Irizarry v. Catsimatidis - 722 F.3d 99 (2d Cir. 2013)

Rule:

Evidence 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 under the Fair Labor Standards Act, 29 U.S.C.S. § 203. Instead, to be an "employer," an individual defendant must possess control over a company's actual "operations" in a manner that relates to a plaintiff's employment. It is appropriate to require some degree of individual involvement in a company in a manner that affects employment-related factors such as workplace conditions and operations, personnel, or compensation — even if this appears to establish a higher threshold for individual liability than for corporate "employer" status.

Facts:

Defendant CEO John Catsimatidis was also chairman and president of Gristede's Foods, Inc. which operated 30-35 grocery stores in the New York City metro area and has approximately 1700 employees. In this class action, plaintiffs, Bobby Irizarry et al., who were current and former employees of defendant employer sued defendant alleging violations of the Fair Labor Standards Act, 29 U.S.C.S. § 201 et seq., and state law. The parties had settled the FLSA claims, but plaintiffs moved for partial summary judgment on defendant’s personal liability after the defendant defaulted on their settlement obligations. The district court found that defendant hired managerial employees, signed class members' paychecks, had the power to close or sell the stores, routinely reviewed financial reports, and generally presided over the day-to-operations of the company. The district court granted partial summary judgment to plaintiffs and found that defendant CEO was jointly and severally liable for damages as an FLSA employer. Defendant CEO sought review.

Issue:

Was the defendant CEO jointly and severally liable for damages as an FLSA employer?

Answer:

Yes.

Conclusion:

The court affirmed the district court's decision so far as it established that the employer's CEO was an employer under the FLSA. The court concluded that defendant CEO was an employer under the FLSA, but that further consideration of the state law issues was required. In particular, the court found that defendant CEO possessed, but rarely exercised, the power to hire or fire anyone he chose. The court found that although he was involved in the company and individual stores, he did not exercise much operational control. The court further held that defendant CEO controlled the company financially, but he did not maintain employment records. The court considered these factors and the totality of the circumstances, including the overall purposes of the FLSA, in concluding that defendant CEO was an FLSA employer. But the court vacated and remanded the district court's decision on the employees' state law claims.