Last week, the Supreme Court of the United States decided that it would not review two wage and hour cases. The first, Catsimatidis v. Irizarry, which was resolved through a settlement agreement, considered whether an individual could be held personally liable as an “employer” for violations of the Fair Labor Standards Act (FLSA). In the second, Jerusalem Cafe, LLC v. Lucas, the Court declined to consider whether undocumented workers have standing under the FLSA to sue for unpaid wages.
Personal Liability: Catsimatidis v. Irizarry
In Irizarry v. Catsimatidis, No. 11-4035-cv (July 9, 2013), the Second Circuit Court of Appeals affirmed a lower court’s decision that John Catsimatidis, the chairman, president, and CEO of a New York grocery store chain, was an “employer” under the FLSA.
The specific issue before the Supreme Court of the United States was whether an individual could be held personally liable for a corporation’s violation of the FLSA merely because that individual had maintained general control over corporate affairs (although he had not exercised personal responsibility over the conduct that had caused the violation). The Court’s decision not to review the case means that the Second Circuit’s ruling stands.
The case was filed as a collective action on behalf of current and former store employees complaining of overtime violations. They sued several companies involved in operating the stores, in addition to Catsimatidis, a store district manager, and a vice president. The district court granted summary judgment in favor of the workers on their FLSA claims and on Catsimatidis’s personal liability as an employer.
The Second Circuit applied the four-factor test established in Carter v. Dutchess Community College to determine the “economic reality” of an employment relationship. 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 Second Circuit found that Catsimatidis was an employer because he met the first and third of these factors. At the same time, the court acknowledged that there was no evidence that Catsimatidis was “responsible for the FLSA violations—or that he ever directly managed or otherwise interacted with the plaintiffs in this case.” Nevertheless, although he was not personally responsible for the violations, the Second Circuit found that “he nonetheless profited from them.” Catsimatidis v. Irizarry, Supreme Court of the United States, No. 13-683, cert. denied March 10, 2014.
Undocumented Workers: Jerusalem Cafe, LLC v. Lucas
The Jerusalem Cafe, LLC v. Lucas case was filed by several restaurant workers, who were undocumented, claiming that they had not been paid the minimum wage or overtime compensation for hours worked over 40 in a week. The employers of the cafe argued that the FLSA does not apply to employers who illegally hire unauthorized aliens.
The U.S. District Court for the Western District of Missouri found that the workers’ immigration status was irrelevant to the case. The court found it relevant that the workers were seeking FLSA wages for previous work, as opposed to seeking prospective relief, which would have been unlawful under the Immigration Reform and Control Act of 1986 (IRCA). A jury decided in the workers’ favor and the case eventually reached the Eighth Circuit Court of Appeals.
The Eighth Circuit ruled that “the FLSA does not allow employers to exploit any employee’s immigration status or to profit from hiring unauthorized aliens in violation of federal law.” Comparing the employers’ argument to Al Capone’s argument that he should not have to pay taxes on illicit income, the Eighth Circuit held that “aliens, authorized to work or not, may recover unpaid and underpaid wages under the FLSA.”
The Supreme Court’s refusal to take up the issue means that, at least in the Eighth Circuit, the immigration status of employees is not relevant to their ability to sue under the FLSA. Jerusalem Cafe, LLC v. Lucas, Supreme Court of the United States, No. 13-682, cert. denied March 10, 2014.
Hera S. Arsen, J.D., Ph.D. is managing editor of firm publications in the Torrance, California office of Ogletree Deakins.