Very small employers that aren’t engaged in interstate commerce sometimes try to argue that they don’t need to follow the Fair Labor Standards Act () because they are simply too local.
But they often run into legal hurdles when employees sue, as this recent case shows.
Recent case: Modesta and several other cooks and dishwashers at a Thai restaurant sued when they learned the FLSA requires overtime pay for workweeks longer than 40 hours.
The restaurant responded to the lawsuit by producing income tax files showing that it took in far less than the $500,000 FLSA threshold. Plus, the restaurant argued, the employees hadn’t alleged that they handled goods acquired through interstate commerce.
The court said the employees could amend their complaint with more specific allegations about the food they cooked and the cleaning supplies they used to try to show their interstate origins.
This case may be eventually dismissed. Meanwhile the restaurant is paying more in legal fees than it might have cost to pay its employees overtime. (Lopez-Santiago v. Coconut Thai Grill, No. 3:13-CV-4268, ND TX, 2014)
Final note: If you don’t think your company is covered by the FLSA, get expert legal help before denying overtime pay to employees who work more than 40 hours per week. The stakes are too high to get this wrong.
And don’t forget that one good year of earnings may put you over the $500,000 threshold.