Maryland v. Wirtz

Background

A group of States (led by Maryland), joined by 27 other States and a school district, sued the Secretary of Labor after Congress broadened the Fair Labor Standards Act. In 1961 Congress adopted an "enterprise" or organization-wide coverage test. In 1966 it added schools and hospitals to the list of covered organizations and removed a blanket exemption for state employers. The States asked a court to block enforcement of these amendments against state-operated schools and hospitals.

Reasoning

The Court asked whether Congress could, under its power to regulate interstate commerce, treat an entire organization as covered when parts of it affect commerce and whether including state-run schools and hospitals was permissible. Relying on earlier decisions, the Court found a "rational basis" for Congress to act: institutions buy large amounts of goods from other States and labor disputes there can disrupt interstate commerce. The Court therefore held that the enterprise concept and coverage of state-run schools and hospitals fall within Congress’s commerce power. The Court did not decide every related issue; it declined to resolve, in the abstract, whether states can be sued under the Act or whether every particular school or hospital employee is covered.

Real world impact

The decision means many public schools and hospitals can be required to follow federal minimum-wage and overtime rules, affecting state budgets and payrolls. Some professional employees (for example, teachers and certain medical staff) are treated as exempt under the law’s existing categories. Questions about specific remedies, whether a State may be sued, and which individual employees are covered were left for later, case-by-case litigation.

Dissents or concurrances

A dissent (Justice Douglas, joined by Justice Stewart) warned that applying these rules to States seriously intrudes on state sovereignty and could impose large fiscal burdens on public services.