Individual Coverage Under New FLSA Rule

In our last update, we discussed “enterprise coverage” under the Fair Labor Standards Act (“FLSA”). If enterprise coverage does not apply to an employer’s employees, some or all of these employees may still be covered under “individual coverage,” which could determine whether your employees are subject to the FLSA’s overtime provisions.

Individual coverage applies when an employee is engaged in interstate commerce.  You might be wondering, what does it mean for an employee to be engaged in interstate commerce? The Department of Labor provides a few examples:

• Regularly making or receiving out of state phone calls
• Ordering goods from or shipping goods to another state
• Transporting persons or property to another state
• Sending or receiving interstate mail or email
• Handling credit card transactions or performing accounting or bookkeeping for such activities

An employee who only occasionally engages in these activities or other activities constituting interstate commerce is not subject to the FLSA under individual coverage. Therefore, that employee is not subject to the minimum wage and overtime requirements of the FLSA if enterprise coverage also does not apply.

Unlike enterprise coverage, individual coverage requires employers to review the duties performed by each employee – it is possible some employees may be covered while others may not. That could be awkward for an employer to implement.  Also, because these provisions are meant to be employee protective, caution favors applicability if in doubt.

The attorneys at Nauman Smith can help you understand how individual coverage applies to your employees, and we will continue to keep you informed in the coming weeks with practical information on how to comply with the new rules.