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Personal Liability for Unpaid Wages under the Fair Labor Standards Act (FLSA) and NY Labor Law

Our Award Winning New York Employment Lawyer has spoken to employees and employers regarding the legal implications of non-payment of wages under federal and state law. One of the topic that arises often is whether an individual is personally liable for failure to pay wages in accordance with the law. The short answer, in general, is that an individual can be liable and considered an “employer” depending on the circumstances. A recent decision issued on November 10, 2016 in the Eastern District of New York, Awan v. Durrani, 14-CV-4562 (SIL) discussed this issue and relevant part of the decision is quoted below:

“[A]n employer may include an individual owner who exercises a sufficient level of operational control in the company’s employment of employees.” Kalloo v. Unlimited Mech. Co. of NY, Inc., 977 F. Supp. 2d 187, 201 (E.D.N.Y. (citing Irizarry v. Catsimatidis, 722 F.3d 99, 104-11 (2d Cir. 2013)); accord Switzoor,
2013 WL 4838826, at *6 (observing that “[a] person may not be held individually liable for a company’s FLSA violations simply because he was an executive of that company”). In determining whether an individual is an employer, courts consider “whether the individual: ‘(1) had the power to hire and fire 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.’” Gillianv. Starjam Rest. Corp., No. 10 Civ. 6056, 2011 WL 4639842, at *4 (S.D.N.Y. Oct. 4, 2011); see Gayle v. Harry’s Nurses Registry, Inc., No. 07-CV-4672, 2009 WL 605790, at *9 (E.D.N.Y. Mar. 9, 2009) (quoting Keun–Jae Moon v. Joon Gab Kwon, 248 F. Supp. 2d 201, 237 (S.D.N.Y. 2002) (quoting Donavan v. Agnew, 712 F.2d 1509 (1st Cir. 1983))) (“The overwhelming weight of authority is that a corporate officer with operational control of a corporation’s covered enterprise is an employer along with the corporation, jointly and severally liab[le] under the FLSA for unpaid wages.”).”

As you can, the definition of an employer can be quite expansive and ownership is not the only consideration. It is important for businesses to understand who can be liable and for employees to understand their strategic considerations. This can be an important factor as in some cases a business may not have any assets but the individual-employer does.  It is an important factor for individuals to understand because in the Awan case the damage amount exceeded $800,000.00.

If you would like to discuss your specific issue involving the FLSA, New York Labor Law or another employment law concerns, feel free to contact our office for a confidential consultation to learn your rights and options.

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