Work performed while building a future together not covered by FLSA
Issue:

Tammy and her domestic partner worked side-by-side in a dog grooming business for four years and lived off of the business’s proceeds. Each of them performed the same duties and each was free to incur substantial personal expenses, which were paid by the business. Tammy received health insurance through the business as well as sporadic paychecks to substantiate the company’s claim that she was on its payroll for insurance eligibility purposes. Tammy also received one or two commission checks, but they were not commonplace. Tammy and her partner anticipated spending their lives together, but when the romantic relationship ended, the professional relationship collapsed as well. Can Tammy recover damages under the Fair Labor Standards Act for the work that she performed?

Answer:    

No. The Fair Labor Standards Act covers only “employees.” According to the Fourth Circuit, the arrangement described above did not make Tammy an employee. The couple saw their work together as a way to improve an economic future that they intended to share in perpetuity, rather than a transfer of one individual’s assets to another in exchange for labor.

Tammy did not receive a bargained-for portion of her supposed employer’s assets—she took from those assets for her own purposes with a discretion that is fundamentally alien to employer-employee relationships. Because Tammy lived comfortably and exclusively off of the proceeds of the business and exerted authority in disposing of its funds, the court could not find the bargain of exchanging labor for compensation that marks employment arrangements.

The court noted that Tammy may well have a basis for recovery in state law, but that the FLSA could not be transformed into a blunt instrument to resolve all financial disputes.

Cite: Steelman v. Hirsch dba Hair of the Dog, 4thCir, January 10, 2007

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