The Fair Labor Standards Act (“FLSA”) guarantees that certain non-exempt employees receive the national minimum wage, currently $7.25 per hour, as well as overtime pay at 1.5 times the regular rate of pay for hours worked over 40 hours in a workweek. In certain circumstances an employer, such as a CEO, manager or an owner of a company can be named as an individual defendant in cases where an individual’s FLSA rights have been violated. Recently, in Irizarry v. Catsimatidisthe Court of Appeals for the Second Circuit held that the CEO of a local grocery chain was individually liable under the FLSA for $3.5 million of unpaid wages. The court’s finding of individual liability means that the CEO is personally liable for the entire $3.5 million in damages. The finding of liability was based upon that fact that the CEO had a strong influence over the day-to-day management decisions of all 35 of the defendant’s grocery stores. The court utilized a four factor, “economic reality” test to find the CEO liable. This test considers whether the defendant:
The court found that the first and third factors were applicable to the CEO. In particular the court focused on the following: the CEO worked in the corporate office on most days; he regularly dealt with banking, real estate, and company finances; he developed merchandising concepts; he personally visited stores to critique managers; he hired and fired high level employees; and he personally promoted employees. These factors, in their totality “particularly as demonstrated by [the CEO’s] active exercise of overall control over the company, his ultimate responsibility for the plaintiffs' wages, his supervision of managerial employees, and his actions in individual stores — demonstrate that he was an ‘employer’ for purposes of the FLSA.” Remember, if your company has violated your rights under the FLSA the corporate entity may not be the only person you can try to recover damages from. As demonstrated in Irizarry, if an owner, manager, CEO, or other company official has sufficient control over the company or the company’s operation, they may be individually liable, along with the corporation, for any damages you are awarded. If you think your FLSA rights have been violated attorneys at Lebau & Neuworth are experienced in litigating FLSA cases and may be able to help. For more information contact us.
