After the Eleventh Circuit’s holding in Asalde v. First Class Parking Systems LLC 894 F.3d 1248 (11th Cir. 2018), more small employers may be subject to the requirements of the FLSA. By expanding the “handling clause,” the case chips away at the degree of interstate commerce necessary for the FLSA to apply.
In Asalde, a valet driver brought suit on behalf of herself and others similarly situated, alleging that their employer had failed to pay the minimum-wage and overtime required by the FLSA. The Southern District of Florida granted summary judgment for the employer. The trial court reasoned that parking cars in Florida is a local activity. Because of the absence of interstate commerce, there was no FLSA coverage. The Eleventh Circuit, however, recently reversed and remanded the lower court’s decision based on its construction of the word “materials.” The ruling softens the limits of the FLSA’s reach.
Application of the FLSA is triggered in one of two ways: (1) where an employee is engaged in commerce or the production of goods for commerce (i.e., “individual coverage”) or (2) where an employee works for an “enterprise” engaged in commerce or in the production of goods for commerce (i.e., “enterprise coverage”). Under what is called the “handling clause,” an entity is subject to enterprise coverage if it has “employees handling, selling, or otherwise working on goods or materials that have been moved in or produced for commerce by any person.” The Asalde trial court rejected the argument that the cars the valets parked and the walkie-talkies, pens, uniforms, valet tickets, and other items that originated out of state that the valets used on the job satisfied the handling clause. The appellate court, on the other hand, focused on uniforms and ruled that a jury must decide whether the valets’ uniforms were “materials.”
To be a “material,” an item must (1) be necessary for doing or making something, and (2) must have a significant connection with the employer’s commercial activity. The court acknowledged that uniforms are not necessary to park cars. But, uniforms offer a way for customers to identify the valet. So, the use of uniforms enables the employer to provide a service, which could satisfy the first prong of the test. In other words, “necessary” doesn’t mean “necessary.” The same identification purpose could satisfy the second prong because a driver is unlikely to give her keys to someone she can’t be certain is the valet. Consequently, the court held that a reasonable jury could find that the plaintiff’s uniforms are handled “materials” under the FLSA.
Judge Duffey, sitting by designation from the Northern District of Georgia, dissented and pointed out that the majority’s holding renders virtually every business subject to the FLSA (or at least required to go through a jury trial). That point is particularly relevant to smaller employers, which may now find themselves defending collective actions under a law they thought didn’t apply.