IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 17-20021

VANCE ANDERSON, on behalf of himself and others similarly situated, 

 Plaintiff - Appellant

v.

HEARTS WITH HOPE FOUNDATION, 

 Defendant - Appellee

Appeal from the United States District Court 

for the Southern District of Texas

USDC No. 4:15-CV-2037

Before DENNIS, CLEMENT, and GRAVES, Circuit Judges.

PER CURIAM:*

A class of former “Direct Care Personnel” employees (collectively 

“Anderson”) at the Hearts With Hope Foundation (“HWHF”) appeal the district 

court’s order granting summary judgment in favor of HWHF. Anderson 

contends that the district court erred in concluding that HWHF was not an 

“enterprise” covered by the Fair Labor Standards Act (“FLSA”). For the 

 

* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not 

be published and is not precedent except under the limited circumstances set forth in 5TH 

CIR. R. 47.5.4.

United States Court of Appeals

Fifth Circuit

FILED

November 15, 2017

Lyle W. Cayce

Clerk

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reasons set forth below, we AFFIRM the district court’s grant of summary 

judgment in favor of HWHF. 

I

HWHF is a non-profit organization operating two group homes, one for 

boys and one for girls, that provide residential care for children who have been 

the victims of abuse, abandonment, and neglect. Children are placed in 

HWHF’s group homes through the Child Protective Services (“CPS”), a division 

of the Texas Department of Family and Protective Services (“DFPS”), as part 

of a residential child-care contract between HWHF and the state. The group 

homes provide 24-hour care to children between the ages of seven and 

seventeen and are licensed as “General Residential Operations.” The boys’ 

home is also licensed as a “Residential Treatment Center.”

Before placing children at HWHF, CPS assigns each child a “service 

level” that corresponds to their behavioral profile and placement needs. HWHF 

provides care to children in four service level categories: basic, moderate, 

specialized, and intense. Upon receiving a referral packet from CPS, HWHF 

determines whether the child’s placement in one of the group homes is 

appropriate. In making this determination, HWHF takes into consideration 

the child’s background, behavior, and intellectual level, as well as the potential 

for the child’s placement to disrupt the progress of any current residents. 

HWHF is not licensed to provide care to children with intensive psychiatric 

needs, and it does not accept particularly high-risk children such as those 

diagnosed as psychotic, schizophrenic, or prone to violent behavior.

Unsurprisingly, many of the children placed at one of the HWHF group 

homes require some kind of regular therapy and psychological evaluation. 

Although HWHF employees participate in an individualized treatment plan 

for their residents by helping to create a safe and watchful “homelike” 

environment, they are not licensed to diagnose any medical, psychological, or 

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psychiatric conditions, and they do not provide individualized or group 

therapy. Instead, the children are given access to third-party professionals—

psychiatrists, psychologists, and licensed counselors—on an as-needed basis

when they make periodic visits to the homes. Based in large part on the 

assessment of a child’s individualized needs provided by these outside 

professionals, the staff at HWHF implements the treatment teams’ 

suggestions for improving the child’s behavioral health. The children at HWHF 

attend public schools off-site, and the employees at the group homes engage 

mostly in basic recreational therapy with the children such as listening to 

music, participating in extracurricular activities, and working on basic social 

and life skills.

In 2012, after attending a human resources training, a Manager at 

HWHF became concerned that HWHF may be covered by FLSA and that it 

was not currently in compliance with FLSA’s overtime pay requirements. 

HWHF contacted the Department of Labor (“DOL”) and was told that, based 

on an initial assessment of the information given over the phone, HWHF may 

be subject to FLSA. Based on this assessment, HWHF began paying overtime 

wages, including retroactive overtime wages for the preceding two or three 

years. Later that year, DOL conducted an on-site audit of HWHF and 

concluded that HWHF was probably not covered by FLSA. Nonwithstanding 

the results of the 2012 DOL audit, HWHF continued to pay its employees 

overtime wages in compliance with the statute. The DOL conducted a second 

audit in 2013—which included a visit to one of HWHF’s group homes—and 

again told HWHF that it was not required to comply with FLSA’s overtime pay 

requirements.1 In March 2014, HWHF revised its overtime pay policy to 

 

1 Specifically, the DOL auditor referred HWHF to a provision in the DOL Field 

Operations Handbook which provides:

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provide overtime wages only for work in excess of 100 hours in an 80-hour pay 

period rather than any work in excess of 40 hours in a given week.

Anderson filed a collective action complaint against HWHF on behalf of 

himself and other similarly situated “Direct Care Personnel” employees, 

alleging that HWHF had violated FLSA by failing to pay overtime wages for 

hours worked in excess of 40 hours per week. The district court granted 

Anderson’s request for conditional class certification. Following discovery, 

HWHF moved for summary judgment. The district court granted HWHF’s 

motion, concluding Anderson had failed to demonstrate that HWHF is “an 

institution primarily engaged in the care of the . . . mentally ill or defective” 

under 29 U.S.C. §§ 203(r) and (s) for the purposes of establishing enterprise 

coverage under FLSA. Anderson timely appeals.

II

This court reviews the district court’s grant of summary judgment de 

novo. Feist v. La., Dep’t of Justice, Office of the Atty. Gen., 730 F.3d 450, 452 

(5th Cir. 2013). Summary judgment is appropriate “if the movant shows that 

there is no genuine dispute as to any material fact and the movant is entitled 

to judgment as a matter of law.” Fed. R. Civ. P. 56(a). There exists a genuine 

dispute of material fact if the “evidence is such that a reasonable jury could 

return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 

U.S. 242, 248 (1986). In making this determination, we view the evidence in 

 

Private nonprofit institutions providing care for neglected and dependent children are 

not covered by the enterprise provisions of the FLSA, provided that such institution 

is not operated in conjunction with a hospital, covered institution, or school within the 

meaning of sections 3(r) and 3(s) of the Act.

Dept. of Labor, Wage & Hour Div., Field Operations Handbook § 12g18 (March 31, 2016) 

(available at https://www.dol.gov/whd/FOH/FOH_Ch12.pdf).

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the light most favorable to the nonmovant. United Fire & Cas. Co. v. Hixson 

Bros., Inc., 453 F.3d 283, 285 (5th Cir. 2006).

III

Anderson bears the burden of demonstrating that HWHF employees are 

entitled to FLSA protection. See Sobrinio v. Med. Ctr. Visitor’s Lodge, Inc., 474 

F.3d 828, 829 (5th Cir. 2007). To establish FLSA coverage, Anderson must 

show (1) he was personally engaged in commerce or the production of goods for 

commerce (“individual coverage”) or (2) he was employed by an enterprise 

engaged in such activity (“enterprise coverage”). See 29 U.S.C. § 207(a)(1); 

Martin v. Bedell, 955 F.2d 1029, 1032 (5th Cir. 1992). Anderson claims that 

HWHF is subject to FLSA as an enterprise engaged in commerce.

The FLSA defines an “enterprise” as “the related activities 

performed . . . by any person or persons for a common business purpose.” 29 

U.S.C. § 203(r). Non-profit institutions such as HWHF are generally exempt 

from FLSA coverage except to the extent that they engage in commercial 

activity performed for a “business purpose.” See Tony and Susan Alamo 

Foundation v. Sec. of Labor, 471 U.S. 290, 297 (1985). An activity is, however, 

considered to be performed for a business purpose when it is done “in 

connection with the operation of . . . an institution primarily engaged in the 

care of the sick, the aged, [or] the mentally ill or defective who reside on the 

premises of such institution,” regardless of whether the institution is a forprofit or non-profit entity. 29 U.S.C. § 203(r)(2)(A).2 Anderson contends that 

HWHF is covered by FLSA because it is primarily engaged in the care of sick 

or mentally ill residents.

 

2 Similarly, an enterprise is “engaged in commerce or in the production of goods for 

commerce” if it is “engaged in the operation of . . . an institution primarily engaged in the 

care of the sick, the aged, or mentally ill or defective who reside on the premises of such an 

institution,” regardless of the institution’s non-profit status. 29 U.S.C. § 203(s)(1)(B).

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In Brennan v. Harrison County, Mississippi, this court looked to “[t]he 

sole primary, essential, fundamental authority and purpose” of a home for the 

indigent in order to determine whether it was “primarily engaged” in the care 

of the mentally ill or infirm. 505 F.2d 901, 903–04 (5th Cir. 1975). In concluding 

that the home was not covered by FLSA, we stated that “[i]ndigency, not illness 

or age, was the indispensable prerequisite for the operation of the home. That 

the inmates were old or ill was an incidental, not a primary factor.” Id. at 904.

Other courts similarly look to the motivating purpose of an institution to 

determine whether it is “primarily engaged in” caring for the mentally ill. See, 

e.g., Murray v. R.E.A.C.H. of Jackson Cty., Inc., 908 F. Supp. 337, 340 

(W.D.N.C. 1995) (holding that a residential facility for victims of sexual abuse 

and domestic violence was not covered by FLSA because “[t]he most important 

function of this facility is not to provide permanent housing for individuals who 

are there because they are mentally ill”); Kitchings v. Florida United Methodist 

Children’s Home, Inc., 393 F. Supp. 2d 1282, 1288 (M.D. Fla. 2005) (holding 

that a residential children’s home was not a covered enterprise under FLSA 

even though “[m]ost of the Residents . . . do have some form of psychological 

disorder” in part because “[t]he primary reason for placement is that the child 

is unable to reside with their natural parents or guardians”).

The record demonstrates that caring for the mentally ill or infirm was 

not the “primary, essential, fundamental authority and purpose” of the HWHF 

group homes. Brennan, 505 F.2d at 903–04.3 As the district court aptly noted, 

“the ‘primary, indispensable requirement’ for admission to either of the HWHF 

homes is that the child [has] been abused and/or neglected and in need of a 

 

3 Notably, when Anderson was asked during his deposition whether he believed 

HWHF “treats the mentally ill,” he replied “no.” Instead, he agreed that HWHF was 

“primarily engaged in helping return abused and abandoned children to a home 

environment.”

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safe, residential environment.” That the children often suffer from mental 

health or behavioral issues is “an incidental, not a primary factor” motivating 

their admission to HWHF. Id. at 904.4 None of the employees at HWHF are 

licensed to provide professional counseling or to diagnose medical, 

psychological, or psychiatric conditions. All psychological and psychiatric 

services are outsourced to third-party professionals. HWHF does not accept 

children with intensive psychiatric needs, and it is not licensed to do so. The 

employees at HWHF are involved with the children’s treatment teams insofar 

as they implement professional suggestions on a day to day basis and help 

provide a safe, therapeutic environment, but they are not medical professionals 

engaged to treat mental health issues. Anderson has failed to raise an issue of 

material fact with respect to whether HWHF was “primarily engaged in” the 

care of the mentally ill. Accordingly, the district court properly concluded that

HWHF was not a covered enterprise under FLSA.5

IV

We AFFIRM the judgment of the district court. 

 

4 Anderson relies considerably on the guidance provided in the DOL’s Field Operations 

Handbook which states that an institution would be covered if more than fifty percent of its 

residents “have been admitted by a qualified physician, psychiatrist, or psychologist.” Dept. 

of Labor, Wage & Hour Div., Field Operations Handbook § 12g12. The Handbook goes on to 

say, however, that “[f]or the purposes of the 50 percent test, the term ‘admitted’ includes 

evaluations of mental or emotional disturbance by a qualified [doctor] either subsequent to 

admission to the institution or preceding admission and being the cause for referral.” Id. 

(emphasis added). Though more than fifty percent of the children admitted to HWHF group 

homes suffer from some sort of mental health or behavioral issues, they are not referred to 

HWHF because of these issues. Rather, children are placed at HWHF through CPS because 

they have been deprived of a safe home environment due to abuse, neglect, or abandonment 

and are in need of full-time residential care.

5 Because we conclude that HWHF is not covered by FLSA, we need not address 

Anderson’s contention that HWHF failed to establish that it acted in good faith when it 

attempted to ascertain whether it was subject to FLSA and subsequently declined to pay 

FLSA-compliant overtime wages.

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