Miami Employment Lawyer Blog

Miami and South Florida employers and employees are anxiously awaiting an appeal of a case for overtime compensation under the Fair Labor Standards Act (FLSA). Several recent cases decided by the U.S. District Court for the Southern District of Florida are part of a consolidated appeal to the Eleventh Circuit Court of Appeals in Atlanta, Georgia. The issue is whether a small employer that does business locally, such as a dry cleaner, body shop, landscaping company, security company, or swimming pool installation company, is subject to the FLSA. The analysis is somewhat complex because it involves consideration of what constitutes "interstate commerce." Basically, since 1974 the courts have held that under the "enterprise coverage" standard of the FLSA, virtually every business whose annual gross volume of sales is over $500,000 is subject to the FLSA. That means that practically all employees are covered by the FLSA.

However, recent cases decided in South Florida have now come to the conclusion that some businesses whose activities are wholly local or intrastate in nature, are not covered by the FLSA even if their annual gross volume of sales is over $500,000. The reasoning used by these courts is that where a business does not move goods in interstate commerce, then that business should not be subject to the FLSA. Courts have traditionally stated that in these modern times all businesses use goods that at one point in time moved in interstate commerce. However, these recent decisions now reason that even if a business like a landscaping company uses or purchases goods that have moved in interstate commerce (e.g., lawnmowers, fertilizers, gloves, etc.), those goods were no longer in interstate commerce when the landscaping company purchased them for use. They had come to rest and thus were not moving in interstate commerce. As such,theses courts reason, that the FLSA does not apply to them.

Many South Florida lawyers, however, contend that these decisions are incorrect. Indeed, some judges in the Southern District of Florida have disagreed with the recent decisions. For example, Judge Marcia Cooke recently wrote that "[i]t is notable how many courts in the past three-and-a-half decades have concluded that virtually any enterprise that meets the statutory [$500,000] gross sales requirement is subject to [enterprise coverage]." See Galdames v. N & D Investment Corp., No. 08-20472-CIV, 2008 WL 4372889, at *4 (S.D.Fla. Sept. 24, 2008).

Therefore, several of these recent decisions that have decided that small employers are not involved in interstate commerce are now being appealed to the Eleventh Circuit Court of Appeals. The decision could have major ramifications for small employers and the employees who work for those companies.