Colorado U.S. District Court Refuses to Dismiss FLSA Claims Against Individual
In a recent decision, the United States District Court of Colorado evaluated whether a company owner may be held individually liable for violations of the Fair Labor Standards Act, 29 U.S.C. § 201 et seq. (“FLSA”), committed by his company.
In Innis v. Rocky Mountain Inventory, Inc., the Plaintiffs alleged that their employer failed to properly count travel time and off-the-clock work in calculating their entitlement to overtime compensation. The plaintiffs sought to hold both the Company and its owners liable for the alleged FLSA violations. The Company owners moved to dismiss the FLSA claims asserted against them.
In evaluating the Plaintiffs’ attempt to impose individual liability on the owners, the District Court in Innis recognized that while the Tenth Circuit has not held that owners of a corporate employer may be considered an “employer,” and thus subject to liability under the FLSA, other courts have held as much. The FLSA provides that the term employer “includes any person acting directly or indirectly in the interest of an employer in relation to an employee.” 29 U.S.C. § 203(d).
The Court then evaluated the factors normally examined in the District Court for the District of Colorado to determine if an alleged employer should be deemed an employer under the FLSA. Under these factors, an “employer” is someone who:
1) has the power to hire and fire the employee;
2) supervises and controls the employee’s work schedule or conditions of employment;
3) determines the rate and method of payment; and
4) maintains employment records.
No one factor is dispositive, but instead a court must consider the economic realities and the circumstances of the whole activity.
Applying these factors, the Court in Innis concluded that the Plaintiff had alleged sufficient facts to support a claim of individual liability against the Company owners. Specifically, the Plaintiffs alleged that the corporate Defendant was a closely held corporation, that the owners supervised their employment and maintained employment records, and other facts suggesting that the owner supervised the plaintiffs and maintained records. This evidence was enough to allow the plaintiffs to proceed with the FLSA claims against the owner – although the Court cautioned that additional evidence would be necessary to support the claim at the summary judgment stage.
The Innis decision serves as an important reminder that corporate owners – and officers and supervisors – may be personally liable for wage and hour violations under the FLSA, if they have an ownership interest, exercise day-to-day control of operations, and are involved in the supervision and payment of employees.