judgment. The Court observed that the Constitution places no restriction on Congress’s exercise of that judgment, and gives the courts no control over it. Id.

Therefore, the Court concluded, in prohibiting interstate shipment of goods produced under forbidden substandard labor conditions that violated the FLSA, Congress acted within its authority under the Commerce Clause. Id. In so holding, the Court overruled its decision in Hammer v. Dagenhart, 247 U.S. 251 (1918), which had a narrower reading of the Commerce Clause.

Further supporting this conclusion, the Court reasoned that the “production for interstate commerce” intended by the FLSA included, at least, the production of goods, which, at the time of production, the employer intends or expects to move in interstate commerce, even if all of the goods may not actually enter interstate commerce. Id. at 117. Thus, the power of Congress over interstate commerce extends to intrastate activities “which so affect interstate commerce or the exercise of the power of Congress over it as to make regulation of them appropriate means to the attainment of a legitimate end, the exercise of the granted power of Congress to regulate interstate commerce.” Id. at 118.

Underlying the FLSA, Congress had adopted a policy of excluding from interstate commerce all goods produced for that commerce under circumstances that did not comply with the FLSA’s labor standards. To the Court, the Commerce Clause power meant that Congress “may choose the means reasonably adapted to the attainment of the permitted end, even though they involve control of intrastate activities.” Id. at 121. Independent from the prohibition of the shipment of the proscribed goods, the FLSA provisions regulating the labor conditions under which the goods are produced were within the commerce power. Id. at 122.

Turning to Darby’s Tenth Amendment argument, the Court rejected it. It held that the Tenth Amendment does not limit the authority of the federal government to “resort to all means for the exercise of a granted power which are appropriate and plainly adapted to the permitted end.” Id. at 123.

Finally, the Court held that the FLSA’s recordkeeping requirements were valid because they were “incidental” to the wage and hour requirements. Id. at 124. Nor did the wage and hour requirements violate the due process clause of the Fifth Amendment, under the Court’s decisions in West Coast Hotel Co. v. Parrish, 300 U.S. 379 (1937) and similar cases. 

Analysis 

In sum, Darby held that the Commerce Clause permitted Congress, through the FLSA, to regulate the working conditions of employers whose manufacturing activities were purely intrastate, when the employer intended or expected at least some of its goods to eventually move in interstate commerce. The case is important because it represents an expansive reading of the Commerce Clause as authorizing Congress to regulate working conditions in businesses with even a slight relationship to interstate commerce.

This article was also published on TimCoffieldAttorney.com.

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