MR. JUSTICE BURTON delivered the opinion of the Court.
The questions presented are (1) whether petitioner's employees are engaged "in the production of goods for commerce" so as to bring them within the coverage of §§ 6 and 7 of the Fair Labor Standards Act of 1938 (52 Stat. 1060, 1062-3, 29 U.S.C. §§ 206 and 207), and (2), if so, whether they are exempted from the Act because "engaged in any retail or service establishment the greater part of whose selling or servicing is in intrastate commerce" within the meaning of § 13 (a) (2). 29 U.S.C. § 213 (a) (2).
Respondent sought a permanent injunction in the United States District Court restraining petitioner from continued violation of the minimum wage, maximum hour and report-making provisions of the Act. 29 U.S.C.
Most of the relevant facts were stipulated. Petitioner is a Maryland corporation "having its principal office, place of business and a manufacturing plant" in Baltimore. It is there engaged in "commercial and industrial wiring, electrical contracting, and dealing in electrical motors and generators, for private, commercial, and industrial uses."
Petitioner had "approximately 1,000 active accounts . . . 99 percent of which are commercial or industrial firms." Its "larger and most active accounts" were 33 in number. Of such 33 customers, one was a telephone company "engaged in interstate commerce"; four were "engaged in the repair of ships, tugs, barges, and other boats which were intended for movement in interstate commerce";
As to coverage, the Act is unambiguous and the petitioner's employees come squarely within it as employees "engaged in the production of goods for commerce." This turns on §§ 6 (a), 7 (a), 3 (b), 3 (i) and 3 (j). Section 6 (a) provides: "Every employer shall pay to each of his employees who is engaged in commerce or in the production of goods for commerce wages at the following rates . . ." (Italics supplied.) Section 7 (a) likewise provides: "No employer shall, except as otherwise provided in this section, employ any of his employees who is engaged in commerce or in the production of goods for commerce" at wages less than 1 1/2 times the regular rate, where an employee is employed for more than the maximum number of hours prescribed. (Italics supplied.)
"(b) `Commerce' means trade, commerce, transportation, transmission, or communication among the several States or from any State to any place outside thereof.
"(i) `Goods' means goods (including ships and marine equipment), wares, products, commodities, merchandise, or articles or subjects of commerce of any character, or any part or ingredient thereof, but does not include goods after their delivery into the actual physical possession of the ultimate consumer thereof other than a producer, manufacturer, or processor thereof.
"(j) `Produced' means produced, manufactured, mined, handled, or in any other manner worked on in any State; and for the purposes of this Act an employee shall be deemed to have been engaged in the production of goods if such employee was employed in producing, manufacturing, mining, handling, transporting, or in any other manner working on such goods, or in any process or occupation necessary to the production thereof, in any State." (Italics supplied.)
Putting these definitions together in their own terms, § 6 (a), as applied to the facts of this case, provides in effect that "Every employer shall pay [not less than the required minimum wages] to each of his employees who is employed in any process or occupation necessary to the production, in any state, of any part or ingredient of any articles or subjects of trade, commerce or transportation among the several states." This does not require the employee to be directly "engaged in commerce" among the several states. This does not require the employee to be employed even in the production of an article which itself becomes the subject of commerce or transportation among the several states. It is enough that the employee be employed, for example, in an occupation which is necessary
The necessity to the petitioner's customers, in their productive work, of the sales made and the services supplied to them by the petitioner's employees is the foundation of petitioner's business. The essential need for motors and wiring in the conduct of electrically operated productive processes of manufacture is beyond question. When commercial or industrial producers, such as the petitioner's customers, use electric motors in the production of goods for interstate commerce, services such as those of petitioner's employees are necessary to the continuity of such production. Such sales and services must be immediately available to petitioner's customers or their production will stop. If not supplied to the customers by employees of the petitioner, such customers would have to employ comparable employees of their own or of other contractors.
". . . no hard and fast rule may be transposed from one industry to another to say what is necessary in `the production of goods.' What is practically necessary to it will depend on its environment and position. . . . What is required is a practical judgment as to whether the particular employer actually operates the work as part of an integrated effort for the production of goods."
The foregoing conclusions follow so clearly from the language of the statute as to make unnecessary a discussion of the declared purpose or the legislative history of the Act to support them.
The second question is whether or not petitioner's employees are exempted from the Act on the ground that petitioner is a "service establishment" within the meaning of § 13 (a) (2).
It is rare, if not impossible, for an employee who is engaged in an occupation necessary to the production of goods for interstate commerce to be said to be at the same time an employee engaged in a retail or service establishment whose selling and servicing is confined to ultimate consumers. These employments are largely mutually exclusive. To the extent that sales or services are necessary for the production of goods for interstate commerce they generally are by that hypothesis not sales or services to an ultimate consumer for his personal use and, accordingly, are neither "retail" sales nor services of a comparable character, within the meaning of § 13 (a) (2).
The logic of this result is as clear as the declared purpose, legislative history and administrative practice which combine to produce it.
The purposes of the Act are declared as follows in § 2:
"(a) The Congress hereby finds that the existence, in industries engaged in commerce or in the production of goods for commerce, of labor conditions detrimental to the maintenance of the minimum standard of living necessary for health, efficiency, and general well-being of workers (1) causes commerce and the channels and instrumentalities of commerce to be used to spread and perpetuate
(2) burdens commerce and the free flow of goods in commerce;
(3) constitutes an unfair method of competition in commerce;
(4) leads to labor disputes burdening and obstructing commerce and the free flow of goods in commerce; and (5) interferes with the orderly and fair marketing of goods in commerce.
"(b) It is hereby declared to be the policy of this Act, through the exercise by Congress of its power to regulate commerce among the several States, to correct and as rapidly as practicable to eliminate the conditions above referred to in such industries without substantially curtailing employment or earning power." 52 Stat. 1060, 29 U.S.C. § 202. (Italics supplied.)
To fail to cover in this Act the multitude of employees who are engaged in establishments like that of the petitioner and which supply the materials and services currently needed for the maintenance of productive machinery used by those who produce goods for interstate commerce would take the heart out of this Act. Savings resulting from substandard labor conditions would be reflected directly into competitive costs. This would weaken the governmental mechanism for sustaining "the minimum standard of living necessary for the health, efficiency, and general well-being of workers" referred to as the purpose of the Act.
The original Bill provided for a labor standards board which was given broad authority to issue regulations and orders to carry out the provisions of the Act including authority to determine some questions of coverage. It listed no specific exemptions such as are now contained in § 13. In the joint hearings on this Bill (Joint Hearings, 75th Cong., 1st Sess., on S. 2475 and H.R. 7200, pp. 1-89, see especially pp. 24-25, 24-29, 35 et seq.), the Chairman of the Senate Committee on Education and Labor asked the Assistant Attorney General (p. 35) —
"Would you explain under just what circumstances and under what circumstances only, it would be possible for the regulation of retail establishments and small business enterprises to come under this bill?" to which he replied —
"It was not intended by this bill to apply generally to retailers or to apply to the service trades, such as the filling-station attendant, and the pants presser and small business generally.
"Practically, the situation in which a local merchant might be affected would be if he were moving his goods in the course of delivery across the State line to a substantial extent so that he were engaging in interstate commerce; but generally speaking, the policy of the bill is not to include the service trades and small businesses and the retailing enterprises."
While its language and coverage were changed in details, the Bill did not depart substantially from its original purpose. This purpose remains the key to the meaning of the words defining its coverage and also to those defining exemption from its coverage. There never was an intent expressed to exempt retailers other than the local merchants of the type dealing with the ultimate consumer. Section 13 (a) (2) clarified the exemption of such of these as were near state lines and of local merchants whose purchases might be interstate although the greater part of their sales were intrastate.
In the suggested use of the word "retail" as opposed to the word "wholesale," a distinction appears not merely between the size and volume of the sales but between types of purchasers. For example —
"Retailing includes all marketing transactions in which the purchaser is actuated solely by a desire to satisfy his own personal wants or those of his family or friends through the personal use of the commodity or service purchased." (Beckman and Engle in Wholesaling Principles and Practice (1937) p. 25.)
Similarly the Encyclopedia of Social Sciences states that "The distinguishing feature of the retail trade . . . consists in selling merchandise to ultimate consumers," (Vol. 13, p. 346), whereas wholesaling is said to cover sales "to a retailer, a wholesaler or an industrial consumer so long as the purpose of the customer in buying such goods is to resell them in one form or another or to use them for business needs as supplies or equipment." (Vol. 15, p. 411.)
Governmental usage makes the same distinction on the basis of the use for which the goods are purchased. The Bureau of the Census states in its definition of "wholesale" that "in general, the distinguishing characteristic is that goods sold at wholesale are to be used for business purposes (such as materials for further processing and fabrication, merchandise for resale unchanged, etc.), rather than for personal or household consumption." U.S. Census of Business, 1939, Instructions to Enumerators For Business and Manufacturers, p. 18; also Vol. I, Retail Trade, p. 1; Vol. II, Wholesale Trade, p. 1. It classifies as "wholesale sales," sales of goods or merchandise "to trading establishments of all kinds, to institutions, industrial, commercial, and professional users, and sales to governmental bodies." (Ibid.) The Bureau of the Budget, in its Standard Industrial Classification Manual, likewise classifies "wholesale trade" to include "all establishments or places of business engaged primarily in selling merchandise to retailers, to industrial or commercial
The word "retail" because of its ready contrast with "wholesale" is generally more restrictive than the word "service." The two, however, are used so closely together in this statute as to require them to be interpreted similarly. This makes it appropriate to restrict the broader meaning of "service" to a meaning comparable to that given the narrower term "retail." The words are put on a like level especially by their use in the alternative with the single word "establishment" in the phrase "any retail or service establishment the greater part of whose selling or servicing is in intrastate commerce." (Italics supplied.) Accordingly, in proportion as the meaning of the word "retail" is restricted to sales made in small quantities to ultimate consumers to meet personal rather than commercial and industrial uses of those articles, so it is correspondingly appropriate to restrict the word "service" to services to ultimate users of them for personal rather than commercial purposes. This is supported by judicial interpretation of the clause.
The record establishes the "commercial and industrial" character of the petitioner's customers. The petitioner's circular advertises its business as that of "electrical engineers, motor dealers, commercial and industrial wiring." (Italics supplied.) The circular offers "service for all types of commercial and industrial wiring." (Italics supplied.) The stipulation filed by the petitioner shows that 99% of its "active accounts as reflected in its Accounts Receivable Ledger . . . are commercial or industrial firms." (Italics supplied.) These are not "retail" customers in the same sense as is the customer of the local merchant, local grocer or filling station operator who buys for his own personal consumption. The Fair Labor Standards Act is concerned with goods in the stream of commerce but not with those in "the actual physical possession of the ultimate consumer thereof other than a producer, manufacturer, or processor thereof." See § 3 (i), supra.
For these reasons the employees of the petitioner were properly held to be engaged in the production of goods for interstate commerce under the coverage of the Fair Labor Standards Act and were not taken out of that coverage by the exemption stated in § 13 (a) (2). The judgment of the Circuit Court of Appeals accordingly is
MR. JUSTICE JACKSON took no part in the consideration or decision of this case.
"It costs more to operate a faulty motor than to buy a new one. But it isn't necessary to buy a new motor. We'll recondition your present motors to give you the same service and satisfaction as new ones. And we'll save you 25% to 50% on new motor costs. .. .
"When a motor suddenly goes dead or lags, when trouble in electrical equipment arises, you need service and you need it quick! Every second of delay means more dollars lost. How well do we appreciate what speed means to our patrons, as well as dependable workmanship! . . .
"No job is too small or too large to handle promptly. Temporary replacements can be made immediately from our stocks. No charge is made for equipment that is loaned while repairs are being made."
"The bill carefully excludes from its scope business in the several States that is of a purely local nature. It applies only to the industrial and business activities of the Nation insofar as they utilize the channels of interstate commerce, or seriously and substantially burden or harass such commerce. It leaves to State and local communities their own responsibilities concerning those local service and other business trades that do not substantially influence the stream of interstate commerce. For example, the policy in this regard is such that it is not even intended to include in its scope those purely local and small business establishments that happen to lie near State lines, and solely on account of such location, actually serve a wholly local community trade within two States."
It was intended "to eliminate retailing" and to prevent the classification of employees of retail establishments as employees engaged in interstate commerce because of either purchases or sales made by such employers across state lines. Representative Celler said (83 Cong. Rec. 7438):
"The courts will look to the debates in this House for what is meant by these words. . . . If you want to eliminate retailing, you should say so in clear-cut language, and this amendment which I offer indicates in the clearest way that retailing is exempted.. . . Accept it and then retail dry goods, retail butchering, grocers, retail clothing stores, department stores will all be exempt."
Representative Norton replied: ". . . in view of the great misunderstanding there must be about this retailing feature of the bill, the committee will accept the amendment. There has been a great deal of doubt as to the understanding of that particular section, and I think this amendment will not weaken our bill, but will in fact strengthen it."
The amendment thereupon was agreed to. (Ayes, 145 — Noes, 56.)
Representative Johnson of Oklahoma, in withdrawing an amendment which would have expressly stricken out interstate purchases as a basis for bringing within the Act employees of an industry making such purchases, then said:
". . . the amendment . . . offered by the gentleman from New York [Mr. Celler], which amendment has been approved by this body, is to protect the little corner store, filling station, and other retailers who purchase a substantial part of their goods across the State line."
Some of these interpretations are as follows:
"Section 13 (a) (2), was intended to apply typically to the grocery store, butcher shop, haberdashery, clothing store, filling station, beauty parlor, hotel, and similar commonly recognized retail and service establishments." Par. 3.
"A retail sale is a sale of goods for direct consumption and not for purposes of resale or redistribution in any form." Par. 12.
"A retail establishment sells goods to private individuals for personal or family consumption." Par. 14.
"The term `service establishment' as used in section 13 (a) (2) may be considered to include generally that large miscellaneous assortment of business enterprises which are similar in character to retail establishments, but which may not be accurately classified as such. Such an interpretation is suggested by the manner in which section 13 (a) (2) is drafted. Service and retail establishments are considered in the same sentence and the same criterion of intrastate commerce is made applicable to both." Par. 22. See also, Pars. 23-29.
"As already indicated, establishments which perform a substantial amount of work for industrial or business users, government agencies, institutions, and similar customers may not be considered service establishments. A service establishment is one which performs service for private individuals for personal or family use." Par. 27.
In paragraph 29, the Administrator lists many examples of "establishments not considered service establishments under exemption" and says of them —
"Although we recognize that the foregoing companies perform service, it is nevertheless our opinion that establishments engaged in such business are not in the ordinary case sufficiently similar in character to retail establishments to be considered service establishments within the meaning of section 13 (a) (2)." (Italics supplied.)
Among the companies so listed in paragraph 29, and to which the above quotation refers, are the following which have special significance in connection with this case: engineering firms, machine shops and foundries, establishments engaged in sharpening and reconditioning industrial tools, in resistance welding, in armature rewinding, or in making electric signs, companies engaged in the repair of business machines or in repairing elevators.