In the 1989 case of Fort Stewart Schools v. Federal Labor Relations Authority, the U.S. Supreme Court ruled that schools operated by the Department of Defense (DoD) on military bases were not subject to federal labor laws because they did not engage in "commerce." The Federal Labor Relations Authority had previously decided that these schools were engaged in commerce and thus fell under its jurisdiction for purposes of collective bargaining rights. However, the Supreme Court disagreed, stating that while these DoD-run schools do purchase supplies and pay salaries which can affect interstate commerce indirectly, their primary function is education - a non-commercial activity according to previous court rulings. Therefore, they are exempt from federal labor law requirements.

In the dissenting opinion for Fort Stewart Schools v. Federal Labor Relations Authority, Justice Blackmun disagreed with the majority's interpretation of "conditions of employment" under 5 U.S.C §7102(2). He argued that this definition should include wages and fringe benefits, as these are fundamental aspects of any employment relationship. The majority’s narrow interpretation failed to consider Congress' intent in enacting the statute - to promote collective bargaining within federal workplaces. By excluding wages from negotiable conditions, it undermines employees’ rights and weakens their bargaining power. Furthermore, he pointed out that Department of Defense schools were unique among federal entities because they could set pay scales independently without adhering strictly to General Schedule rates used by most other agencies; thus making wage negotiation more feasible here than elsewhere in government service. Therefore, he believed FLRA was correct in its decision that teachers at DOD-run schools on military bases should be allowed to bargain over salaries.