By Ryan Taylor, Partner at Tressler LLP
In a ruling that considerably expands the personal liabilities of certain employees, the Northern District of Illinois recently held that corporate officers with significant ownership interests, day-to-day control of operations, and involvement in the supervision and payment of employees qualify as “employers” and can, therefore, be personally liable for a corporation’s failure to pay owed wages under the federal Fair Labor Standards Act (“FLSA”).
The ruling stems from a lawsuit filed by former lavatory service workers of Air Check who removed waste from airplanes at Chicago’s O’Hare International Airport. At issue in the lawsuit was the alleged practice of “rounding” hours – only down – on employees’ time cards by certain Air Check supervisors. According to the former workers, the supervisors violated the FLSA by rounding time to the nearest quarter hour worked as well as by deducting 30-minute unpaid lunch breaks from employee time cards. Foday, et al. v. Air Check, Inc., et al., No. 15 CV 10205 (N.D. Ill. Aug. 20, 2018).
“Employers” Under FLSA
In determining whether the individual supervisors were “employers” subject to personal liability for violations of the FLSA, the Court considered whether the alleged employer 1.) had the power to hire and fire the employees, 2.) supervised and controlled employee work schedules or conditions of employment, 3.) determined the rate and method of payment, and 4.) maintained employment records. The Court further noted that the mere fact of stock ownership or officer status in a company was insufficient to deem an individual an “employer.”
The Court ultimately ruled that claims of FLSA violations could proceed against one of the individual supervisions who wrote Air Check’s handbook regarding hours, had authority to hire and fire Air Check employees, and was aware that Air Check’s employees were subject to having their hours records on time cards rounded in some way.
Increased Exposure to FLSA Liability
The Court’s ruling in Foday sheds light on and seemingly broadens the definition of “employer” under the FLSA. At a minimum, the ruling puts employers on alert that employees with supervisory positions face potential personal liability for wage law violations including those brought pursuant to the FLSA.
Ryan Taylor is a partner at Tressler LLP in their commercial litigation practice and can be reached at firstname.lastname@example.org or 312-627-4032.
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