Today, our wage and hour lawyers review the recent case of Ocampo v. Brown & Appel, LLC, No. 21-2579-CV, 2022 WL 17684587, at *1 (2d Cir. Dec. 15, 2022), which is an unusual case out of the United States Court of Appeals for the Second Circuit.
What makes this overtime wage violation case so unusual is that in June of 2021, the direct corporate employer, DoubleTree Hotel franchisee 455 Hospitality LLC, settled the wage and hour case for up to $1.4 million to be disbursed to a group of 22 workers, which works out to just above $66,000 per employee. Despite settling the claims, the employees continue to pursue their case against Brown & Appel (“B&A”), which owned between 16.66 and 33.32 percent, of 455 Hospitality, and Alexander Sirotkin, who owned 55 percent of a company, which in turn owned 50.5 percent of 455 Hospitality. Sirotkin also presented himself on occasion to be the managing partner in charge of the hotels.
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What are examples of overtime and wage violations?
In their lawsuit, the DoubleTree employees asserted that they worked overtime beyond their scheduled hours but were not paid; that they did not receive their proper share of a tip pool; and had lunch breaks automatically deducted from their pay even when no break was taken. These are only a few examples of Fair Labor Standards Act (“FLSA”) violations.
The best way to determine if you have a potential minimum wage or overtime pay claim is to your individual situation directly evaluated by a wage theft law firm, such as Spitz, The Employee’s Law Firm.
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Can individual managers or supervisors be held liable for overtime violations under the FLSA?
Depending on the situation, some managers and supervisors can be held personally liable for FLSA violations, including failure to properly pay overtime, minimum wage violations, and tip credit or tip pool violations. To be individually liable, the employees must present evidence that satisfies one of two tests. First, the employees can present evidence that the supervisor or other managerial employee: “(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.” Barfield v. N.Y.C. Health & Hosps. Corp., 537 F.3d 132, 142 (2d Cir. 2008). Thus, neither simply ownership shares nor title will suffice under this test to create individual liability under the FLSA.
The second test for individual liability is based on whether the individual exerted “operational control” over the company. To have the requisite operational control, an individual will only be deemed liable as an employer under the FLSA if that person exercises “day-to-day” decision-making on behalf of the company. The majority of United States Court of Appeals to address this issue have held that to directly liable as an employer under the FLSA, the owner, president, or stockholder of a company must – at the very minimum – be involved in the manner in which the business interacts with employees. In one of the seminal cases on this point, Wirtz v. Pure Ice Co., 322 F.2d 259, 262 (8th Cir.1963), the United States Court of Appeals for the Eighth Circuit held against individual liability because even though the defendant was a “controlling stockholder and dominating figure” and “could have taken over and supervised the relationship between the corporation and its employees had he decided to do so,” he never did so. Instead, the individual defendant only visited the facility a handful of times each year but “had nothing to do with the hiring of the employees or fixing their wages or hours,” and he “left the matter of compliance with the Fair Labor Standards Act up to the various managers of the businesses in which he had an interest.” Id. at 262–63. The court noted, however, that if it were to consider “a combination of stock ownership, management, direction and the right to hire and fire employees, then a contrary conclusion would be well supported.” Id. at 263.
In Ocampo, the United States Court of Appeals for the Second Circuit rejected and dismissed the claims for individual liability:
Plaintiffs-Appellants point out that the hiring of managerial employees is “a strong indication of control” where those managers are “in charge of the [plaintiffs].” Herman v. RSR Sec. Servs. Ltd., 172 F.3d 132, 140 (2d Cir. 1999). Here, Sirotkin was involved in interviewing and hiring managerial employees such as the General Manager, the Director of Marketing and Sales, the Director of Finance, and the Chief Financial Officer. But on appeal, the Plaintiffs-Appellants do not claim that any of these managerial employees, including the General Manager, themselves qualify as supervisors who were “in charge of” them. And in any event, Plaintiffs-Appellants have not pointed us to evidence of such authority. At most, according to the record, Sirotkin’s communications with the managers were limited to discussing hotel sales and employees who worked in sales.
Plaintiffs-Appellants also argue that Sirotkin’s frequent and regular demands for financial documents establishes his operational control. We disagree. Sirotkin testified that, consistent with his focus on sales, he requested these documents to see if the hotel was profitable. Plaintiffs-Appellants did not adduce evidence that rebutted this testimony. And “[e]vidence that an individual is an owner or officer of a company, or otherwise makes corporate decisions that have nothing to do with an employee’s function, is insufficient to demonstrate ‘employer’ status.” Irizarry, 722 F.3d at 109.
Id. at *2.
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Who can I sue for wage theft?
It is tricky enough to figure out what wage and hour claims may be available under the FLSA even before complicating it further with the question of which corporate entity or individual boss, manager, supervisor, or owner may be individually liable. This is a very fact-based analysis that is best answered during a direct consultation with qualified overtime, minimum wage, and tipped employee violation rights lawyers.
Luckily for you, Spitz, The Employee’s Law Firm, which handles nationwide FLSA claims, is available to provide you with a free and confidential initial consultation. The experienced wage and hour lawyers at Spitz will provide you with the top options for your overtime pay dispute situation. (Read: What is the Spitz No Fee Guarantee? ; Employment Law: Avoid Hiring The Wrong Attorney). If you even think that you may be entitled to overtime pay that you are not being paid, call lawyers now.
Disclaimer:
The FLSA wage law information this overtime, wage and hour blog and at this employment law website are for informational purposes only and should not be taken as direct legal advice regarding your particular circumstances. Use and access to this wage theft website or any of the links contained within the site do not create an attorney-client relationship. The legal opinions expressed at the top of this page or through this site are the opinions of the individual lawyer and may not reflect the opinions of The Spitz Law Firm, Brian Spitz, or any individual attorney.