Tony and Susan Alamo Foundation v. Secretary of Labor
471 U.S. 290, 85 L. Ed. 2d 278, 1985 U.S. LEXIS 3 (1985)
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Rule of Law:
The Fair Labor Standards Act's minimum wage, overtime, and recordkeeping provisions apply to commercial activities operated by religious or nonprofit organizations. The application of this neutral, generally applicable law to such organizations does not violate the Religion Clauses of the First Amendment.
Facts:
- The Tony and Susan Alamo Foundation is a nonprofit religious organization dedicated to evangelism and caring for the needy.
- The Foundation derives its income primarily from operating more than 30 commercial businesses, including service stations, retail stores, and construction companies, which serve the general public and compete with other for-profit businesses.
- These businesses are staffed largely by 'associates,' many of whom were formerly drug addicts, derelicts, or criminals who were rehabilitated by the Foundation.
- The associates do not receive any cash salaries for their work.
- In lieu of cash wages, the Foundation provides its associates with food, clothing, shelter, and other in-kind benefits.
- The associates testified that they considered themselves to be volunteers working for religious purposes and did not expect or desire monetary compensation.
Procedural Posture:
- The Secretary of Labor filed an action against the Tony and Susan Alamo Foundation in the U.S. District Court for the Western District of Arkansas, alleging violations of the Fair Labor Standards Act (FLSA).
- The District Court, a trial court, ruled that the Foundation's businesses were a covered 'enterprise' and its associates were 'employees' under the FLSA, and that applying the Act did not violate the First Amendment.
- The Foundation appealed the liability determination to the U.S. Court of Appeals for the Eighth Circuit.
- The Court of Appeals, an intermediate appellate court, affirmed the District Court's holding as to the Foundation's liability under the FLSA.
- The Court of Appeals vacated the District Court's remedial order and remanded the case for a recalculation of back wages.
- The U.S. Supreme Court granted certiorari to review the judgment of the Court of Appeals.
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Issue:
Does applying the Fair Labor Standards Act's minimum wage, overtime, and recordkeeping requirements to workers engaged in the commercial activities of a religious foundation violate the Religion Clauses of the First Amendment?
Opinions:
Majority - Justice White
No. The application of the Fair Labor Standards Act (FLSA) to the commercial activities of the religious foundation does not violate the First Amendment. The Court reasoned through a two-part analysis. First, it determined that the FLSA statutorily applies to the Foundation's businesses. These businesses qualify as an 'enterprise' engaged in commerce for a 'common business purpose' because they serve the general public in competition with other commercial ventures; the FLSA contains no express or implied exception for religious or nonprofit organizations. Second, the Court held that the associates are 'employees' under the 'economic reality' test. Despite their subjective characterization as volunteers, their long-term economic dependence on the Foundation for food, shelter, and other necessities—which are wages in another form—establishes an employment relationship. The Act's protections cannot be waived. Finally, this application does not violate the First Amendment. It does not burden the associates' free exercise of religion, as wages can be paid in-kind as they already are, and any cash received could be voluntarily returned. Furthermore, the Act's recordkeeping requirements are a routine, secular regulatory matter that does not create excessive government entanglement with religion.
Analysis:
This decision solidifies the principle that when religious organizations enter the commercial marketplace, they must adhere to the same neutral, generally applicable laws as secular businesses. The Court's ruling reinforces the 'economic reality' test for determining employee status, prioritizing objective economic dependence over the subjective beliefs or labels used by the parties. This prevents employers, including religious entities, from circumventing labor laws by classifying economically dependent workers as 'volunteers.' The case sets a significant precedent limiting the ability of religious entities to claim First Amendment immunity from labor regulations governing their commercial, market-competing enterprises.
