The Eleventh Circuit Court of Appeals has issued an opinion that provides a good primer on individual and enterprise coverage under the Fair Labor Standards Act. But the decision leaves the tough questions unanswered.
In Josendis v. Wall to Wall Residence Repairs, Inc., Case No. 09-12266 (11th Cir., November 17, 2011), the Eleventh Circuit affirmed the trial court’s entry of summary judgment in favor of the employer, holding that the plaintiff, a former employee of a home restoration and repair business, failed to show that he was covered as an individual under the FLSA, or that his employer was covered as an enterprise.
“An employee is subject to individual coverage,” the court wrote, “if he is directly and regularly “engaged in” interstate commerce.” (citing Thorne v. All Restoration Servs., Inc., 448 F.3d 1264, 1266 (11th Cir. 2006). This means that an employee must be directly participating in the actual movement of persons or things in interstate commerce by (i) working for an instrumentality of interstate commerce, e.g., transportation or communication industry employees, or (ii) by regularly using the instrumentalities of interstate commerce in his work, e.g., regular and recurrent use of interstate telephone, telegraph, mails, or travel.
Since Josendis was not working directly for an instrumentality of interstate commerce, he had to produce evidence that, as a part of his work duties, he repeatedly traveled to and from job sites outside of Florida or used an item moving in interstate commerce. But Josendis never traveled outside of Florida for purposes of his employment with Wall to Wall, and he produced no evidence to indicate that he ever directly participated in the actual movement of any object in interstate commerce. Therefore, his claim of individual coverage failed.
To prove enterprise coverage, the court continued, Josendis had to show that his employer: “(1) has at least two employees engaged in interstate commerce or the production of goods for interstate commerce, or who handle, sell, or otherwise work on goods or materials that had once moved or been produced for in interstate commerce, and (2) has gross sales of at least $500,000 in sales annually.” (citing 29 U.S.C. § 203(s)(l)(A)(i)–(ii)). To meet this test, the court held, Josendis needed to provide concrete, admissible evidence that Wall to Wall met both statutory requirements.” (my emphasis).
Josendis speculated, based on certain jobs he worked on or was aware of, that his employer’s gross sales were higher than its tax returns indicated, and exceeded $500,000 annually. The court held that such conjecture was insufficient to defeat the employer’s motion for summary judgment.
The court went on to note that because Josendis could not meet the gross sales test, it was unnecessary to decide whether Josendis met the first prong of the test for enterprise coverage. Citing its own 2010 decision in Polycarpe v. E&S Landscaping Service, Inc., 616 F.3d 1217 (11th Cir. 2010) (per curiam), which provided the framework for analyzing the first prong, the court (practically breathing a sigh of relief), wrote that it “need not engage in the herculean task of determining whether vehicles, such as cars and trucks; parts of a GPS unit; and other tools and supplies, such as paint, tape, drywall, or nails are best characterized as ‘goods’ or, alternatively, ‘materials’ under the FLSA. Likewise,” the court wrote, “we need not then determine whether the ‘goods’ were subject to the ultimate-consumer exception.”
All of these issues – What is a material? What is a good? When is a good subject the ultimate-consumer exception? – were discussed and analyzed in Polycarpe, but were not definitively resolved. They remain vexing issues that are the subject of much litigation. And a definitive opinion from the Eleventh Circuit that resolves them will have to wait another day.