Is There an FLSA Exception for Small Employers?

by Mammoth Team on June 28, 2016


Q: How do I know if the FLSA applies to my company? Is there any exception for small employers?

A: The Fair Labor Standards Act (FLSA) and the new salary threshold for white collar exempt employees apply to nearly all employers and employees. There is no exception for small employers.

Organizations, and everyone in them, are covered by the FLSA if they do more than $500,000 in business annually. This is called enterprise coverage. Additionally, regardless of how much business they do, the FLSA applies if the employer is a hospital, an organization providing medical or nursing care for residents, a school or preschool, or a government agency.

The FLSA also applies to individuals who are engaged in interstate commerce. This is called individual coverage. So even if the organization is very small and not covered as a whole, the employees may be covered by the FLSA individually. The definition of interstate commerce is very broad. If an employee makes goods that will be shipped out of state, sends or receives out-of-state shipments, places telephone calls to another state, or does any number of other basic business activities that cause products, money, or information to cross state lines, they will qualify for individual coverage. This includes running credit cards and processing checks.

What all this means is that your organization as a whole, or most or all individual employees, are likely covered under the FLSA. In the event that neither the organization nor the individual employee are covered under the FLSA, it is still possible they would be covered under state wage and hour regulations.

Want more information? Learn how to implement the FLSA overtime changes by watching our On-Demand Webinar “FLSA Overtime Changes: What Employers Need to Know.”

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Topics: Compliance, Wage & Hour