Opinion ID: 567207
Heading Depth: 2
Heading Rank: 1

Heading: Status as employer

Text: 8 Defendants argue that Schubiner did not have sufficient control over the corporation to be held individually liable as an employer under 29 U.S.C. § 203(d). Defendants rely on Schubiner's affidavit and their answers to the Secretary's request for admissions as evidence creating a genuine issue of fact regarding Schubiner's status as an employer. 9 The FLSA defines employer to include any person acting directly or indirectly in the interest of an employer in relation to an employee.... 29 U.S.C. § 203(d). The FLSA contemplates there being several simultaneous employers who may be responsible for compliance with the FLSA. Falk v. Brennan, 414 U.S. 190, 195, 94 S.Ct. 427, 431, 38 L.Ed.2d 406 (1973). The remedial purposes of the FLSA require the courts to define 'employer' more broadly than the term would be interpreted in traditional common law applications. McLaughlin v. Seafood, Inc., 867 F.2d 875, 877 (5th Cir.1989) (per curiam). In deciding whether a party is an employer, economic reality controls rather than common law concepts of agency. Goldberg v. Whitaker House Cooperative, 366 U.S. 28, 33, 81 S.Ct. 933, 936, 6 L.Ed.2d 100 (1961). Whether a party is an employer within the meaning of the FLSA is a legal determination. Patel v. Wargo, 803 F.2d 632, 634 (11th Cir.1986); Karr v. Strong Detective Agency, Inc., 787 F.2d 1205, 1206 (7th Cir.1986); see Donovan v. Brandel, 736 F.2d 1114, 1116 (6th Cir.1984) ([T]he determination of whether a particular factual setting gives rise to coverage under the FLSA is a matter of law.). But see Donovan v. Sabine Irrigation Co., 695 F.2d 190, 194 (5th Cir.) (whether party is employer is question of fact), cert. denied, 463 U.S. 1207, 103 S.Ct. 3537, 77 L.Ed.2d 1387 (1983). 10 The overwhelming weight of authority is that a corporate officer with operational control of a corporation's covered enterprise is an employer along with the corporation, jointly and severally liable under the FLSA for unpaid wages. Donovan v. Agnew, 712 F.2d 1509, 1511 (1st Cir.1983). In Agnew, the court determined that corporate officers with a significant ownership interest who had operational control of significant aspects of the corporation's day to day functions, including compensation of employees, and who personally made decisions to continue operations despite financial adversity during the period of non-payment were employers under the FLSA. Id. at 1514. No one factor is dispositive; rather, it is incumbent upon the courts to transcend traditional concepts of the employer-employee relationship and assess the economic realities presented by the facts of each case. Sabine, 695 F.2d at 195. 11 The record in this case reveals that Schubiner was involved in the business operations of the corporation, and he controlled the purse strings of the corporation. See Donovan v. Grim Hotel Co., 747 F.2d 966, 972 (5th Cir.1984), cert. denied, 471 U.S. 1124, 105 S. Ct. 2654, 86 L.Ed.2d 272 (1985). Schubiner is president of Elliott Travel, and he and his wife are co-owners of the corporation. In response to the Secretary's first set of interrogatories, defendants stated that day-to-day control of the corporation was in the hands of Schubiner. However, in an amended response to the interrogatories, defendants stated that although major corporate decisions were made by Schubiner, the day-to-day control of specific operations was not entirely in his hands. In the amended response, defendants stated that Schubiner determined the amount of employee salaries, but the actual details of computing hours were handled by a payroll bookkeeper. Defendants also stated that a general manager handled many of the day-to-day problems relating to operation of the corporation, and managers of branch offices exercised control over hours worked by employees at the branch offices. 12 In an affidavit filed in support of defendants' response to the motion for summary judgment, Schubiner states that although he made major corporate decisions with respect to Elliott Travel, he did not have day-to-day control of specific operations, and the general operation of the company was not entirely in his hands. Schubiner reiterates in the affidavit that he did not personally handle payroll, and although he generally made arrangements for the amount of salary to be paid an employee, the actual details of calculating the hours, overtime, and commission were handled by the payroll bookkeeper. Schubiner also states in the affidavit that because of excessive time involved in the defense of numerous lawsuits against Elliott Travel and a prior business operated by Schubiner, he was not available to insure that employees of Elliott Travel were being paid in accordance with the FLSA. However, Schubiner adds that he anticipates the problem relative to excessive litigation will soon be alleviated allowing [him] to devote more time to [Elliott Travel] to rigorously insure that the operations of [the corporation] comply with the Fair Labor Standards Act. 13 The economic realities of this case indicate that Schubiner was an employer within the meaning of the FLSA, and he is chargeable with personal liability for failure to comply with the FLSA. Schubiner was the chief corporate officer, had a significant ownership interest in the corporation, and had control over significant aspects of the corporation's day-to-day functions, including determining employee salaries. See Agnew, 712 F.2d at 1514. The fact that a payroll bookkeeper computed hours, overtime, and commissions and a general manager handled many of the day-to-day problems associated with operation of the corporation does not preclude finding that Schubiner was an employer. To be classified as an employer, it is not required that a party have exclusive control of a corporation's day-to-day functions. The party need only have operational control of significant aspects of the corporation's day to day functions. Id. (emphasis added). In short, the evidence clearly demonstrates that Schubiner was the top man at Elliott Travel, and the corporation functioned for his profit. Grim Hotel, 747 F.2d at 972. There being no genuine dispute of the material facts regarding Schubiner's status as an employer, summary judgment was appropriate on this question of law.