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March 11, 2013

11th Circuit: Bosses Can Be Personally Liable For Unpaid Overtime Even If Workers Are Undocumented (March 2013)

Filed under: Legal Updates — admin @ 10:24 am

March 2013 – Many employers would be surprised to learn not only that undocumented workers can sue for unpaid overtime under the federal Fair Labor Standards Act (FLSA), but also that company supervisors, officers, directors, and owners can be personally liable for such damages.  In Lamonica et al. v. Safe Hurricane Shutters, Inc. et al. (No. 07-cv-61295), the federal 11th Circuit Court of Appeals (covering Georgia, Florida, and Alabama) recently held that two salaried workers were entitled to recover back pay, liquidated damages, and attorneys’ fees from their employer, a hurricane shutter installer, and two of the company’s owners.  At trial, the plaintiffs were found to be non-exempt workers who were entitled to overtime.

The Court rejected arguments by the employer and two individual owners that the workers should be precluded from recovering back pay because one or both were undocumented aliens and allegedly used false social security numbers to obtain the jobs.  Regardless of any alleged wrongdoing by the workers, the Court held, the employer still was responsible for payment of wages under the FLSA for work already performed.  The Court distinguished a previous decision by the U.S. Supreme Court, Hoffman Plastic Compounds, Inc. v. NLRB (2002), which held that undocumented workers could not recover back wages for wrongful termination because they were not entitled to the job in the first place.  In that case, the 11th Circuit observed, the workers had not already performed work for which they were seeking compensation.

Further, even though the two owners were minority shareholders and were not present in the workplace for more than a few days or weeks each month, the Court held that they had “sufficient control of the company’s financial affairs to cause the corporation to compensate or not to compensate employees in accordance with the FLSA,” and therefore they could be deemed “employers” along with the company.  As a result, the Court held that the owners/board members were individually and personally liable to the plaintiffs.

This case highlights the importance to business owners and managers alike of ensuring that all employees are properly classified (as either exempt or non-exempt from overtime requirements) and compensated under the FLSA.  Overtime pay requirements are applied rigidly and are the source of a surprisingly large amount of employment litigation.  The best way to avoid such litigation is to have a qualified employment attorney conduct a privileged audit of pay practices, including an evaluation of all positions as either exempt or non-exempt.

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