Personal Liability Against Owner Is Possible Under FLSA

​If an employee at a deli located within a gas station is owed overtime wages under the Fair Labor Standards Act (FLSA), the gas station's owner and operator would be personally liable for the amount owed, a federal trial court in Florida ruled in a pretrial motion filed in the employee's lawsuit. The court, however, declined to decide whether the employee was an executive or administrative employee―which determines whether he is entitled to overtime pay under the FLSA's exemptions―and ruled that the question would proceed to trial.

From March 6, 2014, to Dec. 7, 2017, the plaintiff was an employee at a gas station in Miami. The gas station owner claimed that the plaintiff was the manager of the gas station's deli and had free rein to operate the deli as he saw fit. The plaintiff, however, asserted that he was a "regular employee"—a cashier, cook and customer service representative. The plaintiff earned a salary of $650 per week.

The plaintiff sued under the FLSA, claiming that he worked an average of 62.5 hours a week but was never paid the extra half-time rate for any hours worked over 40 hours. He filed a pretrial motion asking the court to rule that one of the defendants, who owned and operated the gas station, was his employer, as that term is defined in the FLSA, and that the owner was therefore individually liable to the plaintiff for any unpaid overtime wages.

The plaintiff also asked the court to find that he was not exempt from entitlement to overtime pay under the FLSA's executive, administrative and professional exemptions.

Individual Liability

An individual officer or supervisor may be held personally liable for unpaid wages under the FLSA when he or she exercises control over significant aspects of the company's day-to-day functions, including compensation of employees, the court first noted.

The court then found that the owner exercised such control. The owner had authority over all aspects of the company, and he exercised that authority, the court found. He was the sole owner of the gas station, and although he may have not been at the station every day, he was there frequently.

The owner determined his employees' wages and hired and fired employees. In addition, he sometimes worked at the deli. He was not an absentee owner who might have been immune from liability under the FLSA, the court concluded.

Therefore, if the plaintiff is found to be owed overtime wages under the FLSA, the owner would be personally liable for the money owed, the court said.

FLSA Exemptions

The FLSA requires employers to pay overtime compensation to covered employees. Certain exemptions from coverage apply, including for employees who are employed in a bona fide executive, administrative or professional (EAP) capacity.

[SHRM members-only toolkit: Determining Overtime Eligibility in the United States]

For any of these EAP exemptions to apply—that is, for the employee not to be entitled to overtime pay under the FLSA—the employee must, among other things, be compensated on a salary basis at a rate of not less than $455 per week. The plaintiff met this requirement, the court noted.

Each of the EAP exemptions has its own additional duties test, the court said. Under the executive exemption, an employee who meets the salary requirement must:

• Primarily manage the enterprise in which he or she is employed.
  
• Customarily and regularly direct the work of two or more other employees.
  
• Have the authority to hire or fire other employees.
  

Under the administrative exemption, the employee's primary duty must:

• Be office or nonmanual work directly related to the management or general business operations of the employer or the employer's customers.
  
• Include the exercise of discretion and independent judgment with respect to matters of significance.
  

Under the professional exemption, the employee's primary duty must be work requiring advanced knowledge in a field of science or learning, customarily acquired by a prolonged course of specialized, intellectual instruction.

FLSA regulations make clear that a job title alone is insufficient to establish the exempt status of an employee. Instead, the exempt or nonexempt status of any employee must be determined based on the employee's salary and duties, the court said.

The court concluded that the plaintiff had established that he was not exempt from overtime pay as a professional employee. The owner acknowledged that the plaintiff did not have to have any particular education in order to land his job.

However, the court also ruled that the plaintiff had not established that he was not an executive employee, because there was a dispute as to his actual job duties. While the plaintiff claimed that he was not a manager, there was other evidence demonstrating that he managed the deli and had the authority to hire or fire other employees.

Similarly, the court refused to rule that the plaintiff was not an administrative employee, again citing conflicting evidence as to the plaintiff's actual job duties.

The case, the court said, would proceed to trial to determine whether the plaintiff fell under the executive or administrative exemptions to the FLSA's overtime requirement.

Goussen v. Mendez Fuel Holdings LLC, S.D. Fla., No. 18-CV-20012 (Oct. 10, 2018).

Professional Pointer: The most important factor in determining whether an individual can be held personally liable under the FLSA is the amount of control the individual exercises over the day-to-day operations of the business, particularly over corporate decisions concerning employee hours and pay.

Joanne Deschenaux, J.D., is a freelance writer in Annapolis, Md.