One Benefit of Low Revenue: No Federal Overtime

Bloomberg Law for HR Professionals is a complete, one-stop resource, continuously updated, providing HR professionals with fast answers to a wide range of domestic and international human resources...

By Jon Steingart

Jan. 22 — A supervisory landscaper for a lawn care company in Maryland isn't entitled to overtime under federal law because his employer didn't meet the law's interstate commerce threshold, a federal district court ruled Jan. 21.

Todd Bellows only performed work within Maryland, and it had no effect on commerce outside the state, Judge William D. Quarles Jr. found, granting summary judgment to the company. Further, Darby Landscaping's annual revenue fell below the Fair Labor Standards Act's $500,000 threshold for coverage, said Quarles of the U.S. District Court for the District of Maryland.

“There’s potentially a benefit of being a smaller employer,” Darby's attorney, Bruce Covahey, told Bloomberg BNA Jan 22. “There’s still state law,” which may have overtime requirements that apply when the FLSA doesn't, he said. “If you’re involved in a business that can realistically survive intrastate,” this is one way for businesses to avoid overtime costs, he said.

Bellows alleged that the company received unreported cash revenue that would put it over the threshold. He said the company's failure to show it didn't have such income created a triable issue. That argument misunderstood the parties' burdens at summary judgment, the court found. Bellows didn't carry his burden because he provided no evidence that Darby underreported its income, Quarles said.

‘Enterprise' and ‘Individual' Coverage Don't Apply

To support his interstate commerce argument, Bellows said he used interstate highways to travel to work sites. He also said he used equipment that was purchased in Maryland, but the judge said it wasn't clear where it was manufactured.

Income tax returns and a profit-and-loss statement showed the company never exceeded $483,000 in annual revenue, Quarles said. This meant the company wasn't included in the FLSA's “enterprise coverage,” he said.

Bellows wasn't entitled to “individual coverage” because he wasn't engaged in interstate commerce, Quarles said. The test is whether an employee's “work is so directly and vitally related” to interstate commerce that it can't be considered an “isolated, local activity,” he said.

Equipment that's bought from a merchant who acquired it through interstate commerce doesn't transform anyone who comes into contact with it into an agent of interstate commerce, Quarles said. “Thus, Bellows's handling of interstate goods for purely local purposes is insufficient to convey individual coverage,” he said.

Bellows also brought wage claims under state law. Those claims “are best resolved by Maryland courts,” Quarles said. Unlike the FLSA claims, he dismissed the state law claims without prejudice, which means Bellows can refile them in state court.

R. Edward Rosenberg, an attorney for Bellows, couldn't be reached for comment Jan. 22.

Text of the opinion is available at

For More Information

For more information, see Compensation and Benefits Library's FLSA Exemptions chapter.

To contact the reporter on this story: Jon Steingart in Washington at

To contact the editor responsible for this story: Susan J. McGolrick at

Request Bloomberg Law for HR Professionals