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FLSA overtime rules don’t apply to truly small and local businesses

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in Human Resources,Overtime Labor Laws

Some very small employers are truly so tiny that they’re not covered by Fair Labor Standards Act (FLSA) overtime rules.

Recent case: Jian worked as a local delivery person for China House, a tiny Chinese restaurant in Westbury. It has a five-burner stove and four tables in the dining room. A couple own and operate it. The only em­­ployees were a cook and Jian, who earned $1,800 per month.

Jian sued, alleging he was owed unpaid overtime.

The restaurant owners provided copies of their business tax return, showing sales of around $70,000 per year. They also provided bank statements showing annual deposits totaling no more than $200,000 per year, including cash infusions from the owners when business was slow.

The court tossed out Jian’s case, reasoning that the restaurant’s sales were far less than the $500,000 required for so-called enterprise coverage under the FLSA.

Plus, there was no evidence that Jian engaged in interstate commerce (another FLSA criterion) when he delivered locally. The court said that the mere use of a cellphone or a car manufactured in a different state or gasoline bought locally from a national gas station chain wasn’t enough to create liability under the FLSA. (Li v. China House, et al., No. 11-CV-5636, ED NY, 2014)

Final note: There was a time when just about any activity was considered interstate and imposed liability under the FLSA. Not so anymore for operations that are truly small and local.

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