The FLSA defines employer as any person acting directly or indirectly in the interest of an employer in relation to an employee. In cases involving FLSA, courts have overwhelmingly held that a corporate officer with operational control of a corporation s covered enterprise is an employer with the corporation and that both are jointly and severally liable under FLSA for violations of the Act.
In determining an individual s control of a corporation, courts review several factors and have held that even if an individual is not responsible for the day-to-day operation of a corporation, he or she may still be personally liable under FLSA. Such factors include: frequency of instruction given by the individual to others on how to conduct the company s affairs; whether the individual received status reports from employees on the company s operations; whether the individual had control over the employees assignments, and rates charged by the company; and whether the individual had signature authority over the company s bank accounts.
Courts adopting the broad definition of employer under the FLSA, have allowed the naming of another employee in an FLSA suit rather than the employer as defendant. Employees with supervisory authority over complaining employees and those responsible, in whole or part, for the alleged violations of FLSA are susceptible to being sued under FLSA.
The argument made by defendants in these cases has been that a narrower definition of employer should be used to only include corporate officers or other individuals where in an ordinary civil suit the circumstances would warrant a piercing of the corporate veil. This argument has been rejected. An individual may be still be considered an employer under FLSA even though the corporate veil may not be pierced.
Accordingly, corporate officers and managers should be aware that although they may not be involved in the day-to-day operations of the company, they still may be considered an employer under FLSA and subjected to personal liability for violations. If you have any questions regarding personal liability for corporate acts, please do not hesitate to contact our Firm.