Motel Staff Ineligible for Federal Wage Law Coverage

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By Jon Steingart

Aug. 8 — Resident caretakers for a motel in Tennessee aren't entitled to the federal minimum wage or overtime pay because they didn't work for a large-enough enterprise or engage in the sort of workplace duties that would make them eligible, a federal judge ruled ( Davis v. Patel , 2016 BL 254579, M.D. Tenn., No. 3:14-cv-764, 8/5/16 ).

Fair Labor Standards Act coverage applies broadly to all workers at a particular business if it meets a revenue threshold, or narrowly to individual workers whose duties include certain characteristics, Judge Aleta A. Trauger wrote Aug. 5 for the U.S. District Court for the Middle District of Tennessee. Plaintiffs Michael and Janice Davis aren't eligible under either condition, she said.

The FLSA applies to all employees of businesses that exceed $500,000 in annual revenue. This is called “enterprise coverage,” said John Ho, a management-side attorney at Cozen O'Connor who wasn't involved in the case. “If your annual volume of business is $500,000 or over, everyone is in, period,” he said. “It doesn’t matter what specific individuals do. Every employee that works for that enterprise” is covered, unless an exemption applies, he told Bloomberg BNA Aug. 8.

“If, for whatever reason, a business doesn’t meet that annual dollar threshold,” the FLSA may apply “if the particular person bringing the lawsuit is engaged in interstate commerce,” Ho said. This is called “individual coverage,” he said.

Individual coverage applies when workers “regularly and recurrently use instrumentalities of interstate commerce in the course of their work,” Trauger wrote.

“It’s the unusual case where the coverage issue becomes the issue,” Andrew Naylor, an attorney for defendant Rest Haven Motel, told Bloomberg BNA Aug. 8. “You usually aren’t fighting over that,” he said.

Guests Rent Rooms by the Hour

Michael and Janice Davis conceded the Goodlettsville, Tenn., motel didn't satisfy the revenue threshold for enterprise coverage, Trauger said. They contended they engaged in commerce by processing credit card payments from guests that operated on interstate financial systems.

The Davises also said they engaged in interstate commerce when they registered guests to stay in the motel. Out-of-state visitors were particularly fond of renting its rooms by the hour, they said.

The Davises' contention that processing payments qualified as interstate commerce wasn't persuasive because they could recall doing this only one time, the judge wrote. Rooms were paid for mostly in cash, Janice Davis said in a deposition.

The hotel didn't maintain records with names or home addresses for its hourly customers, Trauger said. Without a log, it was “mere speculation” that the Rest Haven rented rooms to out-of-state guests by the hour, she said.

Attorneys for the Davises didn't immediately respond to Aug. 8 requests for comments.

Castelli & Knox LLP and Grace Law represented the Davises. Waller Lansden Dortch & Davis LLP represented the hotel.

To contact the reporter on this story: Jon Steingart in Washington at jsteingart@bna.com

To contact the editor responsible for this story: Susan J. McGolrick at smcgolrick@bna.com

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