In Steelman v. Hirch, the parties were romantic partners who exchanged vows, lived together, and worked side by side in a dog-grooming business known as "Hair of the Dog" in Asheville, North Carolina. They supported themselves from the business' proceeds. The bliss between the two women soon ended and a lawsuit was filed. Steelman sought an ownership share in Hair of the Dog and compensation for work that she alleges was performed in reliance on Hirsch's promises of additional compensation, in addition to or in lieu of damages under the Fair Labor Standards Act (FLSA) and the North Carolina Wage and Hour Act. The district court granted summary judgment to the defendant on the sole federal cause of action--the FLSA claim-- and dismissed the state law claims without prejudice after it declined to exercise supplemental jurisdiction. The Fourth Circuit affirmed.
According to the panel, the plaintiff could not be adjudged an "employee" for purposes of the FLSA . The intended lifetime partnership she described was not "the bargained-for exchange of labor for mutual economic gain that occurs in a true employer-employee relationship." The couple saw their work together as a way to improve an economic future that they intended to share in perpetuity, rather than as a transfer of one individual's assets to another in exchange for labor. Hence, without an employer-employee relationship, FLSA did not apply.