May 9, 1977

77-25 MEMORANDUM OPINION FOR THE

GENERAL COUNSEL, DEPARTMENT OF

DEFENSE

Status of Baggers as Federal Employees—Fair Labor

Standards Act

This is in response to the request of the General Counsel concerning 

a disagreement between the Department of Defense (DOD) and the 

Civil Service Commission (CSC) regarding the interpretation of the 

Fair Labor Standards Act of 1938 (FLSA), as amended in 1974, 29 

U.S.C. §§ 201 et seq. The CSC has determined that individuals who, 

with the permission of the commissary, bag and transport DOD commissary patrons’ purchases in return for tips (“baggers”) are employees 

within the scope of the FLSA. It is D O D ’s view that this interpretation 

“conflicts with statutory and traditional concepts of Federal employment.” For the reasons that follow, we conclude that such concepts are 

not controlling under the FLSA and that CSC’s application of the 

“economic realities” test1 to determine questions of employment, even 

in the Federal sector, is proper.

I

D O D ’s main objection to CSC’s determination lies in its resort to the 

“economic realities” test in determining whether an individual is an 

employee for purposes of the FLSA, and the view that the statute 

“expressly excepted from the general definition of ‘employees’ ” individuals employed by the U.S. Government. This line of reasoning, it is 

argued, renders the “economic realities” standard inoperative as a test 

of Federal employment. It is further contended that the coverage of the 

FLSA is restricted to those who conform to the statutory criteria of 

Federal employment set forth in 5 U.S.C. § 2105.

1 T he “econom ic realities” test, as generally applied by the courts, simply refers to an 

analysis o f a controverted employm ent situation based not on isolated factors but rather 

“upon the circum stances of the w hole activity.” Rutherford Food Corp. v. McComb, 331 

U.S. 722, 730 (1947).

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We cannot agree that the statutory framework here leads to such 

conclusion. The pertinent parts of the FLSA definition of “employee” 

in 29 U.S.C. § 203(e) read as follows:

(1) Except as provided in paragraphs (2) and (3), the term 

“employee” means any individual employed by an employer.

(2) In the case of an individual employed by a public agency, 

such term means—

(A) any individual employed by the Government of the 

United States—

(i) as a civilian in the military departments (as defined 

in section 102 of Title 5),

(ii) in any executive agency (as defined in section 105 of 

such title),

(iii) in any unit of the legislative or judicial branch of 

the Government which has positions in the competitive 

service,

(iv) in a nonappropriated fund instrumentality under the 

jurisdiction of the Armed Forces, or

(v) in the Library of Congress.

It is clear that Federal employees are not deemed employees subject to 

the FLSA by virtue of the “general” definition of employee set forth in 

§ 203(a)(1). It is not at all clear, however, how this fact gives rise to a 

conclusion that the “economic realities” test is to be inapplicable to all 

individuals working in the Federal sector. The “exception” in 

§ 203(e)(1) does not purport to exclude Federal employees from the 

scope of the statute or create different standards as to them, but merely 

refers to § 203(e)(2). This latter provision, except for the kind of employer to which it relates, adheres strictly to the structure of the 

“general” definition in § 203(e)(1)—that is, the provision defines “employee” as “any individual employed by” the pertinent employer. Because the “economic realities” test applies to determine whether this 

requirement is [fulfilled with respect to the “general” definition, it 

would seem equally applicable to determine whether this same requirement is] satisfied with respect to the question of the FLSA’s coverage 

in the Federal sector.

While the “economic realities” test may have been applicable only 

with respect to the “general” definition prior to the 1974 amendments, 

it does not follow that it should remain so limited today. The “general” 

definition was the only one in existence prior to 1974, and as such the 

“economic realities” standard was applicable in every case where the 

question of coverage under the definition of “employee” arose. Absent 

some contrary indication in the amendments themselves or in their 

legislative history, we would expect that the same approach would hold 

true today in ariy case where the issue was whether an individual was 

an employee under the FLSA—whether the individual was associated 

with the Government or a private employer.

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There is no such contrary indication here; in fact, all indications are 

that the “economic realities” test should be applied in the Federal 

sector and that formal criteria are not to be determinative. Most fundamentally, if Congress had intended that formal criteria were to prevail, 

it would have explicitly so stated. Instead, Congress chose a more 

expansive approach. An employee is defined by the FLSA as “any 

individual employed by the Government of the United States,” 29 

U.S.C. § 203(e)(2)(A). [Emphasis added.] In turn, the definition of 

“employ” “includes to suffer or permit to work.” 29 U.S.C. § 203(g).2 

The use of this broadly defined term with reference to the Federal 

Government must thus mean that the Government could “employ” an 

individual even if formal statutory criteria were not met. All that need 

be done is that the Government “suffer or permit” that individual to 

work in one of the areas specified in § 203(e)(2)(A)(i)-(v).

The legislative history of the provisions at issue here bolsters this 

view. That history shows that Congress intended that coverage under 

the FLSA “should be interpreted broadly,” S. Rep. No. 690, 93d 

Cong., 2d Sess. 56 (1974). Strict adherence to formal criteria of employment would hardly comport with this general mandate. More specifically, the legislative history is clear that the reason for extending the 

FLSA to Federal employees was to subject the Federal Government 

and private employers to the “same standards.” See 120 Cong. Rec. 

4702 (remarks of Senator Williams). While this expression of intent 

could be viewed as limited to the payment of similar minimum and 

overtime wages, we believe that Congress meant for the “same standard”—including the “economic realities” test with respect to the scope 

of the A ct—to apply across the board. Any doubt about this point was 

resolved by the committee’s statement:

It is the intent of the Committee that the Commission will administer the provisions of the law in such a manner as to assure consistency with the meaning, scope, and application established by the 

rulings, regulations, interpretations, and opinions of the Secretary 

of Labor which are applicable in other sectors of the economy. S. 

Rep. No. 690, 93d Cong., 2d Sess. 23 (1974). [Emphasis added.] See

also H.R. Rep. No. 913, 93d Cong., 2d Sess. 23 (1974).

The standards previously established by the Secretary of Labor with 

respect to the scope and application of the FLSA would, of course, 

include the “economic realities” approach. The above statement thus 

makes it quite clear that this same approach is to be applied to the

2 Significantly, the Supreme C ourt had previously acknowledged the broad scope of 

the A ct under such definitions:

In determ ining w ho are “em ployees” under the A ct, comm on law employee categories o r employer-employee classifications under other statutes are not of controlling 

significance .... This Act contains its ow n definitions, comprehensive enough to 

require its application to many persons and w orking relationships which, prior to this 

A ct, w ere not deemed to fall within an employer-employee category. Walling v. 

Portland Terminal Co., 330 U.S. 148, 150-51 (1947). [Emphasis added.]

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question whether an individual working for the Federal Government is 

an employee under the FLSA.

Moreover, the suggested approach of resorting to 5 U.S.C §2105 

seems particularly inappropriate in this case. A resort to that section 

would ignore completely the definitions of Government employees set 

forth in the FLSA itself. It seems clear that the coverage of the FLSA 

must be determined by reference to the definitions contained within it, 

and not by criteria set forth in an unrelated title. Nothing is said to 

indicate that the FLSA definitions are not sufficient in themselves; and, 

more specifically, no reference is made to the definition set forth in 5 

U.S.C. §2105. In fact, Congress indicated its awareness of the relevance of several provisions of Title 5 by referring to them in § 203 

itself (i.e., 5 U.S.C. §§ 102, 105). The absence of any similar reference to 

5 U.S.C. §2105 could suggest that Congress did not intend that provision to be applicable here.3 We believe that to resort to 5 U.S.C. § 2105 

would disregard the definitions that Congress carefully framed for 

purposes of the FLSA and made determinative a set of criteria that 

Congress gave no indication were to be relevant.4

II

The DOD also points out that, if baggers are regarded as employees 

within the FLSA, problems arise with respect to other statutes—for 

example, the conflict-of-interest laws, 18 U.S.C. §§201 et seq., and the 

Federal Tort Claims Act, 28 U.S.C. §§ 1346(b), 2671 et seq. We do not 

believe that CSC’s conclusion here is determinative of the question 

whether a bagger is an employee for purposes of these other provisions. 

The problems adverted to, therefore, may not exist. Even if problems 

arise, it will not be due to CSC’s determination with respect to the 

FLSA, but rather by reason of the language of these other provisions 

and Congress’ purpose in enacting them.

The DOD might argue that Congress’ failure to provide for baggers 

in some respects—such as appropriations or manpower ceilings—indicates that Congress did not intend to allow baggers to be paid out of 

Federal funds and, therefore, by implication, did not intend that baggers be regarded as employees within the FLSA. We think, however,

3 N or is there any indication in 5 U.S.C. §2105 to the contrary. By its ow n terms, that 

provision exists “for the purpose o f this title” ; the legislative history also indicates that 

the section is designed only for the purposes o f Title 5. See S. Rep. No. 1380, 89th Cong., 

2d Sess. 47 (1966).

4 In fact, if 5 U.S.C. § 2105 w ere to be determinative here, it w ould not only ignore but 

also completely nullify some of the provisions explicity set forth in § 203. For example, 

§ 203 includes those employed “in a nonappropriated fund instrumentality under the 

jurisdiction o f the Arm ed Forces.” 29 U.S.C. § 203(e)(2)(A)(iv). A resort to the standards 

of 5 U.S.C. §2105, how ever, would exclude from the definition of employee (for purposes o f laws administered by the CSC) “an employee paid from nonappropriated funds” 

o f military exchanges and other instrumentalities of the United States under the jurisdiction of the Arm ed Forces. 5 U.S.C. § 2105(c). W e cannot believe that Congress m eant, on 

the one hand, to set forth certain criteria and, on the other, intended that a m andated 

resort to another statutory provision would abrogate those criteria.

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that this argument reads too much into Congress’ silence. In view of 

the broad language of the FLSA and Congress’ aims underlying it, it is 

our opinion that, in order for other provisions of law to create an 

exception, they must do so specifically and clearly. Morton v. Mancari,

417 U.S. 535, 551 (1974). We therefore conclude that possible inconsistency with appropriation authorization cannot be deemed to create an 

exception to the usual standards by which the FLSA is to be applied.5

Ill

The D O D also argues that, even if the “economic realities” test does 

apply, the most important factor to be considered is whether the individual involved has met the formalities required by statute. If this is 

meant to imply that the statutory criteria of Title 5 are to be determinative, it is merely a restatement of your primary argument and must fail 

for the reasons discussed above.

Moreover, we doubt whether it is even proper to regard a failure to 

satisfy statutory criteria as of great, rather than controlling, importance. 

The courts have made clear that the test of an employment relationship 

is not to depend on technical or isolated factors, but rather “upon the 

circumstances of the whole activity.” Rutherford Food Corp. v. 

McComb, supra, at 730; Goldberg v. Whitaker House Cooperative, Inc.,

366 U.S. 28, 33 (1961); Hodgson v. Griffin and Brand o f McAllen, Inc.,

471 F. 2d 235, 237 (5th Cir. 1973). Thus CSC might quite properly 

accord more weight to other factors more indicative of the economic 

realities of the situation.

We do not read your request for our opinion as asking for our views 

generally as to CSC’s application of the “economic realities” test to the 

facts of this particular case. Nor do we believe that such as assessment 

is within our province, because such determinations are lodged by law 

in the Commission. 29 U.S.C. 204(f). Additionally, insofar as the application of the “economic realities” test involves an examination of all the 

relevant facts and circumstances, we think that the Commission is 

better suited than this Office to make such a determination. In fact, to

5 T h e fact that C ongress has directed D O D to reduce commissary personnel and the 

cost o f comm issary operations, is not so specifically or explicitly addressed to the 

situation here as to allow for an exception to C ongress’ expansive approach in the 1974 

am endm ents. R ather, the mandate to cut costs must be viewed in light of the usual rule 

that congressional enactments are to be read in harm ony, see, Morton v. Mancari, supra,

and w e thus believe that this directive must be applied within the constraints imposed by 

o th er congressional enactments.

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the extent that such an evaluation is a mixed question of law and fact,6 

it is beyond the authority of this Office. 28 U.S.C. §512. See 20 Op. 

A.G. 240, 242 (1891); 20 Op. A.G. 711 (1894); 19 Op. A.G. 676 (1890).

The decision to apply the FLSA concept of employment to the 

Federal sector was made by Congress, and in our opinion any other 

view would depart from the broad language of the statute and Congress’ underlying purpose. We accordingly conclude that the criteria of 

Title 5 are not controlling and that CSC’s application of the “economic 

realities” test to determine the question of the applicability of the 

FLSA in the Federal sector is proper.

J o h n M . H a r m o n

Acting Assistant Attorney General

Office o f Legal Counsel

•W hile the courts have adopted different approaches to this problem, compare, Walling

v. General Industries Co., 330 U.S. 545, 550 (1947), Wirtz v. Lone Star Steel Company, 405 

F. 2d 663, 669-70 (5th Cir. 1968) (applying the clearly erroneous rule to a question 

involving the application of the FLSA ), with Rutherford Food Corp. v. McComb, supra,

Shultz v. Hinojasa, 432 F. 2d 259, 264 (5th Cir. 1970) (regarding the question of FL SA 

coverage as one o f law), the question here, involving the application of a standard to all 

the circumstances o f a given situation, presents a mixed question of law and fact. This 

appears particularly true where, as here, inferences that are draw n from the facts and are 

factors in the ultimate determination are subject to conflicting interpretations; your 

D epartm ent’s and the Commission’s differences on the question o f supervision or control 

are one such example.

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