Brennan v. Arnheim & Neely, Inc.

Background

The Secretary of Labor sued a Pittsburgh-area real estate management company that runs eight commercial office buildings and one apartment complex. The company manages leases, collects rent into separate owner accounts, hires and supervises maintenance and janitorial staff, handles payroll, and negotiates pay and benefits subject to owner approval. The Secretary sought an injunction against future violations of federal minimum-wage, overtime, and recordkeeping rules and back wages for affected workers. The lower District Court found the workers were employees of the management company and that the company’s gross rental collections should be used to measure the enterprise’s size; the Third Circuit agreed on those points but refused to aggregate the separate buildings’ rentals into a single enterprise.

Reasoning

The Supreme Court addressed whether the management company’s activities at all nine locations could be treated as one enterprise under the statute. The Court said yes: the company is a single, integrated business whose similar, related activities are performed under unified operation and for the common business purpose of managing properties for profit. It held that facts about separate owners, separate bank accounts, and agency relationships did not prevent aggregation. The Court reversed the Court of Appeals and remanded the case for further proceedings. The Court did not resolve some issues such as whether the owners themselves are employers or whether gross rentals or commissions are the correct sales measure because the respondent did not cross-appeal those points.

Real world impact

The ruling lets regulators treat a centralized management company’s operations across multiple buildings as a single enterprise when applying federal wage laws, potentially broadening coverage for employees who work in different but similarly managed sites. This decision may make it easier to show that such a company meets the dollar-volume threshold for coverage.

Dissents or concurrances

Justice White dissented, warning that treating separate owner properties as one enterprise based solely on a common agent ignores congressional intent to exempt small independent businesses and that common agents alone should not merge independent owners into a single economic unit.