Second Circuit Court of Appeals Holds CEO is Individually Liable for Any Wages Found Unpaid Under the FLSA – Los Angeles Wage & Hour Claims Attorneys Blumenthal, Nordrehaug & Bhowmik

by Norman B. Blumenthal on August 14, 2013

MoneyThe Second Circuit Court of Appeals has held that a CEO is individually liable for any wages that were unpaid under the Fair Labor Standards Act (FLSA).  John Catsimatidis is the CEO of Gristedes, the largest supermarket chain in the New York City area.  With approximately 30 to 35 stores in the New York area, Gristedes’ employs almost 2 thousand workers.

In 2004, then-current and former managers and co-managers of Gristedes sued several companies that were involved in running the Gristedes chain.  The managerial group alleged that Gristedes unlawfully classified them as FLSA-exempt to avoid paying them overtime pay.  The managerial group also sued Catsimatidis and two other Gristedes’ executives.

After the district court granted summary judgment for the plaintiffs on their FLSA and state law claims, the parties reached a settlement agreement.  When the corporate defendants later defaulted on their settlement payments, the plaintiffs moved for partial summary judgment against Catsimatidis alleging as the CEO he was their employer and individually liable for the settlement.  The district court concluded that Catsimatidis’ in essence was an employer and thus, yes, personally liable for the rest of the unpaid settlement.  Catsimatidis appealed.  The Court of Appeals upheld the district court decision.

The Court of Appeals noted that Catsimatidis influenced day-to-day management decisions.  Specifically, Catsimatidis:

  1. Worked in the corporate office almost daily;
  2. Dealt regularly with banking, real estate, and finance;
  3. Developed merchandising concepts;
  4. Visited stores to provide thoughts on how managers can improve merchandising;
  5. Made hiring and firing decisions for high-level employees who report directly to him; and
  6. Personally promoted employees.

And based on the totality of the circumstances, the CEO exercised sufficient control over the economic reality of the supermarket chain to be individually liable for settlement payments to the plaintiffs.  Irizarry v. Catsimatidis.

If you have worked for any company that has denied you overtime pay by misclassifying you as exempt, please contact an experienced California labor lawyer today at Blumenthal, Nordrehaug & Bhowmik at (310) 981-3918.  Blumenthal, Nordrehaug & Bhowmik is a California employment law firm with offices located in San Diego, San Francisco and Los Angeles. The firm dedicates its practice to contingency fee employment law work for issues involving misclassification as a salaried worker exempt from overtime, failure to pay vacation wages, misclassification as an independent contractor, off-the-clock work, wrongful termination, discrimination and other California labor laws.

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