In Pineda v. Frisolino, Inc. and Peter Migliorini, the Court issued an opinion and order setting forth its conclusions of law following a four-day bench trial into claims of unpaid wages under the FLSA and NYLL. See 15-CIV-3774 (GBD) (S.D.N.Y. Aug. 29, 2017). Of particular note was the Court’s determination that the restaurant’s owner qualified as an “employer” under the FLSA and was thus jointly and severally responsible for the damages awarded to the plaintiffs.
The Court noted the broad definition of an “employer” under the FLSA: “any person acting directly or indirectly in the interest of an employer in relation to an employee.” The Court held that the “economic reality test” was the appropriate test to apply in resolving this issue, and required resolution of whether the alleged employer: (1) had the power to hire and fire the employees; (ii) supervised and controlled employee work schedules or conditions of employment; (3) determined the rate and method of payment; and (4) maintained employment records. The testimony at trial revealed that Mr. Migliorni supervised the plaintiffs, participated in the decision to hire them, and signed their checks, and that he was a constant presence in the restaurant. Consequently, the Court found him to be an “employer” and jointly responsible for nearly $500,000 in damages.
The potential for individual liability under the FLSA and/or NYLL can be unsettling to business owners, particularly in the context of class and collective litigation, where a determination that an individual is an “employer” may mean ruinous personal financial liability. Because of the breadth of the definition of “employer” under these laws, it is important to speak with counsel to discuss safeguards or operational changes that can serve to minimize the potential for such a determination.