Rowan Cos., Inc. v. United States

PETITIONER: Rowan Cos., Inc.
RESPONDENT: United States
LOCATION: Dames & Moore

DOCKET NO.: 80-780
DECIDED BY: Burger Court (1975-1981)
LOWER COURT: United States Court of Appeals for the Fifth Circuit

CITATION: 452 US 247 (1981)
ARGUED: Apr 21, 1981
DECIDED: Jun 08, 1981

K. Martin Worthy - on behalf of the Petitioner
Stuart A. Smith - on behalf of the Respondent

Facts of the case


Media for Rowan Cos., Inc. v. United States

Audio Transcription for Oral Argument - April 21, 1981 in Rowan Cos., Inc. v. United States

Warren E. Burger:

We'll hear arguments next in Rowan Companies v. the United States.

Mr. Worthy, you may continue when you're ready.

K. Martin Worthy:

Mr. Chief Justice, and may it please the Court:

The issue in this case is whether meals and lodging furnished without charge to employees solely for the convenience of the employer are wages subject to social security, that is, FICA and FUTA taxes.

The court below said yes.

We think that in light of this Court's decision in Central Illinois Public Service Company in 1978, emphasizing that wages is a narrowly defined term, much narrower than income, the legislative history of social security and income tax withholding indicating that Congress intended that the same wage base, the same exact tax base of wages with the same definition, be used for all employment tax purposes, and the 60-year history of rulings, regulations, and cases that meals and lodging for the convenience of the employer are not income, the answer is clearly that they are not subject to tax.

The essential facts are undisputed.

The petitioner operates oil and gas drilling rigs up to 60 miles offshore, with crews of up to a dozen people.

Because it's too costly for the crews to leave at the end of each shift--

Warren E. Burger:

Too costly for?

K. Martin Worthy:

--The crews to leave the--

Warren E. Burger:

Yes, but too costly for whom?

The crew members or the employer?

K. Martin Worthy:

--The employer.

The record shows that the expense of transporting the men back and forth from the shore to the rig is borne by the employer and borne during the employer's time.

Warren E. Burger:

On their time or company time?

K. Martin Worthy:

On company time.

They are paid while they are being transported.

That's in the record, Your Honor.

Warren E. Burger:

And was there a figure on that?

That cost?

K. Martin Worthy:

Yes, sir.

The figure is--

Warren E. Burger:

How does it relate--

K. Martin Worthy:

--$275 to $350 per crew per trip, which breaks down to about $25 to $29 per man, with a 12-man crew as compared to about $6 a day for furnishing food and lodging aboard the rig.

Warren E. Burger:

--A little bit more than the food.

K. Martin Worthy:

I beg your pardon, sir?

Warren E. Burger:

A little bit more than the food.

K. Martin Worthy:

Yes, sir, about five times as much as the food and lodging.

Byron R. White:

Unless they're awful hungry.