On Thursday (7/23), the U.S. Department of Labor (“DOL”) announced that Partners HealthCare Systems and its affiliated hospitals and health care companies (“Partners”) throughout eastern Massachusetts have agreed to pay 700 employees more than $2.7 million in overtime and back wages to resolve a lawsuit filed by the DOL alleging violations of the Federal Fair Labor Standards Act (“FLSA”). The FLSA requires that employees be paid at least the federal minimum wage and time and one-half their regular rates of pay for hours worked beyond 40 per week. The FLSA also requires that employers maintain accurate records of employees’ wages, hours and conditions of employment.
Here, after realizing that one of its affiliated companies might be in violation of the FLSA, Partners’ management contacted the DOL’s Wage and Hour Division which conducted an investigation. The investigation confirmed that the defendants failed to aggregate hours on separate payrolls when employees worked for more than one Partnersaffiliated hospital or health care company during a work-week to determine whether overtime was due. The parties agreed that the best way to resolve the matter was through the filing of a complaint and consent judgment in federal court, which prohibits the defendants from future violations of the FLSA’s overtime provisions and order them to pay back wages totaling $2,756,514 for the period January 1, 2007, through March 21, 2009.
Partners’ may have self-reported to the DOL to mitigate personal liability under the FLSA. The FLSA defines “employer” to include “any person acting directly or indirectly in the interest of an employer in relation to the employee.” (29 U.S.C. 203(d)). In general, the case law interpreting the FLSA definition of “employer” holds that a corporate officer with operational control of the covered enterprise is an “employer” under the FLSA and, along with the corporation, is jointly and severally liable under the FLSA for wage violations. Therefore, to the extent that a corporate officer actually exercises operational control over significant aspects of the corporation’s day-to-day functions, to include employee compensation, or made the decision that caused the corporation to violate the FLSA, the officer may be held personally liable for any damages (back pay, overtime, etc.) incurred by employees. Depending on the nature of the FLSA violation, the DOL can seek civil penalties or refer the matter to the Department of Justice for criminal penalties.