Sometimes, my clients ask if they are required to pay overtime to their hourly employees. Some of the more-savvy clients know that most federal employment laws only apply to businesses of a certain size. For example, Title VII of the Civil Rights Act of 1964 only applies to employers with fifteen or more employees. So, these legal-oriented clients will ask about the size-requirement for the Fair Labor Standards Act, which requires overtime.
The answer: there is no size requirement. Instead, the FLSA looks at the business of the employer and the employee. Employers must provide overtime for any employee “who in any workweek is engaged in commerce or in the production of goods for commerce, or is employed in an enterprise engaged in commerce or in the production of goods for commerce ….” 29 U.S.C. §207(a)(1). That language provides “individual coverage” for employees who work in commerce and also “enterprise coverage” for employers whose business is engaged in commerce.
Last week, the Eleventh Circuit Court of Appeals made clear that it doesn’t take much for an employee to get “individual coverage.” See Elien v. All County Enviro. Svcs., Inc., No. 2021 WL 1034800 (11th Cir. Mar. 18, 2021). The Court concluded that an employee who “makes three to five phone calls per week to out-of-state customers and vendors” can receive “individual coverage” under the FLSA.
Wendy St. Elien was an administrative assistant for a pest control company in Florida. She called out-of-state customers and vendors on the phone between three and five times a week. She called “snowbird” property owners to ask for permission to charge their credit cards for services rendered at their Florida properties or to get permission to enter their premises. She also called the out-of-state corporate headquarters of vendors to discuss billings and payments. St. Elien sued her employer under the FLSA claiming that she was not paid overtime. Her employer claimed that she was not covered by the FLSA.
The Eleventh Circuit’s opinion boiled-down to whether St. Elien was “engaged in commerce.” The FLSA defines “[c]ommerce” to mean “trade, commerce, transportation, transmission, or communication among the several States or between any State and any place outside thereof.” 29 U.S.C. § 203(b) (emphasis added). Because St. Elien was engaged in “communication” between States, the Court found that she was entitled to individual coverage under the FLSA. Despite that clear language, the trial court in St. Elien’s case relied upon an earlier Eleventh Circuit decision to require that an employee seeking individual coverage must be “directly participating in the actual movement of persons or things in interstate commerce ….” But, the St. Elien court reversed the trial court because its reliance upon the earlier decision was overbroad.
St. Elien is a reminder to employers that they have broad obligations to pay overtime to their employees. There are a few, rare employers who are truly intra-state — with no business conducted with other states. But, in most cases, employers are required to pay overtime to their hourly employees.