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ALAMO FOUND'N V. SECY. OF LABOR, 471 U. S. 290 (1985)
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1. The Foundation's businesses constitute an "enterprise" within the meaning of the Act, and are not beyond the Act's reach because of the Foundation's religious character. This Court has consistently construed the Act liberally in recognition that broad coverage is essential to accomplish the goal of outlawing from interstate commerce goods produced under conditions that fall below minimum standards of decency. The Act contains no express or implied exception for commercial activities conducted by religious or other nonprofit organizations, and the Labor Department has consistently interpreted the Act to reach such businesses. And this interpretation is supported by the legislative history. Pp. 471 U. S. 295-299.
2. The Foundation's associates are "employees" within the meaning of the Act, because they work in contemplation of compensation. Walling v. Portland Terminal Co., 330 U. S. 148, distinguished. The fact that chanrobles.com-red
the associates themselves protest coverage under the Act is not dispositive, since the test of employment under the Act is one of "economic reality." And the fact that the compensation is primarily in the form of benefits, rather than cash, is immaterial in this context, such benefits simply being wages in another form. Pp. 471 U. S. 299-303.
3. Application of the Act to the Foundation does not infringe on rights protected by the Religion Clauses of the First Amendment. The Free Exercise Clause does not require an exemption from a governmental program unless, at a minimum, inclusion in the program actually burdens the claimant's freedom to exercise religious rights. Here, since the Act does not require the payment of cash wages and the associates received wages in the form of benefits in exchange for working in the Foundation's businesses, application of the Act works little or no change in the associates' situation; they may simply continue to be paid in the form of benefits. But even if they were paid in cash and their religious beliefs precluded them from accepting the statutory amount, there is nothing in the Act to prevent them from voluntarily returning the amounts to the Foundation. And since the Act's recordkeeping requirements apply only to commercial activities undertaken with a "business purpose," they would have no impact on petitioners' own evangelical activities or on individuals engaged in volunteer work for other religious organizations. Pp. 471 U. S. 303-306.
The threshold question in this case is whether the minimum wage, overtime, and recordkeeping requirements of the Fair Labor Standards Act, 52 Stat. 1060, as amended, 29 U.S.C. § 201 et seq., apply to workers engaged in the commercial chanrobles.com-red
"establish, conduct and maintain an Evangelistic Church; to conduct religious services, to minister to the sick and needy, to care for the fatherless and to rescue the fallen, and generally to do those things needful for the promotion of Christian faith, virtue, and charity. [Footnote 1]"
The Foundation does not solicit contributions from the public. It derives its income largely from the operation of a number of commercial businesses, which include service stations, retail clothing and grocery outlets, hog farms, roofing and electrical construction companies, a recordkeeping company, a motel, and companies engaged in the production and distribution of candy. [Footnote 2] These activities have been supervised by petitioners Tony and Susan Alamo, president and secretary-treasurer of the Foundation, respectively. [Footnote 3] The businesses are staffed largely by the Foundation's "associates," most of whom were drug addicts, derelicts, or criminals before their conversion and rehabilitation by the Foundation. These workers receive no cash salaries, but the Foundation provides them with food, clothing, shelter, and other benefits. chanrobles.com-red
In 1977, the Secretary of Labor filed an action against the Foundation, the Alamos, and Larry La Roche, who was then the Foundation's vice-president, alleging violations of the minimum wage, overtime, and recordkeeping provisions of the Fair Labor Standards Act, 29 U.S.C. §§ 206(b), 207(a), 211(c), 215(a)(2), (a)(5), with respect to approximately 300 associates. [Footnote 4] The United States District Court for the Western District of Arkansas held that the Foundation was an "enterprise" within the meaning of 29 U.S.C. § 203(r), which defines that term as "the related activities performed . . . by any person or persons for a common business purpose." 567 F.Supp. 556 (1983). The District Court found that despite the Foundation's incorporation as a nonprofit religious organization, its businesses were "engaged in ordinary commercial activities in competition with other commercial businesses." Id. at 573.
The District Court further ruled that the associates who worked in these businesses were "employees" of the Alamos and of the Foundation within the meaning of the Act. The associates who had testified at trial had vigorously protested the payment of wages, asserting that they considered themselves volunteers who were working only for religious and evangelical reasons. Nevertheless, the District Court found that the associates were "entirely dependent upon the Foundation for long periods." Although they did not expect compensation in the form of ordinary wages, the District Court found, they did expect the Foundation to provide them "food, shelter, clothing, transportation and medical benefits." Id. at 562. These benefits were simply wages in another form, and, under the "economic reality" test of employment, see @ 366 U. S. 33 (1961), [Footnote 5] the associates were employees. The District Court also rejected petitioners' arguments that application of the Act to the Foundation violated the Free Exercise and Establishment Clauses of the First Amendment, and the court found no evidence that the Secretary had engaged in unconstitutional discrimination against petitioners in bringing this suit. [Footnote 6]
The Court of Appeals for the Eighth Circuit affirmed the District Court's holding as to liability, but vacated and remanded as to the appropriate remedy. 722 F.2d 397 (1984). [Footnote 7] The Court of Appeals emphasized that the businesses operated by the Foundation serve the general public, in competition with other entrepreneurs. Under the "economic reality" test, the court held,
Id. at 400. Like the District Court, the Court of Appeals also rejected petitioners' constitutional claims. We granted certiorari, 469 U.S. 915 (1984), and now affirm.
In order for the Foundation's commercial activities to be subject to the Fair Labor Standards Act, two conditions must be satisfied. First, the Foundation's businesses must constitute an "[e]nterprise engaged in commerce or in the production of goods for commerce." 29 U.S.C. § 203(s). [Footnote 8] Second, the associates must be "employees" within the meaning of the Act. While the statutory definition is exceedingly broad, see United States v. Rosenwasser, 323 U. S. 360, 323 U. S. 362-363 (1945), it does have its limits. An individual who,
is outside the sweep of the Act. Walling v. Portland Terminal Co., 330 U. S. 148, 330 U. S. 152 (1947). [Footnote 9]
Petitioners contend that the Foundation is not an "enterprise" within the meaning of the Act, because its activities are chanrobles.com-red
not performed for "a common business purpose." [Footnote 10] In support of this assertion, petitioners point to the fact that the Internal Revenue Service has certified the Foundation as tax-exempt under 26 U.S.C. § 501(c)(3), which exempts "any . . . foundation . . . organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary, or educational purposes." [Footnote 11]
The Court has consistently construed the Act "liberally to apply to the furthest reaches consistent with congressional direction," Mitchell v. Lublin, McGaughy & Associates, 358 U. S. 207, 358 U. S. 211 (1959), recognizing that broad coverage is essential to accomplish the goal of outlawing from interstate commerce goods produced under conditions that fall below minimum standards of decency. Powell v. United States Cartridge Co., 339 U. S. 497, 339 U. S. 516 (1950). [Footnote 12] The statute contains no express or implied exception for commercial activities conducted by religious or other nonprofit organizations, [Footnote 13] chanrobles.com-red
"Activities of eleemosynary, religious, or educational organization [sic] may be performed for a business purpose. Thus, where such organizations engage in ordinary commercial activities, such as operating a printing and publishing plant, the business activities will be treated under the Act the same as when they are performed by the ordinary business enterprise."
29 CFR § 779.214 (1984). See also Marshall v. Woods Hole Oceanographic Institution, 458 F.Supp. 709 (Mass.1978); Marshall v. Elks Club of Huntington, Inc., 444 F.Supp. 957, 967-968 (SD W.Va.1977). Cf. Mitchell v. Pilgrim Holiness Church Corp., 210 F.2d 879 (CA7), cert. denied, 347 U.S. 1013 (1954).
The legislative history of the Act supports this administrative and judicial gloss. When the Act was broadened in 1961 to cover "enterprises" as well as individuals, the Senate Committee Report indicated that the activities of nonprofit groups were excluded from coverage only insofar as they were not performed for a "business purpose." [Footnote 14] Some illumination of congressional intent is provided by the debate on a proposed floor amendment that would have specifically excluded from the definition of "employer," see 29 U.S.C. § 203(d), organizations qualifying for tax exemption under 26 chanrobles.com-red
U.S.C. § 501(c)(3). [Footnote 15] The floor manager of the bill opposed the amendment because it might have been interpreted to "g[o] beyond the language of the [Committee] report" by excluding a "profitmaking corporation or company" owned by "an eleemosynary institution." [Footnote 16] The proponent of the failed amendment countered that it would not have excluded "a church which has a business operation on the side." [Footnote 17] There was thus broad congressional consensus that ordinary commercial businesses should not be exempted from the Act simply because they happened to be owned by religious or other nonprofit organizations. [Footnote 18]
Petitioners further contend that the various businesses they operate differ from "ordinary" commercial businesses because they are infused with a religious purpose. The businesses minister to the needs of the associates, they contend, both by providing rehabilitation and by providing them with food, clothing, and shelter. In addition, petitioners argue, the businesses function as "churches in disguise" -- vehicles chanrobles.com-red
for preaching and spreading the gospel to the public. See Brief for Petitioners 27-28. The characterization of petitioners' businesses, however, is a factual question resolved against petitioners by both courts below, and therefore barred from review in this Court "absent the most exceptional circumstances." [Footnote 19] The lower courts clearly took account of the religious aspects of the Foundation's endeavors, and were correct in scrutinizing the activities at issue by reference to objectively ascertainable facts concerning their nature and scope. Both courts found that the Foundation's businesses serve the general public in competition with ordinary commercial enterprises, see 722 F.2d 400; 567 F.Supp. at 573, and the payment of substandard wages would undoubtedly give petitioners and similar organizations an advantage over their competitors. It is exactly this kind of "unfair method of competition" that the Act was intended to prevent, see 29 U.S.C. § 202(a)(3), and the admixture of religious motivations does not alter a business' effect on commerce.
That the Foundation's commercial activities are within the Act's definition of "enterprise" does not, as we have noted, end the inquiry. An individual may work for a covered enterprise and nevertheless not be an "employee." In Walling v. Portland Terminal Co., 330 U. S. 148 (1947), the Court held that individuals being trained as railroad yard brakemen -- individuals who unquestionably worked in "the kind of activities covered by the Act" [Footnote 20] -- were not "employees." The trainees enrolled in a course lasting approximately seven or eight days, during which time they did some actual work chanrobles.com-red
under close supervision. If, after completion of the training period, the trainees obtained permanent employment with the railroad, they received a retroactive allowance of four dollars for each day of the course. Otherwise, however, they neither received or expected any remuneration. Id. at 330 U. S. 150. The Court held that, despite the comprehensive nature of the Act's definitions, [Footnote 21] they were
The trainees were in much the same position as students in a school. Considering that the trainees' employment did not "contemplate . . . compensation," and accepting the findings that the railroads received "no immediate advantage' from any work done by the trainees," the Court ruled that the trainees did not fall within the definition of "employee." Id. at 330 U. S. 153.
Relying on the affidavits and testimony of numerous associates, petitioners contend that the individuals who worked in the Foundation's businesses, like the trainees in Portland Terminal, expected no compensation for their labors. It is true that the District Court found that the Secretary had
567 F.Supp. at 562. An associate characterized by the District Court as typical "testified convincingly that she considered her work in the Foundation's businesses as part of her ministry," and that she did not work for material rewards. Ibid. This same chanrobles.com-red
Nevertheless, these protestations, however sincere, cannot be dispositive. The test of employment under the Act is one of "economic reality," see Goldberg v. Whitaker House Cooperative, Inc., 366 U.S. at 366 U. S. 33, and the situation here is a far cry from that in Portland Terminal. Whereas, in Portland Terminal, the training course lasted a little over a week, in this case, the associates were "entirely dependent upon the Foundation for long periods, in some cases several years." 567 F.Supp. at 562. Under the circumstances, the District Court's finding that the associates must have expected to receive in-kind benefits -- and expected them in exchange for their services -- is certainly not clearly erroneous. [Footnote 22] Under Portland Terminal, a compensation agreement may be "implied" as well as "express," 330 U.S. at 330 U. S. 152, and the fact that the compensation was received primarily in the form of benefits, rather than cash, is in this context immaterial. These benefits are, as the District Court stated, wages in another form. [Footnote 23] chanrobles.com-red
That the associates themselves vehemently protest coverage under the Act makes this case unusual, [Footnote 24] but the purposes of the Act require that it be applied even to those who would decline its protections. If an exception to the Act were carved out for employees willing to testify that they performed work "voluntarily," employers might be able to use superior bargaining power to coerce employees to make such assertions, or to waive their protections under the Act. Cf. Barrentine v. Arkansas-Best Freight System, Inc., 450 U. S. 728 (1981); Brooklyn Savings Bank v. O'Neil, 324 U. S. 697 (1945). Such exceptions to coverage would affect many more people than those workers directly at issue in this case, and would be likely to exert a general downward pressure on wages in competing businesses. As was observed in Gemsco, Inc. v. Walling, 324 U. S. 244, 324 U. S. 252-254 (1945), it was there essential to uphold the Wage and Hour Administrator's authority to ban industrial homework in the embroideries industry, because,
the Foundation's business activities will lead to coverage of volunteers who drive the elderly to church; serve church suppers, or help remodel a church home for the needy. See Brief for Petitioners 24-25. The Act reaches only the "ordinary commercial activities" of religious organizations, 29 CFR § 779.214 (1984), and only those who engage in those activities in expectation of compensation. chanrobles.com-red
Ordinary volunteerism is not threatened by this interpretation of the statute. [Footnote 25]
Petitioners further contend that application of the Act infringes on rights protected by the Religion Clauses of the First Amendment. Specifically, they argue that imposition of the minimum wage and recordkeeping requirements will violate the rights of the associates to freely exercise their religion [Footnote 26] and the right of the Foundation to be free of excessive government entanglement in its affairs. Neither of these contentions has merit.
It is virtually self-evident that the Free Exercise Clause does not require an exemption from a governmental program unless, at a minimum, inclusion in the program actually burdens the claimant's freedom to exercise religious rights. See, e.g., United States v. Lee, 455 U. S. 252, 455 U. S. 256-257 (1982); Thomas v. Review Board, Indiana Employment Security Div., 450 U. S. 707, 450 U. S. 717-718 (1981). Petitioners claim that the receipt of "wages" would violate the religious convictions of the associates. [Footnote 27] The Act, however, does not require chanrobles.com-red
the payment of cash wages. Section 203(m) defines "wage" to include "the reasonable cost . . . of furnishing [an] employee with board, lodging, or other facilities." See n 23, supra. Since the associates currently receive such benefits in exchange for working in the Foundation's businesses, application of the Act will work little or no change in their situation: the associates may simply continue to be paid in the form of benefits. The religious objection does not appear to be to receiving any specified amount of wages. Indeed, petitioners and the associates assert that the associates' standard of living far exceeds the minimum. [Footnote 28] Even if the Foundation were to pay wages in cash, or if the associates' beliefs precluded them from accepting the statutory amount, there is nothing in the Act to prevent the associates from returning the amounts to the Foundation, provided that they do so voluntarily. [Footnote 29] We therefore fail to perceive how application of the Act would interfere with the associates' right to chanrobles.com-red
freely exercise their religious beliefs. Cf. United States v. Lee, supra, at 455 U. S. 257.
Petitioners also argue that application of the Act's recordkeeping requirements would have the "primary effect" of inhibiting religious activity and would foster "an excessive government entanglement with religion,'" thereby violating the Establishment Clause. See Lemon v. Kurtzman, 403 U. S. 602, 403 U. S. 612-613 (1971) (quoting Walz v. Tax Comm'n, 397 U. S. 664, 397 U. S. 674 (1970)). [Footnote 30] The Act merely requires a covered employer to keep records "of the persons employed by him and of the wages, hours, and other conditions and practices of employment maintained by him." 29 U.S.C. § 211(c). Employers must also preserve these records and "make such reports therefrom from time to time to the Administrator as he shall prescribe." Ibid. These requirements apply only to commercial activities undertaken with a "business purpose," and would therefore have no impact on petitioners' own evangelical activities or on individuals engaged in volunteer work for other religious organizations. And the routine and factual inquiries required by § 211(c) bear no resemblance to the kind of government surveillance the Court has previously held to pose an intolerable risk of government entanglement with religion. [Footnote 31] The Establishment Clause does not exempt religious organizations from such secular governmental activity as fire inspections and building and zoning regulations, see Lemon, supra, at 403 U. S. 614, and the recordkeeping requirements of the Fair Labor Standards Act, while chanrobles.com-red
perhaps more burdensome in terms of paperwork, are not significantly more intrusive into religious affairs. [Footnote 32]
The District Court found that the Foundation operates 4 businesses in California, 30 businesses in Arkansas, 3 businesses in Tennessee, and a motel in Tempe, Arizona. See 567 F.Supp. 556, 559-561 (WD Ark.1983). The Foundation also receives income from the donations of its associates. Id. at 562.
See also United States v. Silk, 331 U. S. 704, 331 U. S. 713 (1947); Rutherford Food Corp. v. McComb, 331 U. S. 722, 331 U. S. 729 (1947).
See n 6, supra. The Court of Appeals held that the District Court should have calculated back wages due, instead of requiring associates to initiate backpay proceedings. 722 F.2d 404-405. On remand, in an unpublished order, the District Court identified specific associates due back wages and ordered the Secretary to submit a proposed judgment. Following this Court's grant of a writ of certiorari, the District Court "administratively terminate[d]" the action pending this Court's decision. Brief for Respondent 12, n. 8.
The Court of Appeals omitted this second step of the inquiry, although it mentioned in passing that the associates expected to receive and were dependent on the in-kind benefits. 722 F.2d 399. The District Court's findings on this question are sufficiently clear, however, that a remand is unnecessary.
Petitioners do not dispute that the Foundation's various activities are performed "through . . . common control." Nor do they quarrel with the District Court's finding that the Foundation's annual gross volume of sales exceeds $250,000, as required by § 203(8)(1). See 567 F.Supp. at 561.
The Internal Revenue Service has apparently not determined whether petitioners' commercial activities are "unrelated business" subject to taxation under 26 U.S.C. §§ 511513. See App. to Brief for Petitioners 14; Tr. of Oral Arg. 30.
See also Goldberg v. Whitaker House Cooperative, Inc., 366 U. S. 28 (1961); Rutherford Food Corp. v. McComb, 331 U. S. 722 (1947); United States v. Rosenwasser, 323 U. S. 360 (1945).
Cf. Powell v. United States Cartridge Co., 339 U.S. at 339 U. S. 517 (exemptions from the Act are "narrow and specific," implying that "employees not thus exempted . . . remain within the Act").
Id. at 16703 (remarks of Sen. Goldwater). The following year, when the expansion of the Fair Labor Standards Act was again considered and this time enacted, Senator Curtis proposed the same amendment that Senator Goldwater had unsuccessfully introduced. The amendment was once more rejected. Senator McNamara, Chairman of the Senate Education and Labor Committee, opposed the amendment on the ground that it would remove from the protection of the Act employees of nonprofit organizations who were engaged in
107 Cong.Rec. 6255 (1961). See also H.R.Rep. No. 75, 87th Cong., 1st Sess., 8 (1961); S.Rep. No. 145, 87th Cong., 1st Sess., 41 (1961).
Because we perceive no "significant risk" of an infringement on First Amendment rights, see infra at 471 U. S. 303-306, we do not require any clearer expression of congressional intent to regulate these activities. See NLRB v. Catholic Bishop of Chicago, 440 U. S. 490, 440 U. S. 500 (1979).
Branti v. Finkel, 445 U. S. 507, 445 U. S. 512, n. 6 (1980).
330 U.S. at 330 U. S. 150. Since Walling was decided before the advent of "enterprise coverage," see n 8, supra, the Court's remark must have been premised on the fact that railroad brakemen work directly in interstate commerce.
The Act defines "employ" as including "to suffer or permit to work" and "employee" as (with certain exceptions not relevant here) "any individual employed by an employer." 29 U.S.C. §§ 203(g), (e). See Rutherford Food Corp., 331 U.S. at 331 U. S. 728; Rosenwasser, 323 U.S. at 323 U. S. 362-363, and n. 3 (quoting Sen. Black as stating that the term "employee" had been given "the broadest definition that has ever been included in any one act," 81 Cong.Rec. 7657 (1935)).
Former associates called by the Secretary as witnesses testified that they had been "fined" heavily for poor job performance, worked on a "commission" basis, and were prohibited from obtaining food from the cafeteria if they were absent from work -- even if the absence was due to illness or inclement weather. App. 148-149, 146, 153, 218-219. These former associates also testified that they sometimes worked as long as 10 to 15 hours per day, 6 or 7 days per week. This testimony was contradicted in part by petitioners' witnesses, who were current associates. See 567 F.Supp. at 562. Even their testimony, however, was somewhat ambiguous. Ann Elmore, for example, testified that the thought of receiving compensation was "vexing to [her] soul." But in the same paragraph, in answer to a question as to whether she expected the benefits, she stated that "the benefits are just a matter of -- of course, we went out and we worked for them." App. 78-79.
The Act defines "wage" as including board, food, lodging, and similar benefits customarily furnished by the employer to the employees. As the District Court recognized, an employer is entitled to credit for the reasonable cost of these benefits. 567 F.Supp. at 663, 577; see 29 U.S.C. § 203(m).
The Solicitor General states that, in determining whether individuals have truly volunteered their services, the Department of Labor considers a variety of factors, including the receipt of any benefits from those for whom the services are performed, whether the activity is a less than full-time occupation, and whether the services are of the kind typically associated with volunteer work. The Department has recognized as volunteer services those of individuals who help to minister to the comfort of the sick, elderly, indigent, infirm, or handicapped, and those who work with retarded or disadvantaged youth. See Brief for Respondent 4-5, and n. 3.
Petitioner Larry La Roche is an associate and a former vice-president of the Foundation. The Foundation also has standing to raise the free exercise claims of the associates, who are members of the religious organization as well as employees under the Act. See NAACP v. Alabama ex rel. Patterson, 357 U. S. 449, 357 U. S. 458-459 (1958). But cf. Donovan v. Shenandoah Baptist Church, 573 F.Supp. 320, 325-326 (WD Va.1983).
Id. at 62-63 (testimony of Bill Levy). Petitioners also argue that the recordkeeping requirements of the Act, 29 U.S.C. § 211, will burden the exercise of the associates' religious beliefs. This claim rests on a misreading of the Act. Section 211 imposes recordkeeping requirements on the employer, not on the employees.
See App. 62, 89 (testimony of Bill Levy and Edward Mick); Brief for Petitioners 33. The actual value of the benefits provided to associates -- a matter of heated dispute below -- was determined by the District Court to average somewhat over $200 a month per associate. 567 F.Supp. at 566-570.
Under the Lemon test, the criteria to be used in determining whether a statute violates the Establishment Clause are whether the statute has a secular legislative purpose; whether its primary effect is one that neither advances nor inhibits religion; and whether it fosters excessive government entanglement with religion. 403 U.S. at 403 U. S. 612-613. No one here contends that the Fair Labor Standards Act has anything other than secular purposes.
See Meek v. Pittenger, 421 U. S. 349 (1975); Lemon v. Kurtzman, 403 U. S. 602 (1971). Cf. NLRB v. Catholic Bishop of Chicago, 440 U. S. 490 (1979).