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Q&A: Does the FLSA Apply to My Small Business?

Question:

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

Answer: Eric, one of our HR Pros says…

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 is covered under the FLSA, it is still possible they would be covered under state wage and hour regulations.

 

Eric has extensive experience in HR, management, and training. He has held several senior HR positions, including as the HR & Operations Manager for an award-winning interactive marketing agency and as HR Director for a national law firm. Eric graduated with a Bachelor’s of Science in Economics from the University of Oregon with a minor in Business Administration.

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HR Girlfriends™ is a Human Resources networking organization dedicated to advancing the practice and culture of people empowerment. Our team of Girlfriends consult, train, educate, develop, share, promote, and advocate for solutions in the field of human resource management.

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