Under the Fair Labor Standards Act(FLSA) the central question is whether an employer or employee is covered by the Act. Not all workers are covered by the FLSA, and even for workers who are covered, there are certain exemptions from the FLSA.
As shown below, in the world of workers there are certain workers who are within the coverage (circle in the diagram below) of the FLSA, and then there are workers within the coverage who are exempted by the act (the shaded circle). Thus, the FLSA generally applies to the workers within the bigger circle excluding the smaller shaded circle.
An employer is covered by the FLSA if it is an “enterprise” defined under the act as: (1) an employer that has two or more “employees engaged in commerce or in the production of goods for commerce,” or that “has employees handling, selling, or otherwise working on goods or materials that have been moved in or produced for commerce by any person”; (2) and has a gross annual volume of sales of not less than $500,000, (except for an enterprise not subject to the dollar value test under the act).
Whether there are two or more employees engaged in “interstate commerce” is determined without regard to the FLSA exemptions. For example, even if the only two employees were engaged in interstate commerce were exempt executives, or otherwise exempt, the business would still be a covered enterprise. The term “commerce” as used broadly in the FLSA and means: trade, commerce, transportation, transmission or communications among
the several states or between any state and any place outside the state.
If an employer is an “enterprise” then all its employees are covered by the FLSA, whether or not the employees are individually engaged in interstate commerce. Also employees who individually engage in interstate commerce can be covered even where there is no enterprise coverage. Certain workers are not considered “employees” under the FLSA. For example, bona fide independent contractors; certain home workers; trainees; prisoners; bona fide volunteers; elected officials and their personal staffs; and certain workers for Native American tribes are excluded from the FLSA's coverage.
The FLSA covers not only the employees who work in an “enterprise,” but also the employees who individually are engaged in commerce, in the production of goods for commerce, or in handling, selling or otherwise working on goods or materials that have been moved in or produced for commerce. If employees regularly devote time to work involving interstate commerce, they are individually covered under the FLSA even where there is no enterprise coverage. Even using the telephone and receiving out-of-state phone calls can make the individual covered under the FLSA.
THE EMPLOYER-EMPLOYEE RELATIONSHIP
Under FLSA, an employer is defined broadly and includes “any person acting directly or indirectly in the interest of an employer in relation to an employee,” and so various owners, corporate officers, and even supervisors with direct control over the work performed by an employee may be found under law to be employers. Therefore, individuals who exercise managerial control over employee work situations or wages can be jointly and separately liable for FLSA violations.
Similar to the definition of employer, an employee is broadly defined under the FLSA as any person who is employed by an employer. The act in turn defines the term “employ” as to “suffer or permit to work.” The FLSA does not distinguish between temporary or part-time workers and full-time employees. Finally, undocumented aliens employees are protected under the FLSA just like any other worker.
When a worker is employed by two or more employers, each employer must separately pay overtime for hours the employee works, in excess of 40 hours per week, for that particular employer.
Even where an employee works for separate employers, if the employers are so intertwined that it may be considered “joint employment” relationship under the FLSA, and the two employers may be treated as one and therefore jointly and severally liable for all the overtime hours worked by that employee in excess of 40 hours per week. If it can be shown that an employee is employed jointly by two or more employers, then all of the employee's work for all of the joint employers during the workweek is considered as one employment under the FLSA. Some of the factors that the courts consider in finding whether there is joint employment are: (a) whether the employers are sharing employees' services; (b) whether one employer is acting in the direct interest of other employer; and (c) whether the employees can deemed to be under common control of the employers.