The United States Court of Appeals for the Eleventh Circuit, which has appellate jurisdiction over federal district courts in Alabama, Florida, and Georgia, recently addressed whether evidence that an employee makes three to five phone calls per week, to out-of-state customers and vendors, provides a legally sufficient basis for a jury to find that the employee falls within the coverage of the Fair Labor Standards Act (“FLSA”).
A Florida company (“Company”), with only one office in Broward County, provides services for homes and businesses in Southeast Florida. An administrative assistant of the company (“Employee”) called the Company’s out-of-state customers and vendors on the phone between three and five times a week. The Employee explained that many of the out-of-state customers were individuals who lived in colder climates much of the year and headed to Florida during the winter. The Employee would call these out-of-state customers to ask for permission to charge their credit cards for services rendered at their Florida properties or to get their approval prior to the Company entering their premises. The Employee also called the Company’s out-of-state vendors, at the vendors’ headquarters, to discuss billings and payments to those vendors for purchases that the Company had made at those vendors’ local stores.
The Employee sued the Company alleging that the Company had violated the FLSA by failing to pay her overtime wages. The FLSA provides, in relevant part, that:
[N]o employer shall employ any of his employees who in any workweek is engaged in commerce or in the production of goods for commerce, or is employed in an enterprise engaged in commerce or in the production of goods for commerce, for a workweek longer than forty hours unless such employee receives compensation for his employment in excess of the hours above specified at a rate not less than one and one-half times the regular rate at which he is employed.
29 U.S.C. § 207(a)(1). The FLSA broadly covers individuals who are engaged in commerce or the production of goods for commerce (“individual coverage”) and those who may not satisfy that standard but who are employed by a covered employer (an enterprise engaged in commerce or the production of goods for commerce (“enterprise coverage”)). The case went to trial on the issue of whether the interstate contacts by the Employee were sufficient to bring her within the FLSA’s ambit through § 207(a)(1)’s “individual coverage” clause.
After two days at trial, the district court granted the Company’s motion for judgment as a matter of law. The district court found that to establish individual coverage, a plaintiff must present evidence that she “directly participated in the actual movement of persons or things in interstate commerce.” The district court found that the Employee failed to satisfy this threshold condition because there was simply no evidence in the record that she directly participated in the actual movement of persons or things in interstate commerce. Specifically, the district court found that the Employee’s calls to obtain approval for local work, payments, and entering properties were not direct participation in interstate commerce and did not fundamentally alter the nature of the Employee’s work. As such, the district court found that the Employee was not individually covered by the FLSA and the Company was entitled to judgment as a matter of law. The Employee appealed.
Appellate Court’s Decision
The Eleventh Circuit ultimately ruled in the Employee’s favor and vacated the district’s court’s ruling on the judgment as a matter of law. The Eleventh Circuit narrowed the question to whether a jury could have found that the Employee was “engaged in commerce.” The Eleventh Circuit held that it could have.
The Eleventh Circuit focused on the FLSA’s definition of “commerce.” The FLSA defines “commerce” as “trade, commerce, transportation, transmission, or communication among several States or between any State and any place outside thereof.” 29 U.S.C. § 203(b). The Eleventh Circuit held that the plain language shows that the Employee in this case “engaged in commerce” because she was in Florida and she called customers and vendors in other states three to five times a week as part of her work for the Company. The Eleventh Circuit held that this is sufficient evidence for a jury to conclude that the Employee was individually covered by the FLSA.
The Eleventh Circuit noted that this decision is consistent with a number of Department of Labor (“DOL”) regulations. Specifically, the Eleventh Circuit pointed to 29 C.F.R 779.103, which states, in relevant part, that “employees engaged in . . . commerce include employees . . . who regularly use the mails, telephone or telegraph for interstate communication;” and 29 C.F.R. § 776.23(d)(2) which states, in relevant part, that “[e]mployees who regularly use instrumentalities of commerce, such as the telephone, telegraph and mails for interstate communication are within the scope of the [FLSA].”
Intrastate employers should pay attention to this decision if their employees are making out-of-state calls for the Company to avoid any potential FLSA concerns. The FLSA provides different requirements than some State laws. Coverage under the FLSA could place additional burdens and requirements upon employers. At this point, this decision only applies to employers in Florida, Alabama, and Georgia, but it could be adopted in other parts of the country. Employers should consult with experienced employment counsel if they have any questions concerning FLSA coverage or any other wage and hour issue.
R. Eddie Wayland is a partner with the law firm of King & Ballow. You may reach Mr. Wayland at (615) 726-5430 or at [email protected] The foregoing materials, discussion and comments have been abridged from laws, court decisions, and administrative rulings and should not be construed as legal advice on specific situations or subjects.