Marshall v. Owensboro Daviess County Hosp.

• Decision Date: 09 August 1978
• Docket Number: No. 77-3069,OWENSBORO-DAVIESS,77-3069
• Citation: 581 F.2d 116
• Parties: 17 Fair Empl.Prac.Cas. 1448, 23 Wage & Hour Cas. (BN 959, 17 Empl. Prac. Dec. P 8529, 84 Lab.Cas. P 33,694 Ray MARSHALL (Successor to W. J. Usery), Secretary of Labor, United States Department of Labor, Plaintiff-Appellant, v.COUNTY HOSPITAL et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 116

581 F.2d 116

17 Fair Empl.Prac.Cas. 1448,

23 Wage & Hour Cas. (BN 959,

17 Empl. Prac. Dec. P 8529, 84 Lab.Cas. P 33,694

Ray MARSHALL (Successor to W. J. Usery), Secretary of Labor United States Department of Labor, Plaintiff-Appellant, v. OWENSBORO-DAVIESS COUNTY HOSPITAL et al., Defendants-Appellees.

No. 77-3069.

United States Court of Appeals Sixth Circuit.

Argued June 12, 1978.

Decided Aug. 9, 1978.

Marvin Tincher, Regional Atty., Frank Steiner, U. S. Dept. of Labor, Nashville, Tenn., Carin Ann Clauss, Lois G. Williams, U. S. Dept. of Labor, Washington, D. C., for plaintiff-appellant.

Ronald M. Sullivan, Sandidge, Holbrook, Craig & Hager, Owensboro, Ky., for defendants-appellees.

Before WEICK, PECK ^* and LIVELY, Circuit Judges.

WEICK, Circuit Judge.

The suit in the District Court was brought by the Secretary of Labor against the Owensboro-Daviess County Hospital, a corporation, the City of Owensboro, Kentucky, and the County of Daviess, Kentucky, under the Equal Pay Act of 1963, 29 U.S.C. § 206(d)(1), (3). The Secretary sought to enjoin the defendants from violating the Act by paying wages to "male nursing assistants" (I. e., orderlies) higher than wages paid to female "nurse assistants" (I. e., aides), and sought as well an award of back pay unlawfully withheld. The case proceeded to trial, and the record shows that at the close of the Secretary's evidence the District Court Sua sponte granted defendants' motion for a directed verdict and adopted findings of fact and conclusions of law, and entered judgment for defendants, dismissing the complaint. The Court found as fact that there were substantial differences between the two positions, the duties of a typical orderly requiring skill, effort, and responsibility greater than those of a typical aide, and accordingly held that the wage differential was justified and was not in violation of the Act.

On appeal, in Brennan v. Owensboro-Daviess County Hosp., 523 F.2d 1013 (6th Cir. 1975), Cert. denied, 425 U.S. 973, 96 S.Ct. 2170, 48 L.Ed.2d 796 (1976), we reversed, finding that several of the District Court's pertinent findings of fact were not supported by substantial evidence and were clearly erroneous, and that the Secretary had established a Prima facie case of sex discrimination by demonstrating that the jobs of aides and orderlies, during the relevant period, were substantially the same and were performed under identical working conditions. The case was remanded to the District Court to give to the defendants an opportunity to rebut the Secretary's Prima facie case, or to show that a factor other than sex justified the wage differential.

Before the case was scheduled for hearing in the District Court, however, the Supreme Court announced its decision in National League of Cities v. Usery, 426 U.S. 833, 96 S.Ct. 2465, 49 L.Ed.2d 245 (1976), in which the Court held that the application of the minimum wage and overtime provisions of the Fair Labor Standards Act (FLSA), 29 U.S.C. §§ 206(a), (b), 207(a), to state and local government employees performing traditional governmental functions could not be constitutionally justified as a regulation of commerce.

Because the Equal Pay Act of 1963 (EPA) had been originally enacted as an amendment to the FLSA, defendants were granted leave to amend their answer in order to raise the issue of the constitutionality of the EPA as applied to employees of a state hospital. The District Court granted defendants' motion for summary judgment, holding that under National League of Cities "the term 'employers,' as defined for the entire Act, no longer includes state-operated hospitals or their employees." Usery v. Owensboro-Daviess County Hosp., 423 F.Supp. 843, 845 (W.D.Ky.1976). ¹ We disagree, and accordingly we reverse.

I

In 1938 Congress enacted the Fair Labor Standards Act, ch. 676, 52 Stat. 1060 (1938) (current version at 29 U.S.C. §§ 201-19), which required certain employers to pay their employees a minimum wage and to pay them at one and one half times the regular hourly rate for work in excess of forty hours per week. In United States v. Darby, 312 U.S. 100, 61 S.Ct. 451, 85 L.Ed. 609 (1941), the Supreme Court unanimously upheld the FLSA as a valid exercise of Congressional power under the Commerce Clause.

As originally enacted § 3(d) of the FLSA specifically excluded states and their political subdivisions from coverage. The scope of employee coverage was significantly expanded, however, by the Fair Labor Standards Amendments of 1966, Pub.L. No. 89-601, § 102, 80 Stat. 831, which eliminated the prior exemptions of public and nonprofit hospitals, schools, and certain other institutions. The extension of the FLSA to cover such enterprises was upheld by the Supreme Court in Maryland v. Wirtz, 392 U.S. 183, 88 S.Ct. 2017, 20 L.Ed.2d 1020 (1968).

The extension of the FLSA to the states was completed by the Fair Labor Standards Amendments of 1974, Pub.L. No. 93-259, § 6(a)(5), 88 Stat. 59 (1974), in which the critical definition of "enterprises engaged in commerce or in the production of commerce" was expanded to encompass "an activity of a public agency," 29 U.S.C. § 203(s)(5), and "employer" was redefined to include "a public agency" in 29 U.S.C. § 203(d). The FLSA thus was amended to impose substantially identical requirements upon public employers as on private employers.

In National League of Cities, supra, individual cities, states and organizations brought an action challenging the 1974 amendments primarily on Tenth Amendment grounds. As summarized by the Court, 426 U.S. at 837, 96 S.Ct. at 2467:

They asserted in effect that when Congress sought to apply the Fair Labor Standards Act provisions virtually across the board to employees of state and municipal governments it "infringed a constitutional prohibition" running in favor of the States As States. The gist of their complaint was not that the conditions of employment of such public employees were beyond the scope of the commerce power had those employees been employed in the private sector but that the established constitutional doctrine of inter-governmental immunity consistently recognized in a long series of our cases affirmatively prevented the exercise of this authority in the manner which Congress chose in the 1974 amendments.

The Court agreed, and accordingly overruled Maryland v. Wirtz, supra, 426 U.S. at 840, 96 S.Ct. 2465.

The Court stated:

One undoubted attribute of state sovereignty is the States' power to determine the wages which shall be paid to those whom they employ in order to carry out their governmental functions . . . . (National League of Cities, Supra, at 845, 96 S.Ct. at 2471.)

and further stated:

But it cannot be gainsaid that the federal requirement directly supplants the considered policy choices of the States' elected officials and administrators as to how they wish to structure pay scales in state employment. (National League of Cities, Supra, at 848, 96 S.Ct. at 2472.)

The Court concluded, at 851-52, 96 S.Ct. at 2474:

(B)oth the minimum wage and the maximum hour provisions will impermissibly interfere with the integral governmental functions of these bodies. We earlier noted some disagreement between the parties regarding the precise effect the amendments will have in application. We do not believe particularized assessments of actual impact are crucial to resolution of the issue presented, however. For even if we accept appellee's assessments concerning the impact of the amendments, their application will nontheless significantly alter or displace the States' abilities to structure employer-employee relationships . . . . (T)he dispositive factor is that Congress has attempted to exercise its Commerce Clause authority to prescribe minimum wages and maximum hours to be paid by the States in their capacities as sovereign governments. In so doing, Congress has sought to wield its power in a fashion that would impair the States' "ability to function effectively in a federal system" . . . . (Fry v. United States, 421 U.S. 542, 547 n. 7, 95 S.Ct. 1792, 44 L.Ed.2d 363 (1975)).

In a footnote, however, 426 U.S. at 852 n. 17, 96 S.Ct. at 2474, the Court added:

We express no view as to whether different results might obtain if Congress seeks to affect integral operations of state governments by exercising authority granted it under other sections of the Constitution such as the spending power, Art. I, § 8, cl. 1, or § 5 of the Fourteenth Amendment.

II

The Equal Pay Act of 1963, 29 U.S.C. § 206(d), was enacted by Congress as an amendment to the FLSA. It was based on a Congressional finding that sex-based wage differentials have a substantial adverse impact on interstate commerce, and accordingly mandated that all persons performing equal work must receive equal pay, unless the differential is justified by a consideration other than sex. ²

In holding the EPA unconstitutional as applied to a state hospital, the District Court stated, 423 F.Supp. at 845:

Although the League ruling did leave unanswered questions as to which state activities were essential to state sovereignty and therefore protected by the Tenth Amendment from federal regulation under the Commerce Clause, that decision explicitly stated that hospitals were encompassed within its ruling. Thus, the term "employers", as defined for the entire Act, no longer includes state-operated hospitals or their employees.

At the outset it should be noted that to date three Circuits have considered the claims asserted by defendants in the District Court, and have uniformly rejected them. Marshall v. City of Sheboygan, 577 F.2d 1 (7th Cir. 1978); ³ Usery v. Charleston County School Dist., 558 F.2d 1169 (4th Cir. 1977); Usery v. Allegheny County Inst. Dist., 544 F.2d 148 (3d Cir. 1976), Cert. denied, 430 U.S. 946, 97 S.Ct. 1582, 51 L.Ed.2d 793 (1977). We agree with the decisions in Charleston and Allegheny which held that, although Congress did not expressly...