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Even very small employers are probably covered by Fair Labor Standards Act

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in Employment Law,Human Resources

Do you believe your organization doesn’t have to abide by the Fair Labor Standards Act because you only have a few employees and don’t engage in interstate commerce? Think again.

Any employer that does at least $500,000 worth of business is probably covered by the FLSA. And as a recent federal court case concluded, using any piece of equipment that was made out of state and shipped in can satisfy the interstate commerce part of the test.

Recent case: Family Sleep is a small Texas company that provides sleep diagnostic services. It makes no products and sends no goods out of state. It does, however, have more than $500,000 in sales and uses sleep diagnostic equipment purchased from out of state.

Several employees sued, alleging they had not been paid overtime on those occasions when they had worked more than 40 hours in a workweek. Family Sleep countered that it wasn’t engaged in interstate commerce and therefore was not required to follow the FLSA’s overtime rules.

But the court disagreed. It said that it was enough that the company did more than $500,000 in business per year and used a piece of equipment procured from out of state. The case now goes to trial, where employees will try to prove that they worked more than 40 hours some weeks for which they were not paid overtime. (McDaniel, et al., v. Family Sleep Diagnostics, et al., No. 3:13-CV-4031, ND TX, 2016)

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