Coverage Employer-Employee Relationship

In general, the FLSA provisions apply to all employers and to all employees who are not designated as exempt. However, since the FLSA's focus is employment relationships, those outside of an employment relationship, as with an independent contractor, are not covered. In addition, constitutional reasons do not provide for the coverage of state employees.

Since the FLSA provisions apply to the "employment relationship" between employer and employee, how these roles are defined can come into play. One test involves economic realities: Is the employee economically dependent upon the business to which he or she renders services? Within the courts, five factors must be considered in order to answer this question:

  • What is the degree of control that is exercised by the alleged employer?
  • What is the extent of the relative investments from both the employee and the employer?
  • To what degree is the worker's opportunity for profit and loss determined by the employer?
  • What is the skill and initiative required for performing the job?
  • How permanent is the relationship?

FLSA provisions do not apply to volunteers who are designated by their participation as civic or personal without promise of compensation and who choose their hours of participation. In addition, they do not replace regular employees as they perform their duties.

The following provide clarification of terms in relation to the coverage of the FLSA regulations:

Coverage Commerce

The wage and hour provisions apply to any employee who, during the workweek, is engaged in interstate commerce or in the production of products for commerce or is employed in an enterprise, which is involved in such. For the sake of clarification, "commerce" means the interstate movement of people, goods and services.

Coverage Enterprise

The FLSA definition contains several key components:

  • It regards an enterprise as any group of "related activities" which may be similar and are, together, necessary to the operation of a particular business. For example, a business may contain warehousing, bookkeeping, purchasing, advertising. These are lumped together since they are linked and essential to the maintenance of the business.
  • The "related activities" are performed through "unified operations" or "common control." The focus here is the coming together of individuals, corporations, or other units which share control of the activities of the enterprise. These units also come together for the same business objective.

In light of the above definition, an "enterprise" may be comprised of a parent company and its subsidiary, even though they are two distinct corporations legally. Therefore, this configuration would be considered an employer and thus, subject to FLSA regulations.

Coverage Collective Bargaining

Because the courts consider the rights and policies of the FLSA so important, FLSA provisions will take precedence over collective bargaining agreements if an employee takes a claim to court.

Coverage Statutory Exemptions

The following types of employment are exempt from the FLSA requirements on minimum wage and overtime:

  • Domestic Services in which an employee provides companionship for those who are unable to care for themselves.
  • Fishing Operations in which an employee catches or cultivates fish or is involved in the first processing of canning or packing marine products at sea.
  • Agriculture in which employees engage in farming in all its branches, as in the cultivating and tillage of soil, the growing and harvesting of crops.

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