The Court of Appeals for the Second Circuit has ruled that the owner, president, and chief executive officer of a supermarket chain can be held personally liable to pay a settlement for violations of the federal Fair Labor Standards Act (FLSA). Irizarry v. Catsimatidis (2nd Cir. 2013)
The Second Circuit found John Catsimatidis could be held personally liable in a class-action lawsuit brought by current and former managers alleging misclassification of employees as exempt, failure to pay overtime, and retaliation. Individuals are “employers” under the FLSA and can be held personally liable if they have “control over a company’s actual ‘operations’ in a manner that relates to the plaintiff’s employment.”
The court found that Catsimatidis had “operational control” over the supermarket chain because he dealt with customer complaints, in-store displays and merchandising, and the promotion of personnel. The court rejected Catsimatidis’s arguments that he exercised this control only occasionally and that he did not directly manage the class members. The court found that Catsimatidis had the ability to hire and fire the employees who supervised the class members and retained overall financial control of the company. The court held that the FLSA did not require Catsimatidis to be personally complicit in the violations to be liable. His “operational control” was sufficient—no matter how often he exercised that power.
This case illustrates the liability of business owners for employment law violations. While only a few employment laws, the FLSA included, allow individual managers or supervisors to be sued personally for violations, owners may still be liable under legal theories such as the one described in this case.