A maintenance worker who alleges he regularly worked at an adult day-care business for 10 to 12 hours a day without overtime pay does not have a claim under the Fair Labor Standards Act, a federal judge ruled.
In a written opinion last week, U.S. District Judge Robert W. Gettleman dismissed the proposed class-action lawsuit Paul Kim filed against the Center for Seniors and its operators.
Gettleman held the business is exempt from the requirements of the FLSA because it is a nonprofit organization.
Gettleman rejected the argument that the center is an enterprise that engages in commerce and, therefore, is subject to the FLSA’s requirements.
Section 207(a)(1) of the FLSA requires certain employees to be paid at least 1½ times their regular rate for any hours over 40 they work in a week.
Employees covered by the act include those who as individuals are “engaged in commerce or in the production of goods for commerce.”
Also included are employees “employed in an enterprise engaged in commerce or in the production of goods for commerce.”
“Enterprise” is defined as “the related activities performed (either through unified operation or common control) by any person or persons for a common business purpose.”
The center is a nonprofit, tax-exempt organization that runs adult day-care facilities in Chicago, Morton Grove, Schaumburg and Wheeling.
The center offers meals, shuttle services and recreational activities to senior citizens who collect Supplemental Security Income.
The services are free for enrollees who have $17,500 or less in savings and stocks.
The center charges a fee to enrollees whose savings and stocks are worth more than $17,500.
The four facilities are operated by Young and Jae Kwan Ha.
Kim was employed by the center as a maintenance worker from July 2015 until October 2018.
In November 2018, he filed his suit against the center and the Has.
Kim alleges he submitted time sheets for the hours he worked, but was paid only a fixed amount each month.
He argues the center is an enterprise that engages in commerce because it charges some enrollees for the same type of services offered by restaurants, public transportation services and other adult day-care facilities.
Gettleman rejected that argument.
Quoting Section 203(r)(2)(A) the FLSA, he acknowledged activities “performed for a business purpose” include activities performed for institutions “primarily engaged in the care of the sick, the aged, the mentally ill or defective who reside on the premises of such institution.”
The limited number of activities covered by that provision, Gettleman wrote, “establishes that Congress intended that those institutions not providing residential services should be recognized as not engaged in activities performed for a business purpose and, therefore, not covered by the FLSA.”
Gettleman noted Kim does not allege the center provides residential services for anyone.
“Defendants correctly assert that providing free services to eligible senior citizens does not rise to the level of commercial activity that competes with ordinary private businesses that charge everyone for every service or product,” Gettleman wrote.
He also rejected the argument that Kim himself was engaged in commerce when he worked for the center because he purchased supplies for the center and handled packages that came from out of state.
“Federal courts have consistently held that an employee’s sporadic or isolated activities do not entitle the employee protection under the FLSA,” he wrote, citing cases that included Reagor v. Okmulgee County Family Resources Center Inc., 501 Fed. Appx. 805 (10th Cir. 2012).
“In other words, to be engaged in commerce, a majority of the employee’s work must be connected to interstate commerce,” the judge wrote.
Gettleman declined to exercise jurisdiction over claims Kim brought under Illinois law.
Gettleman issued his opinion Oct. 15 in Paul Kim v. Center for Seniors, et al., No. 18 C 7660.
Kim is represented by Ryan J. Kim of Inseed Law P.C. in Des Plaines.
“I believe Judge Gettleman got the ruling wrong,” Ryan Kim said in an email.
“I am not just saying it because it was my case, but there are many nonprofit organizations that are nonprofit only in the name.”
He said he will challenge Gettleman’s ruling before the 7th U.S. Circuit Court of Appeals.
And he will pursue a claim under the Illinois Minimum Wage Law on behalf of his client in Cook County Circuit Court, Ryan Kim said.
The lead attorney for the center and the Has is Jennifer Adams Murphy of Wessels Sherman Joerg Liszka Laverty Seneczko P.C. in St. Charles.
Murphy said her clients are pleased with the ruling.
“The general rule is that not-for-profits are not covered by the Fair Labor Standards Act, but there’s a lot of exceptions to the general rule,” she said.
However, Murphy said, the Center for Seniors and similar nonprofit organizations that do not operate as commercial entities are not included in the exceptions set out in the FLSA.
“It’s an important ruling for a small subset of nonprofit entities,” Murphy said.
And even if the FLSA had applied, she continued, the center and the Has deny they violated the statute.