Scope Of Federal Jurisdiction

Ed. Note: The relatively recent passage of the health care act has focused attention on how far Congress can go to regulate local activities through the interstate commerce clause. Perhaps the broadest application of this clause is the Fair Labor Standards Act (FLSA) which extends federal jurisdiction to any business which does $500,000 a year in gross sales and whose workers handle goods that had been in interstate commerce. This recent decision from Florida shows how far this goes.

Workers for local service providers may be entitled to overtime under federal law because their employers have a sufficient nexus with interstate commerce, the 11th Circuit has ruled in reversing judgment.

The decision addressed six separate cases involving employers that provide services such as landscaping, security installation and construction in Florida.

In each case, the employer argued that it wasn t subject to the FLSA s overtime requirements because its business did not have a sufficient connection with interstate commerce.

The court concluded that the employers could be covered by the Act if they had employees who handled materials that have been moved in commerce.

For the purposes of the FLSA s handling clause the court said an item counts as materials if it meets the definition of materials tools or other articles necessary for doing or making something in the context of its use and if the employer has employees On handling, selling, or otherwise working on the item for the employer s commercial (not just any) purposes, the court said.

The court held the employers could not avoid the Act s reach simply by showing they only made local purchases of materials.

With the exception of a case involving one employer who did not meet the $500,000 gross annual sales threshold, the court remanded the matter for a consideration of the plaintiffs claims under the above standard.