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Can My Boss Avoid Paying Overtime By Closing The Business?

On Behalf of | Jan 8, 2014 | Wage: Minimum Wage, Wage: Overtime |

Ohio Wage Lawyers And Overtime Attorneys Answer: What do I do if my boss is not paying me time and a half for overtime? How do I get paid my wages if the business closes?

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When employees are cheated out of their pay or their paycheck is short, they rarely care where the money comes from to make them whole. Our wage and hour lawyers have heard all the excuses that bosses have given their employees and have covered many of the employer’s overtime tricks on this website and in our overtime and minimum wage blogs. One of the big threats used by employers is to say, “Hey, if I pay you overtime then the company goes broke and you won’t get paid anyway.” This is not necessarily true.

Under the FLSA, “employer” is defined as “any person acting directly or indirectly in the interest of an employer in relation to an employee and includes a public agency, but does not include any labor organization (other than when acting as an employer) or anyone acting in the capacity of officer or agent of such labor organization.”

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For example, this past summer, a New York court determined that the owner of Gristedes Foods, Inc. was personally liable as an “employer” under the Fair Labor Standards Act (“FLSA”) in a class action lawsuit that resulted in settlement payments of close to $2 million. The case in question involved allegations that Gristedes had violated its workers rights to overtime compensation under federal law. After the Court determined that he could be held personally liable under the FLSA, John Catsimatidis, the owner of Gristedes, was forced to continue paying the settlement payments after the company ran out of money. The boss appealed, but the Second Circuit Court of Appeals upheld the lower court’s holding that he fell under the FLSA’s definition of employer:

“the ‘striking breadth’ of the FLSA’s definition of ‘employ’ ‘stretches the meaning of ‘employee’ to cover some parties who might not qualify as such under a strict application of traditional agency law principles’ in order to effectuate the remedial purposes of the act.’ … Catsimatidis’s actions and responsibilities – particularly as demonstrated by his active exercise of overall control over the company, his ultimate responsibility for the plaintiffs’ wages, his supervision of managerial employees, and his actions in individual stores – demonstrate that he was an ‘employer’ for purposes of the FLSA.”

Now, Catsimatidis is asking the U.S. Supreme Court to overturn the lower courts’ rulings. In bringing the case to the Supreme Court’s doorstep, Catsimatidis’s petition asks the Supreme Court to decide whether an individual may be held liable for a corporation’s violation of the FLSA because the individual had some control over the corporate decisions but exercised “no personal responsibility” over the conduct that caused the violation.

So far, two lower courts in New York have both ruled that Catsimatidis was an “employer” under the FLSA. Both courts determined that Catsimatidis was involved in every day operations of the store and maintained close contact with the employees of the store.

When enacting the FLSA, the United States Congress specifically created an expansive definition of “employer” so that it included both entities and individuals. This expansive definition of employer so as to create individual liability on the boss has become crucial crucial shield for employees of small companies or companies with no tangible assets that could avoid paying by simply closing shop and restarting under a new company name.

At this point, it is unclear as to whether the Supreme Court will agree to hear the case or not.

If you have been denied minimum wages or not paid time and a half for your overtime hours, or even think that you might need an employment lawyer, then call the right attorney to schedule a free and confidential consultation at 866-797-6040. Spitz, The Employee’s Law Firm and its attorneys are experienced and dedicated to protecting employees’ wage rights under the Fair Labor Standards Act (FLSA) and Ohio wage law. The opportunity to meet directly with a wage and hour lawyer is just a phone call away. Your best choice is not to wait.


The wage and hour law materials available at the top of the page and at this employment law website are for informational purposes only and not for the purpose of providing legal advice. If you are still asking yourself, “should I be paid for …,” “am I entitled to overtime for …,” or “my employer isn’t paying my for …”, then your best course of action is to contact an Ohio attorney to obtain advice with respect to any particular employment law or FLSA issue or problem. Use and access to this employment law website or any of the links contained within the site do not create an attorney-client relationship. The legal opinions expressed at or through this site are the opinions of the individual lawyer and may not reflect the opinions of Spitz, The Employee’s Law Firm, Attorney Brian Spitz or any individual attorney.

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