Business Owner Found Personally Liable For Overtime Pay Violations

Recently, the Second Circuit Court of Appeals ruled that the owner of a business could be held personally liable for damages resulting from violations of the Fair Labor Standards Act (FLSA). The FLSA provides employees certain protections, including that workers receive at least minimum wage and that non-exempt employees be paid overtime compensation at a rate of one and one-half their standard rate of pay for each hour worked in excess of 40 hours in any work week.

If you have any wage and hour questions or are concerned that you are not getting paid all the compensation you are entitled to, it’s important to consult with an experienced Atlanta wage and hour attorney right away.

In the recent FLSA case, Irizarry v. Catsimatidis, the court evaluated who should be responsible for actually paying the money owed when a company is found to have violated the Act, such as by not paying overtime. Here, the court found that the chairman and CEO of corporate supermarket chain Gristede’s Foods, Inc., could be held personally liable and responsible for paying those damages.

This case involved the Gristede’s supermarket chain, which operated between 30 and 35 supermarkets in the New York City area and employed approximately 1,700 workers. The workers sued for unpaid overtime under the FLSA. The employees won, and the parties reached a settlement. After the company defaulted on the terms of the settlement, the employees sought compensation from the owner himself – John Catsimatidis.

The court determined that Catsimatidis could be found responsible and required to pay damages according to the terms of the settlement. The court reached this conclusion based on a number of considerations. First, the court concluded that in certain circumstances, an individual may be considered an “employer” under the FLSA and therefore personally liable for violations of the statute. Factors which were important included the fact that Catsimatidis was actively involved in running some of the stores, and had contact with employees, vendors, and customers. He also was ultimately responsible for the employees’ wages and signed their paychecks. Even though he wasn’t typically involved in day-to-day operations, he did have sufficient interactions and this, along with his limited high-level management activity was sufficient to make him liable for the FLSA violations.

Finally, it is important to note that the Court found that it was irrelevant that Catsimatidis wasn’t accused of being personally responsible for the wage and hour violations. According to the court, the FLSA would carry an “empty guarantee” to remediate employees for violations if it didn’t hold an employer’s controlling officers accountable under the law. As a result, the court found that Catsimatidis was personally responsible to pay damages for the workers’ overtime claims.

For more information about the FLSA or any other wage and hour question, please contact the knowledgeable Georgia wage and hour attorneys at Buckley Bala Wilson Mew LLP for an immediate case evaluation.