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CEO can be liable for failing to pay employees overtime

| May 15, 2014 | Employment Disputes |

In general, employees in New York are satisfied with how their employers handle their pay, particularly if the wages are appropriate to the jobs and benefits are reasonable. In cases of alleged underpayment, however, employees are often willing to take their employers to court, especially if underpayment is chronic and widespread.

This is the case in a settlement just reached between Gristedes, a large New York City area grocer, and 1,700 supermarket employees.

The federal Second Circuit Court of Appeals recently ruled that the company’s chief executive officer could be held personally accountable under the federal Fair Labor Standards Act and New York State’s labor laws on account of overtime pay that was allegedly withheld from employees. The employee collective bargaining lawsuit was filed in 2004.

The Gristedes problem began when the employees asked court to hold the CEO personally liable for damages under the FLSA. The decision of a federal district court favored the employees, and they offered to enter into a settlement agreement with Gristedes.

Gristedes, however, appealed the district court decision regarding the wage-and-hour disputes. The Second Circuit Court affirmed the initial decision and stated that the CEO was personally liable for violating both federal and state employment law because he was the de facto employer at the time of the case. The CEO was personally active in operating the supermarkets and thus ultimately responsible for decisions about both the employees’ wages and the supervision of other personnel.

This case illustrates that complying with the FLSA’s overtime requirements and paying the minimum wage is an important obligation for all employers and management personnel in New York, just like elsewhere in the country. Whether they are working for a large company such as a multiple-store supermarket or for a small mom-and-pop store, employees deserve wages and benefits that is in accord with federal and state labor law.

Source: HR.BLR.com, “U.S. Appeals Court rules CEO can be personally liable for FLSA violations,” May 2, 2014