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Extremely small businesses may be exempt from FLSA

by on
in Human Resources,Overtime Labor Laws

Almost every employer is covered by the Fair Labor Standards Act’s (FLSA) wage-and-hour provisions unless it’s specifically exempted. But some truly local and isolated entities may not be, depending on the specifics.

Recent case: Married couple Yang and Chun Li agreed with some business people to help open a restaurant and contributed $15,000 to the enter­­prise. The Lis ran the restaurant and lived rent-free above it. They were paid nothing. The restaurant soon failed and they sued the owners, alleging unpaid wages.

But the restaurant wasn’t covered by the FLSA because its revenues didn’t hit $500,000. Nor were the Lis covered, since they testified they didn’t do anything related to inter­­state commerce—not even making phone calls or mailing bills. Their FLSA case was dismissed. (Li v. Lucky Grand Hunan Chinese Res­­taurant, No. 10-CV-4664, ED NY, 2012)

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