Under the Fair Labor Standards Act (“FLSA” or “the Act”), employers that fail to comply with certain minimum wage and overtime requirements can face significant liability. “Employer,” however, is broadly defined by the Act to include “any person” who acts “directly or indirectly in the interest of an employer in relation to an employee.” Business owners are often sued personally in these suits, but a recent case suggests there is significant legal risk for restaurant managers, as well.
The court found the individual defendant had held herself out as the “general manager,” told customers she was in charge of everything, interviewed job applicants, overruled other managers’ decisions, told one plaintiff that she would pay the back wages, offered to pay another plaintiff higher wages if the plaintiff did not quit, prepared payroll checks for some employees, and oversaw aspects of the restaurant’s financial transactions and accounting. Based on those allegations, the court ruled that a jury would have to decide whether the GM was legally responsible, at least in part, for the alleged FLSA violations.
This ruling serves as a reminder to restaurant managers that it is possible to be held individually liable for a restaurant’s wage and hour violations. Managers who encourage or tolerate practices such as off-the-clock work and unpaid overtime among restaurant employees cannot just point their finger at the company. Because of that, it’s imperative to train managers properly and ensure they consistently enforce the company’s established wage-and-hour policies. The risk of failing to do so--including back pay, liquidated damages, court costs, and often substantial attorney fees--is too big to ignore.