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Cause for Concern. Are officers of corporate employers personally liable for violations of the Fair Labor Standards Act (FLSA)?

Recently, the United States Supreme Court recently declined to review a decision by the Second Circuit Court of Appeals in which the court held that a corporate officer was personally liable for violations of the Fair Labor Standards Act ("FLSA"). The question before the United States Supreme Court was whether a corporate officer could be held liable for a corporation's violation of the FLSA merely because that corporate officer maintained general control over corporate affairs (regardless of whether the corporate officer had responsibility over the conduct that had resulted in the violation).

The issue arose since there are differing interpretations as to the meaning of "employer" under the FLSA because viewing the individual as the "employer" imposes liability on the individual. Individual liability under the FLSA turns on whether an employment relationship exists between the employee and the purported employer.

This raises a very important question: what is the law in Florida? The Eleventh Circuit of Appeals (which includes Florida) has held that status as a corporate officer alone will not trigger individual personal liability. Rather, to be personally liable, a corporate officer must either be involved in the day-to-day operation or have some direct responsibility for the supervision of the employee. Corporate officers who play no active role in on-going business operations will not be held individually liable under the FLSA.

The Second Circuit Court of Appeals applied a four-factor test to determine the "economic reality" of an employment relationship, and thus, whether a corporate officer can be held personally liable. The test asks:

"whether the alleged employer (1) had the power to hire and fire the employees, (2) supervised and controlled employee work schedules or conditions of employment, (3) determined the rate and method of payment, and (4) maintained employment records."

The Eleventh Circuit Court of Appeals has not adopted the Second Circuit Court of Appeals test when determining whether a corporate officer is personally liable for violations of the FLSA. Because the United States Supreme Court declined to review the Second Circuit Court of Appeals decision, the ruling stands as the law in that circuit and employers in the Eleventh Circuit Court of Appeals (which includes Florida employers) are left with little clarity concerning what levels of operational control will trigger individual liability on the part of corporate officers. Until the United States Supreme Court reviews the issue, corporate officers must be aware of the potential for personal liability for FLSA violations.

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