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Personal liability for wage claims

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in Discrimination and Harassment,Human Resources,Leaders & Managers,Management Training

Q. The attorney for one of my former employees sent a letter demanding payment for overtime compensation. The letter threatened to sue me personally, along with my corporation. I understood that only the employer—the company—and not the CEO or owners of the corporation could be sued under employment discrimination laws. Can I be sued personally for wage-and-hour claims?

Yes, you could be held personally liable for wage-and-hour (overtime compensation) violations under the Fair Labor Standards Act (FLSA).

The FLSA defines “employer” differently than the customary employment discrimination statutes. An employer is “any person acting directly or indirectly in the interest of an employer in relation to an employee.”

The courts have examined the totality of the circumstances and the “economic reality” of the employee-employer relationship. This means that, where an individual exercises “control over the nature and structure of the employment relationship” or “economic control” over the relationship, the individual is an employer under the FLSA and is subject to liability.

Thus, courts have held corporate officers to be individually liable when they had significant ownership interest, coupled with operational control of significant aspects of the corporation and decision-making authority on employment.

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