Supermarket mogel is personally liable for FLSA violations

This class action alleged that John Catsimatidis, the Chairman and CEO of Gristede's Foods, Inc., was personally liable under federal labor law for overtime and other labor violations. The district court said that Catsimatidis was the plaintiffs' employer, and that he was personally liable. The Court of Appeals affirms, and the plaintiffs win.

The case is Irizarry v. Catsimatidis, decided on July 9. Every few years the Second Circuit provides guidance on who is an employer under federal labor law. This is one of those cases. The definition of "employer" under the Fair Labor Standards Act is useless because it uses the word "employ" in its definition. So we rely on a body of case law to decide who is an employer. We decide this on a case-by-case basis, using the totality of the circumstances "to determine the 'economic reality' of an employment relationship: '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.'” But this case raises a new wrinkle. The issue here is "whether an individual within a company that undisputedly employs a worker is personally liable for damages as that worker’s 'employer.'”

Catsimatidis is an "employer" under the FLSA. Although he says he is a high-ranking official who only made general corporate decisions affecting employees (and not day-to-day decisions over them), he has operational control over his employees. He has overall authority over the stores, exercised influence in specific stores on multiple occasions and solved problems in individual stores when they arose. He had power to hire and fire employees. He also has authority to sign paychecks and controls the company financially.

So, while Catsimatidis was not responsible for the FLSA violations, the district court properly granted the plaintiffs' summary judgment motion on whether he was their employer. "His involvement in the company's daily operations merits far more than the symbolic or ceremonial characterization he urges us to apply." The Second Circuit (Wesley, Hall and Goldberg [C.I.T.]), says this is a close case. Here's how we wrap it up:

Catsimatidis was not personally responsible for the FLSA violations that led to this lawsuit, but he nonetheless profited from them. And although the Gristede’s Supermarkets business entity appears to have been larger than other businesses discussed in the cases that have considered this question, the company was not so large as to render Catsimatidis’s involvement a legal fiction. The company is not public. Its stores, in which Catsimatidis actively exercised his influence, are all in the New York City metropolitan area, as are the company headquarters, where he worked almost daily. In sum, as the district court concluded, “it is pellucidly clear that he is the one person who is in charge of the corporate defendant.”