As we recently discussed, there are exceptions to the FLSA’s broad coverage provisions. One such FLSA exception pertains to organizations—often not-for-profits—which are not “enterprises”, defined as a person or persons performing related activities “for a common business purpose.” A recent decision from the United States District Court for the District of Columbia is instructive as the court found that an FLSA plaintiff failed in her attempt to allege that her former employer, a trade association devoted to lobbying located in Washington, D.C., was a covered “enterprise.” Malloy v. Ass'n of State & Terr. Solid Waste Mgmt. Officials, 2013 U.S. Dist. LEXIS 104687 (D.D.C. July 26, 2013).
In Malloy, Plaintiff alleged that despite its non-profit status the defendant association was an enterprise because it: 1) charged members for services; 2) represented them as a lobbying organization; 3) planned and conducted meetings and conferences; and 4) paid for associated conference expenses. Rejecting the argument that these activities established a common business purpose, the court ruled that “while these allegations show that the defendant spends and receives money and provides services for its members, they do not plausibly indicate that the defendant engages in these activities with a business purpose. Specifically, the allegations do not support a reasonable inference that the defendant provides services to the general public for which it competes with other commercial enterprises.” Further, observed the court, at most these allegations indicated that “the defendant is a non-profit trade association that provides some undefined set of services to a niche group (state and territorial solid waste management officials) rather than the general public.” Thus, as a matter of law, plaintiff’s complaint failed to establish FLSA enterprise coverage.
Malloy stands for the proposition that an FLSA plaintiff must plead a common business purpose as interpreted by the appellate courts: they must plausibly allege that the defendant employer “serve[s] the general public in competition with ordinary commercial enterprises.” Tony & Susan Alamo Foundation v. Secretary of Labor, 471 U.S. 290, 299 (U.S. 1985). Of course, failure to establish FLSA coverage does not preclude a plaintiff from asserting wage-and-hour claims under state law theories.