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Home / Expert Opinion / Workplace Issues: 2nd Circuit defines ‘employer’ under FLSA

Workplace Issues: 2nd Circuit defines ‘employer’ under FLSA

Lindy Korn

Lindy Korn

This class action alleged that John Catsimatidis, chairman and CEO of Gristede’s Foods Inc., was personally liable under federal labor law for overtime and other labor violations. The district court said that Catsimatidis was the plaintiffs’ employer, and that he was personally liable. The Court of Appeals affirms, Irizarry v. Catsimatidis, 2013 WL 3388443, July 9.

Catsimatidis is the chairman, president and CEO of Gristede’s Foods Inc., which operates between 30 and 35 stores in the New York City metro area and has approximately 1,700 employees.

The definition of “employer” under the Fair labor Standards Act is useless because it uses the word “employ” in its definition. So we rely on a body of case law to decide who is an employer. We decide this on a case-by-case basis, using the totality of the circumstances “to determine the economic reality of an employment relationship: whether the alleged employer (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.” The issue here is “whether an individual within a company that undisputedly employs a worker is personally liable for damages as that worker’s employer.”

“Operational Control” is at the heart of this case. Catsimatidis’ core argument is that he was a high level employee who made symbolic or, at most, general corporate decisions that only affected the lives of the plaintiffs through an attenuated chain of but-for causation. Although Catsimatidis undisputedly possessed broad control over Gristede’s corporate strategy, including the power to decide to take the company public, to open stores, and to carry certain types of merchandise, he contends that a FLSA “employer” must exercise decision-making in a “day-to-day” capacity.

The Second Circuit (Wesley, Hall, and Goldberg C.I.T.), says this is a close case.

“Catsimatidis was not personally responsible for the FLSA violations that led to this lawsuit, but he nonetheless profited from them. And although the Gristede’s Supermarkets business entity appears to have been larger than other businesses discussed in the cases that have been considered in this question, the company was not so large as to render Catsimatidis’ involvement a legal fiction.

“The company is not public. Its stores, in which Catsimatidis actively exercised his influence, are all in the New York City metropolitan area, as are the company headquarters, where he worked almost daily.” In sum, as the district court concluded, “it is pellucidly clear that he is the one who is in charge of the corporate defendant.”

Thus, the Court of Appeals found that Catsimatidis’ actions and responsibilities — particularly as demonstrated by his active exercise of control over the company, his ultimate responsibility for the plaintiff’s wages, his supervision of managerial employees, and his actions in individual stores — demonstrate that he was an “employer” for purposes of the FLSA.

Lindy Korn practices at The Law Office of Lindy Korn and can be reached at lkk75atty@aol.com or (716) 856-KORN (5676).