Arnold v. Ben Kanowsky, Inc, No. 60

CourtUnited States Supreme Court
Writing for the CourtWARREN
Citation361 U.S. 388,4 L.Ed.2d 393,80 S.Ct. 453
PartiesJohn W. ARNOLD, Petitioner, v. BEN KANOWSKY, INC
Docket NumberNo. 60
Decision Date23 February 1960

361 U.S. 388
80 S.Ct. 453
4 L.Ed.2d 393
John W. ARNOLD, Petitioner,

v.

BEN KANOWSKY, INC.

No. 60.
Argued Jan. 11, 1960.
Decided Feb. 23, 1960.
Rehearing Denied April 4, 1960.

See 362 U.S. 945, 80 S.Ct. 803.

Page 389

Miss Bessie Margolin, Washington, D.C., for the United States, as amicus curiae.

Mr. Arthur J. Riggs, Dallas, Tex., for the petitioner.

Mr. G. H. Kelsoe, Jr., Dallas, Tex., for the respondent.

Mr. Chief Justice WARREN delivered the opinion of the Court.

This case concerns the provisions of the Fair Labor Standards Act of 1938 exempting from wages-and-hours coverage certain retail sales and service establishments.1 The suit was brought by petitioner individually under § 16(b) of the Act, 29 U.S.C.A. § 216(b) for payment of overtime wages claimed under § 7, 29 U.S.C.A. § 207. The Court of Appeals for the Fifth Circuit reversed a District Court judgment for petitioner2 and we granted certiorari, 359 U.S. 983, 79 S.Ct. 943, 3 L.Ed.2d 932. The proceedings in this Court are in forma pauperis. Both sides submitted on

Page 390

their briefs, and oral argument was heard only from the representative of the Secretary of Labor appearing as amicus curiae.

Respondent conducts an interior decorating and custom furniture business in Dallas, Texas. On the same premises he fabricates aircraft parts from phenolic, a cloth-impregnated phenol resin. This plastic is widely used in aircraft and automotive parts and can be machined on the woodworking equipment respondent has available in his furniture shop. Petitioner was employed by respondent from October 17, 1954, through September 2, 1955, primarily in the fabrication of phenolic parts.

At the trial, a representative of Chance Vought Aircraft, Inc., testified that his company purchased over $34,000 worth of phenolic parts from respondent in 1955, and that these parts were used in aircraft and missiles sold to the United States Navy. A representative of Temco Aircraft Company testified that it purchased about $2,000 worth of phenolic parts annually from Kanowsky for use in manufacturing aircraft subassemblies for the Air Force or for prime contractors, many of whom were located outside the State. Respondent also shipped a small amount of sheet phenolic directly outside the State.

During the year beginning October 1, 1954, respondent's sales totaled $99,117.52, and its sales of phenolic and phenolic parts were $39,751.71, or almost exactly 40% of its total sales. Its secretary-treasurer admitted that phenolic aircraft parts alone accounted for at least 25% of the company's total sales. Respondent introduced no evidence concerning the amount or nature of sales of phenolic in forms other than aircraft parts. Notwithstanding the admitted percentage of its total sales attributable to phenolic parts, respondent claimed exemption from the provisions of the Fair Labor Standards Act because of the retail character of its business.

Page 391

The District Court found that petitioner was engaged in the production of goods for commerce within the meaning of the Act, and upon respondent's admission that petitioner had been paid for overtime hours only at straight time rates, entered judgment for petitioner for unpaid overtime compensation plus an attorney's fee. The Court of Appeals reversed on the ground that respondent was exempt from the Act's overtime requirements under § 13(a)(2) as a 'retail or service establishment.'

We believe that the Court of Appeals was in error and must be reversed. The wording of the statute, the clear legislative history, and the decisions of this Court require this conclusion.

Petitioner admittedly is engaged in the manufacture of phenolic parts for commerce. That this activity may be considered a 'sideline' from respondent's viewpoint does not remove petitioner from coverage under the Fair Labor Standards Act unless the respondent's activities fall within the specific exemptions enumerated in § 13 of the Act. As originally passed in 1938, the Fair Labor Standards Act exempted from coverage 'any employee engaged in any retail or service establishment the greater part of whose selling or servicing is in intrastate commerce.'3 In 1949 Congress substituted a three-part definition for this provision. Any employee employed by a retail or service establishment is to be exempt if more than 50% of the establishment's annual dollar volume of sales is made within the State, if 75% of its annual sales volume is not for resale, and if 75% of its annual sales volume is recognized within the industry as retail sales.

This Court had occasion at the last Term to point out that the 1949 revision does not represent a general broad-

Page 392

ening of the exemptions contained in § 13. 4 Rather, Congress 'was acting in implementation of a specific and particularized purpose' to replace the unsatisfactory 'business use' test, which had developed around the 1938 provision, with a formula that would be at once flexible and at the same time provide clear statutory guidance to the Administrator.5

We have held that these exemptions are to be narrowly construed against the employers seeking to assert them and their application limited to those establishments plainly and unmistakably within their terms and spirit.6 The three conditions of § 13(a)(2) are explicit prerequisites to exemption, not merely suggested guidelines for judicial determination of the employer's status.7

While § 13(a)(2) contains the requirements every retail establishment must satisfy to qualify for exemption, a retailer-manufacturer must satisfy the additional requirements of § 13(a)(4) since it 'makes or processes' the goods it sells.8

Page 393

Turning to the facts of this case, it is clear that respondent, through its fabrication of phenolic parts, is 'making or processing the goods that it sells.' To gain exemption it therefore must comply with the criteria of § 13(a)(2) as they are incorporated by reference in § 13(a)(4), as well as the additional requirements of § 13(a)(4) itself. It is clear that respondent does not meet at least two of the three standards of § 13(a)(2) as included in § 13(a)(4).

First, sales of phenolic parts account for more than 25% of the respondent's annual sales volume. The court below assumed that respondent's sales were recognized in the community as retail sales without any evidence to support the fact. This conclusion was not justified, since it is clear that Congress intended that 'any employer who asserts that his establishment is exempt must assume the burden of proving that at least 75 percent of his...

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744 practice notes
  • Part II
    • United States
    • Federal Register April 23, 2004
    • 23 d5 Abril d5 2004
    ...regulations. Other commenters contend that the proposal violates the rule of interpretation articulated in Arnold v. Ben Kanowsky, Inc., 361 U.S. 388, 392 (1960), that FLSA exemptions are to be ``narrowly construed.'' However, in Auer v. Robbins, 519 U.S. at 462-63, the Supreme Court addres......
  • Fair Labor Standards Act: Minimum wage and overtime pay for executive, administrative, professional, outside sales, and computer employees; defining and delimiting exemptions,
    • United States
    • Federal Register April 23, 2004
    • 23 d5 Abril d5 2004
    ...regulations. Other commenters contend that the proposal violates the rule of interpretation articulated in Arnold v. Ben Kanowsky, Inc., 361 U.S. 388, 392 (1960), that FLSA exemptions are to be ``narrowly construed.'' However, in Auer v. Robbins, 519 U.S. at 462-63, the Supreme Court addres......
  • Salazar v. Butterball Llc, No. 10–1154.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (10th Circuit)
    • 5 d2 Julho d2 2011
    ...at 345, 117 S.Ct. 843. The first question is whether we must construe the term in the plaintiffs' favor. In Arnold v. Ben Kanowsky, Inc., 361 U.S. 388, 392, 80 S.Ct. 453, 4 L.Ed.2d 393 (1960), the Supreme Court stated that exemptions to the FLSA are to be construed narrowly against the empl......
  • Gilreath v. Daniel Funeral Home, Inc., No. 19646
    • United States
    • United States Courts of Appeals. United States Court of Appeals (8th Circuit)
    • 3 d2 Fevereiro d2 1970
    ...of the Act, exemption from coverage thereunder is to be narrowly construed against the party asserting it. Arnold v. Ben Kanowsky, Inc., 361 U.S. 388, 392, 80 S.Ct. 453, 4 L.Ed.2d 393 (1960); Mitchell v. Kentucky Finance Co., 359 U.S. 290, 295, 79 S. Ct. 756, 3 L.Ed.2d 815 (1959); A. H. Phi......
  • Request a trial to view additional results
743 cases
  • National Automatic Laundry and Cleaning Council v. Shultz, No. 22692.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (District of Columbia)
    • 31 d3 Março d3 1971
    ...in case of inaction. 18 Tcherepnin v. Knight, 389 U.S. 332, 336, 88 S.Ct. 548, 19 L.Ed.2d 564 (1967). 19 Arnold v. Ben Kanowsky, Inc., 361 U.S. 388, 392, 80 S.Ct. 453, 456, 4 L.Ed.2d 393 (1960); Port of New York Authority v. Baker, Watts & Co., 129 U.S.App. D.C. 173, 180, 392 F.2d 497, 504 ......
  • Rehberg v. Flowers Baking Co. of Jamestown, LLC, DOCKET NO. 3:12-cv-00596-MOC-DSC
    • United States
    • United States District Courts. 4th Circuit. Western District of North Carolina
    • 12 d5 Fevereiro d5 2016
    ...any exemption applies. See Sanchez v. Truse Trucking, Inc. , 74 F.Supp.3d 716, 727 (M.D.N.C.2014) (citing Arnold v. Ben Kanowsky, Inc., 361 U.S. 388, 392, 394 n. 11, 80 S.Ct. 453, 4 L.Ed.2d 393 (1960) ). Also as noted above, the FLSA provides that employers must pay hourly employees 150% of......
  • Smith v. United Parcel Service, Inc., Civ. A. No. 2:95-0145.
    • United States
    • United States District Courts. 4th Circuit. Southern District of West Virginia
    • 5 d3 Julho d3 1995
    ...`are to be narrowly construed and limited to those plainly and unmistakably within their terms and spirit.' Arnold v. Ben Kanowsky, Inc., 361 U.S. 388, 392, 80 S.Ct. 453, 456, 4 L.Ed.2d 393 (1960); Mitchell v. Lublin, McGaughy & Assoc., 358 U.S. 207, 211, 79 S.Ct. 260, 264, 3 L.Ed.2d 243 (1......
  • Morales v. 22nd Dist. Agric. Ass'n, D067247
    • United States
    • California Court of Appeals
    • 13 d3 Julho d3 2016
    ...[is] limited to those establishments plainly and unmistakably within their terms and spirit.’ ” (Arnold v. Ben Kanowsky, Inc. (1960) 361 U.S. 388, 392, 80 S.Ct. 453, 4 L.Ed.2d 393 ; Guerrero v. Superior Court (2013) 213 Cal.App.4th 912, 941, 153 Cal.Rptr.3d 315 (Guerrero ).) Appellants, how......
  • Request a trial to view additional results
1 books & journal articles
  • The Sword and the Shield: The Benefits of Opinion Letters by Employment and Labor Agencies.
    • United States
    • Missouri Law Review Vol. 86 Nbr. 4, September 2021
    • 22 d3 Setembro d3 2021
    ...Act, 85 Fed. Reg. 187 (Sept. 25, 2020) (to be codified at 29 C.F.R. pt. 780, 788, 795). (315) See, e.g., Arnold v. Ben Kanowsky, Inc., 361 U.S. 388, 392 (1960). Eisenberg, supra note 96, at (316) DeCamp & McGillivary, supra note 75, at 58. (317) See id. (318) Encino Motorcars, LLC v. Na......

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