Fair Labor Standards Act – what does it mean for me?
You must determine if the business falls under the provisions of the Federal Wage and Hour laws, which are numerous and somewhat complicated. There is a dollar volume test for enterprise coverage, specific types of businesses that are automatically covered and what is termed "individual coverage".
Many states have additional sets of regulations for minimum wage and overtime. They may regulate areas not covered by the FLSA such as frequency of paycheck, method of payment and reporting requirements to the employee.
The FLSA applies to all employees of enterprises engaged in interstate commerce, producing goods intended for interstate commerce or working on goods that have crossed state lines (if two or more employees meet the definition of "engaged in interstate commerce," then the FLSA covers the entire business).
Employees of businesses not covered through "enterprise coverage" can still be covered as individuals if they are involved in interstate commerce or the production of goods for interstate commerce.
| Interstate commerce is quite broadly defined as employees who: |
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Work in communications or transportation |
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Regularly use the mail or telephone for interstate communication |
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Keep records of interstate transactions |
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Handle, ship or receive goods that have crossed state lines |
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Cross state lines for employment purposes |
Exceptions to coverage under the FLSA are rare, but the most common one is the small business exemption. The dollar volume test for this exemption is $500,000, meaning that if the enterprise has an annual gross sales volume less than $500,000, than it is not covered by the Federal Labor Standards Act and state laws will still apply.
Employees of enterprises found not to be covered by the FLSA may still be covered on an individual basis if the duties performed meet the definition of interstate commerce. Therefore, even if an employer meets the small business requirement as a whole, one employee could still be considered as covered by the FLSA, and the employer would have to follow the federal requirements for recordkeeping, minimum wage and overtime.
Consult the local Wage and Hour office for more detailed information on the FLSA, as well as the applicable state regulations. Exemptions and exceptions are usually narrowly defined, and employers must be extremely careful when making determinations.
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