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What Is Enterprise Coverage?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 02 September 2016
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Enterprise coverage is a term that is used to identify two or more business entities that are considered to share certain types of assets in a manner that essentially makes it possible to consider the multiple entities to be functioning as a single enterprise. The essentials of this type of classification are outlined in laws and regulations that are in force in the United States of America, notably in what is known as the Fair Labor Standards Act (FLSA). Enacted in 1938, this act helps to set minimum standards for employment in a number of situations, including ensuring qualified workers some sort of minimum hourly wage while also setting standards for working conditions.

The concept of enterprise coverage usually focuses on what type of attributes apply to business entities considered to be related in some manner. This usually means that if certain resources are shared or are relevant to some degree between these related entities, they can be thought of as a single enterprise. For example, the sharing of contracts would qualify under this concept, as would the sharing of personnel in the day-to-day functions of the companies involved. Even sharing of skills and knowledge may be sufficient to create a condition of enterprise coverage.

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There are other qualifications that must be present in order for a status of enterprise coverage to exist. For example, the entities under consideration must engage in some type of commerce activity that can reasonably be classed as interstate in nature, and not just intrastate. Annual business volume is also a standard for evaluating enterprise coverage, with each entity within the group of related businesses being required to generate at least that amount.

A number of different types of business entities may be considered part of an enterprise coverage situation. For the most part, government entities would fall into this category, ranging from local departments within a city or town all the way through to major departments and divisions within a national government structure. Schools and school systems of different types are also usually included in this type of classification. Businesses with the required amount of annual business volume and business interests that cross over state boundaries would also meet the basic criteria. For the most part, organizations that are considered non-profit, such as houses of worship or religious organizations are excluded from enterprise coverage, even if they conduct activities on a national scale.

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