While the definition of employer under the FLSA is broad, as the Court of Appeals for the First Circuit (encompassing Maine among other states) has noted, state law is not always consistent, as highlighted by a new federal court decision from Maine. Saunders v. Getchell Agency, 2014 U.S. Dist. LEXIS 16728 (D. Me. Feb. 11, 2014).
In Saunders, Chief Judge John A. Woodcock, Jr. reviewed the issue in light of a prior decision of a sister court (Affo v. Granite Bay Care, Inc., 2013 U.S. Dist. LEXIS 76019 (D. Me. May 30, 2013)(Hornby,J)) which held that “extending Maine wage-and-hour laws to individual shareholders and officers would represent a ‘drastic step,’” because the state legislature, in enacting its wage statute many years after the passage of the FLSA, had not seen fit to define employer as broadly as under the FLSA, and Maine courts have been generally deferential to the corporate form. Judge Woodcock determined that he would “not reinvent Judge Hornby’s well-crafted wheel” and adopted the Affo analysis. The Judge also analyzed whether Plaintiff Saunders had alleged acts potentially creating individual liability for acts of the corporate entity under both the piercing of the corporate veil and individual wrongful acts doctrine, and found no basis to apply either. Thus, the claims against the individual defendant under Maine law were dismissed.
“Saunders is a favorable decision for Maine employers. However, the absence of individual liability under the state law — which has not been confirmed by the Maine Supreme Court — should never be viewed as a panacea or a substitute for wage/hour compliance,” observed Jackson Lewis’ Portsmouth Managing Shareholder Debra Weiss Ford.
Individual liability under state wage-and-hour laws is a state-by-state matter, and uncertainty lingers in many jurisdictions. Operators of all businesses must fully consider potential liabilities in their states of operation.