Below as an actual example of the minimum that is required to establish personal, individual liability against a CEO of a mid-size company under the FLSA. This brief extract was filed in the Middle District of Florida
THE CLAIM
Plaintiffs have a one-count complaint of retaliation under the FLSA. The main retaliatory actions perpetuated against Plaintiffs include the fact that each Plaintiff was not awarded a position by Defendants as a contractor driver due to their involvement in an FLSA overtime lawsuit against same Defendants before this Court (Case No. 6:08-cv-317-Orl-19DAB), where Judgment was entered against Mr. Pak. During the time of the FLSA overtime case, Defendants began changing the employment status of their delivery truck drivers from employees to contract drivers. Specifically, Defendant Sei Pak, made the decision to do so. In the parties Joint Final Pre-Trial Statement (Dkt. No. 76), which was drafted jointly by both parties, it was asserted that “Defendant was an employer under 29. U.S.C. § 203(d)” (Dkt. No. 76, ¶ 9, sub-paragraph 2). Now at trial, Defendant contends that he should not be held to such statement, and contends further that Defendant Sei Pak is not an employer as defined under the FLSA.
MEMORANDUM OF LAW
The FLSA defines an employer as “any person acting directly or indirectly in the interest of an employer in relation to an employee.” 29 U.S.C. § 203(d). An individual, such as Defendant Pak, cannot be held individually liable under the FLSA unless he is an employer within the meaning of the FLSA. See Alvarez Perez v. Sanford- Orlando Kennel Club, Inc., 515 F.3d 1150, 1160 (11th Cir. 2008). The Eleventh Circuit has held that, “[t]he 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 liable under the FLSA.” Patel v. Wargo, 803 F.2d 632, 637-38 (11th Cir. 1986). In order for a corporate officer to be held individually liable as an “employer” under the FLSA definition, ” an officer must either be involved in the day-to-day operation or have some direct responsibility for the supervision of the employee.” Id. at 638 (citing Donovan v. Agnew, 712 F.2d 1509, 1514 (1st Cir. 1983)). Thus, individuals who exercise managerial control over employee compensation or work situations have been found to be employers and jointly and severally liable for FLSA violations. Dole v. Elliot Travel and Tours, Inc., 942 F.2d 962 (6th Cir. 1991). More specifically, in Dole, the Court stated that “to be classified as an employer, it is not required that a party have exclusive control of a corporation’s day-to-day functions. The party need only to have ‘operational control of significant aspects of the corporation’s day-to-day functions.’” (emphasis added). Given that Schubiner was the company’s CEO, the Dole Court further found that the evidence “clearly demonstrated that Schubiner was the ‘top man’ at Elliott Travel, and the corporation functioned for his profit.” Id. at 966. In a separate case, “operational control” of a corporation took the form of holding the purse strings of a corporation, directing the policies of the corporation, solving problems that arose in the business, and by exercising ultimate control over the business. See Donovan v. Grim Hotel, Co., 747 F.2d 966, 972 (5th Cir. 1984). While determining whether an individual falls under the FLSA definition of “employer” is a question of law, the individual findings that lead to making that determination are questions of fact. Wargo, 803 F.3d at 634.
DEFENDANT SEI PAK IS INDIVIDUALLY LIABLE AS AN EMPLOYER UNDER THE FLSA
Mr. Pak controls Appliance Direct. Mr. Pak is the President/CEO of Appliance Direct. (Pak deposition Pg. 5, L13-17). No one supervised Mr. Pak. (Pg. 7, L2-4). Furthermore, Mr. Pak determined his own position at Appliance Direct and appointed himself from company president to CEO. (Pak deposition Pg. 6, L19-21). Mr. Pak admitted that he was responsible for the direction of the company, to negotiate, and when things occurred, he would take care of it. (Pak Deposition, Pg. 5-6). In fact, it was Pak’s own decision to create the switch from employee delivery truck drivers to contracted drivers; the initial decision that forms the basis for Plaintiffs’ claims in this instant action:
“Q: Was it your decision to create that switch?
A: To go to independent?
Q: Yes.
A: Yeah.”
(Pak deposition; Pg. 11, L6-10).
With regard to the instant action, Defendant Pak did indeed have control over significant aspects of the day-to-day functions of the corporation given his decision-making control over the company’s direction, therefore qualifying him as an employer under the FLSA. In fact, Defendant Pak’s status as the “top dog” at Appliance Direct is further solidified given it was his own decision to promote himself from President to CEO. (Pak deposition; Pg. 6, L19-21). Moreover, Defendant Pak had direct authority over the delivery drivers. When Appliance Direct Store Manager John Russell confronted Mr. Jeff Pena, Defendants’ delivery manager, about how it was wrong that Plaintiffs were being retaliated against with respect to not be eligible for the contract agreements, Mr. Pena simply stated, “well it’s not my call.” (Russell Aff., Paragraph 5). When a fellow delivery driver, Mr. Jeff Caneva, was awarded a contract driver agreement and asked who he reported to under that agreement, his response was, “we reported to Jeff Pena and to Sam Pak.” (Caneva deposition; Pg. 14, L18-20).
The crux of Mr. Pak’s involvement in this action can best be summarized by the following testimony from Mr. Pak’s own deposition:
Q: As president of Appliance Direct, does it upset you when an employee files a lawsuit against your company?
A: Sure.
(Pak Deposition, Pg. 20, L 10-16).
Q: Is it one of your concerns how supervisors interact with employees who have filed lawsuits against Appliance Direct?
A: No.
Q:You are not concerned that the supervisors may retaliate against the employees?
A: I don’t think they would.
Q: What do you base your belief that you think is; what causes you to think [that].
A. It’s not their money, it’s my money.
(Pak Deposition, Pg. 21-22, emphasis added).
In addition to the testimony and admissions of Mr. Pak above, Mr. Pak was already held liable for the unpaid overtime wages of the Plaintiffs in case number 6:08-cv-317-Orl-19DAB. After litigation of said case, Defendants tendered an Offer of Judgment for the unpaid overtime that was due to the Plaintiffs in the instant case; thereafter, a Judgment was entered against Mr. Pak, in his individual capacity, for the unpaid overtime claim that forms the subject matter of the retaliation claims asserted in the instant action. (See Dkt. No. 70, Case Number 6:08-cv-317-Orl-19DAB).
CONCLUSION
It is quite clear that the evidence on record shows that Defendant Pak does, in fact, meet the threshold requirements of being considered an “employer” under the definition of the FLSA. From his own testimony, Defendant Pak did have control over significant aspects of the day-to-day functions of the corporation given his decision-making control over the company’s direction. Given the overwhelming amount of factual evidence to support Defendant Pak being held individually liable, and the fact that the parties had already stipulated to the fact that Defendant Sei Pak was an employer as defined by Section 203(d) of the FLSA, Defendant Pak’s status as an employer should require no further proof at trial.
Attorney:
Maurice Arcadier
Our Melbourne office is centrally located in Brevard County, enabling our lawyers to serve clients throughout “the Space Coast”, including Cocoa Beach, Palm Bay and Vero Beach.
