On Friday, SCOTUS will decide if it will grant review of a Second Circuit decision that placed a CEO on the hook for unpaid back wages under an FLSA settlement agreement. We previously reported on this case out of New York where the Second Circuit held that the CEO of a grocery chain was personally liable for $3.5 million in unpaid wages deemed owed under the FLSA. The issue was individual liability. Who has it? How did he get it? How much will it cost?
In Irizarry v. Catsimatidis, the Second Circuit looked to a number of factors in holding that the CEO is an “employer” under the FLSA and therefore responsible for money owed by his grocery chain under a settlement agreement, including his power to hire/fire, supervisory capacity, whether he decided employee pay rate, and his influence over day-to-day management decisions. Unless SCOTUS reverses or modifies the Second Circuit’s holding, the CEO will remain personally, jointly, and severally liable for unpaid amounts owed to plaintiffs under the settlement agreement, even though the CEO may not have been “personally responsible for the FLSA violations” in the first place— because according to the court, he still profited.
This case is interesting because the Second Circuit made a potentially far-reaching decision in holding that an individual may be personally liable for a corporation’s violation of the FLSA merely because he had general control over corporate affairs. If SCOTUS decides to hear this case, employers (in particular management) may finally get some clarity about the level of operational control that triggers individual liability, and Catsimatidis may soon be seeking a discount of a different kind from SCOTUS.