Brief Fact Summary. Darby was charged with violating the Fair Labor Standards Act (the Act) by failing to comply with minimum wage and hour requirements for employees. He challenged the violation, claiming the regulation on intrastate wages and hours did not fall within the commerce powers of Congress.
Synopsis of Rule of Law. If the regulated intrastate activity has a substantial effect on interstate commerce, Congress may regulate the activity regardless of Congress’s motive.
We review de novo the district court's legal interpretation of the term loss under the Sentencing Guidelines, but to the extent that the determination of the amount of loss is a factual matter, we review only for clear error.View Full Point of Law
Issue. Do the wages and hours of local employees have such a substantial impact on interstate commerce as to allow Congress to constitutionally regulate them?
Held. Yes. Judgment Reversed.
The Supreme Court found that the manufacture of goods is not itself interstate commerce, but that the shipment of manufactured goods interstate is within the regulatory powers of Congress. The current legislation is an attempt to stop interstate competition in the distribution of goods produced under substandard labor conditions.
Regardless of Congress’s motive, Congress may regulate commerce so long as the regulations do not infringe on any other constitutional prohibitions. This decision overruled Hammer v. Dagenhart, 247 U.S. 251 (1918), which came to the opposite conclusion.
Congress’s power over interstate commerce extends to intrastate activities, so long as the intrastate activities have a substantial effect on the commerce or the exercise of Congressional power over it.
Discussion. The Court in this case relies on the effects of a local economic activity on interstate commerce, establishing a “substantial effect” test.