Whose Liability Is It Anyway? - American Bar Association

31 Pages·2011·1.56 MB·English

ABA Section of Labor and Employment Law
th
5 Annual Labor and Employment Law Conference
Seattle, Washington
Whose Liability Is It Anyway?
Wage and Hour Track
Friday, November 4, 2011
Hope Pordy, Moderator (Union/Employee)
Spivak Lipton LLP
Ellen C. Kearns (Employer)
Costangy Brooks & Smith LLP
John Ho (Employer)
Bond, Schoeneck & King, PLLC
Richard Blum (Plaintiff)
The Legal Aid Society
Will Aitchison (Union)
Aitchison & Vick, Inc.
44226.1 9/12/2011
INTRODUCTION
The challenge in this presentation “Whose Liability Is It Anyway?” is to determine
which persons or companies can be deemed appropriate defendants under the Fair
Labor Standards Act (“Act” or “FLSA”) for violations of the minimum wage, overtime and
child labor requirements of the Act. This paper reviews the scope of the FLSA’s
coverage of employers including (1) individuals, including corporate officers, managers,
supervisors, and owners/shareholders; (2) joint employers; and (3) successors.
I. How Employers Fall Within The FLSA’s Coverage.
There are three ways of establishing that an employer is covered by the FLSA.
The first, often referred to as “traditional” or “individual” coverage, deals with the
employee’s job duties. The second, referred to as “enterprise” coverage, focuses a bit
more on the employer’s operations. The third, applies to state and local governments
that automatically fall under the FLSA’s coverage. Under all three methods, courts
resolve all doubts in favor of application of the FLSA covering an employer’s operations.
II. Individual Or Traditional Coverage Under The FLSA.
Under “individual” or “traditional” coverage, an individual is covered by the FLSA
if he or she has either “engaged in commerce or in the production of goods for
commerce.”1 To be engaged in commerce, a “substantial part” of the employee’s work
must be related to interstate commerce.2 In other words, the work must be related to
the movement of persons or things (including intangibles such as information and
intelligence) between states.3 Under this test, the question “is not whether the
employee’s activities affect or indirectly relate to interstate commerce but whether they
are actually in or so closely related to the movement of the commerce as to be a part of
it.”4
Very little is needed to qualify as “engaged in commerce.” For example, a court
found that an employee who received between 11 and 23 shipments from across state
lines each month was engaged in commerce, despite spending only one-half hour per
week on those tasks.5 Similarly, an employee who regularly made out-of-state phone
calls was found to be engaged in commerce.6 However, a doctor’s assistant who made
29 calls or faxes to other states during her employment did not engage in commerce.7

1 29 U.S.C. § 207(a)(1).
2Divins v. Hazeltine Electronics Corp., 163 F.2d 100 (2d. Cir. 1947)(quotingWalling v. Jacksonville Paper
Co., 317 U.S. 564 (1943)).
3 29 C.F.R. § 779.103; see Kaur v. Royal Arcadia Palace, Inc., 643 F. Supp. 2d 276 (E.D.N.Y. 2007).
4McLeod v. Threlkeld, 319 U.S. 491 (1943).
5Wirtz v. Durham Sandwich Company, 367 F.2d 810 (4th Cir. 1966).
6Stout v. Smolar, 2007 WL 2765519 (N.D. Ga. 2007).
7Curry v. High Springs Family Practice and Diagnosis Center, Inc., 2009 WL 3163221 (N.D. Fla. 2009).
2
Although it does not take much to be engaged in interstate commerce, courts
have recognized that some activities are “purely local” in nature. Once goods reach
their local destinations in the hands of ultimate consumers, they lose their interstate
character. For example, employees are not engaged in interstate commerce merely
because they purchase, deliver, or use goods locally that had previously traveled in
interstate commerce.8 However, they may be engaged in interstate commerce if the
goods are purchased or ordered from out-of-state locations.9 The employees also may
be engaged in interstate commerce if they are involved in distributing or selling goods
upstream – that is, before the goods reach the ultimate consumer.10 This is true unless
the flow of interstate commerce is interrupted by intrastate processing of goods, such as
mixing of concrete, blending of coffee, pasteurizing of milk, or creating dental
prosthetics.11 An employee is not engaged in interstate commerce even though he or
she sometimes provides services or intrastate transportation to out-of-state residents.12
The other avenue for individual coverage is for employees who are engaged in
the production of goods for commerce. The Supreme Court concluded that guards at
production facilities met this test because their work was essential to the production
process.13 Even more broadly, the Supreme Court held that employees performing
maintenance and custodial services for common areas of buildings in which space was
rented to tenants engaged in producing goods were themselves engaged in
“production” covered by the FLSA.14 Similarly, courts have found that employees
performing security services at movie filming sites are engaged in “production.”15
III. Enterprise Coverage Under The FLSA.
The 1961 amendments to the FLSA added “enterprise” coverage to the FLSA in
Sections 203(r) and 203(s), significantly broadening the number of employees covered
by the FLSA. Under “enterprise” liability, the employee does not need to be directly

8Guzman v. Irmadan, Inc., 322 Fed. Appx. 644 (11th Cir. 2009); Thorne v. All Restoration Services, Inc.,
448 F.3d 1264 (11th Cir. 2006); Navarro v. Broney Automotive Repairs, Inc., 533 F. Supp. 2d 1223 (S.D.
Fla. 2008); Casanova v. Morales, 2007 WL 4874773 (S.D. Fla. 2007); Russell v. Continental Restaurant,
Inc., 430 F. Supp. 2d 521 (D. Md. 2006); Junkin v. Emerald Lawn Maintenance and Landscaping, Inc.,
2005 WL 2862079 (M.D. Fla. 2005); Xelo v. Mavros, 2005 WL 2385724 (E.D.N.Y. 2005).
9Tapia v. Florida Cleanex, Inc., 2009 WL 3246121 (S.D. Fla. 2009).
10Alonso v. Garcia, 147 Fed. Appx. 815 (11th Cir. 2005); Johnston v. Spacefone Corp., 706 F.2d 1178
(11th Cir. 1983); Kelley v. Stevens Auto Sales, 2009 WL 2762765 (N.D. Ind. 2009).
11Kim v. Park, 2009 WL 1702972 (N.D. Ill. 2009).
12Sobrinio v. Medical Center Visitor’s Lodge, Inc., 474 F.3d 828 (5th Cir. 2007); Dent v. Giaimo, 606 F.
Supp. 2d 1357 (S.D. Fla. 2009); Si v. CSM Inv. Corp., 2007 WL 1518350 (N.D. Cal. 2007).
13Mitchell v. Joyce Agency, 348 U.S. 945 (1955).
14Kirschbaum Co. v. Walling, 316 U.S. 517 (1942); see Mitchell v. Lublin, McGaughy & Associates, 358
U.S. 207 (1959).
15Chao v. Casting, Acting & Security Talent, Inc., 7 WH Cases 2d 1098 (C.D. Cal. 2001).
3
involved in an activity that affects interstate commerce.16 Rather, if an enterprise’s
annual gross volume of sales made or business done is at least $500,000, all non-
exempt employees are covered under the FLSA if at least two employees are (1)
engaged in commerce; (2) engaged in the production of goods for commerce; or (3)
engaged in handling, selling, or otherwise working on goods or materials that have been
moved in or produced for commerce.17 Non-profit organizations generally do not qualify
as “enterprises,”18 except for those explicitly named in the definition of “enterprise” such
as certain hospitals, institutions for the ill or elderly, and schools,19 or non-profits that
engage in commercial activities.20 A challenge to an employer’s enterprise coverage
implicates not only the merits of the employee’s claim, but also the court’s jurisdiction.21
As with most FLSA coverage questions, courts are very careful about exempting
employees, and the Supreme Court has held that courts should assume that federal law
was intended to apply to the farthest reaches of interstate commerce.22 Sample rulings
finding employers to be engaged in interstate commerce include:
(cid:2) The employer of a meat cutter whose products only “indirectly” made their
way into interstate commerce.23
(cid:2) The employer of crew members who installed pinsetter machines in
bowling alleys and had to cross state lines to perform their work.24
(cid:2) The employer of workers at a parking lot adjacent to the Atlanta airport.25

16Wirtz v. First National Bank & Trust Co., 365 F.2d 641 (10th Cir. 1966); Archie v. Grand Central
Partnership, Inc., 997 F. Supp. 504 (S.D.N.Y. 1998)(citing Radulescu v. Moldowan, 845 F. Supp. 1260
(N.D. Ill. 1994)).
17 29 U.S.C. § 203(s)(1)(A)(i,ii); Brock v. Hamad, 867 F.2d 804 (4th Cir. 1989); Donovan v. Scoles, 652
F.2d 16 (9th Cir. 1981); Boekemeier v. Fourth Universalist Society in the City of New York, 86 F. Supp. 2d
280 (S.D. N.Y. 2000); Marshall v. Sunshine and Leisure, Inc., 496 F. Supp. 354 (M.D. Fla. 1980).
18Tony & Susan Alamo Foundation v. Secretary of Labor, 471 U.S. 290 (1985); Jacobs v. New York
Foundling Hospital, 577 F.3d 93 (2d Cir. 2009).
19 29 U.S.C. § 203(r)(2)(A); Chacon v. El Milagro Child Care Center, 2009 WL 2059910 (S.D. Fla. 2009);
Bailey v. Youth Villages, Inc., 2009 WL 1045464 (W.D. Tenn. 2009); Bowrin v. Catholic Guardian Soc.,
417 F. Supp. 2d 449 (S.D.N.Y. 2006); Kitchings v. The Florida United Methodist Children’s Home, Inc.,
393 F. Supp. 2d 1282 (M.D. Fla. 2005)(non-profit children’s home was not an “enterprise”).
20Godoy v. Restaurant Opportunity Center of New York, Inc., 615 F. Supp. 2d 186 (S.D.N.Y. 2009);
Kitchings v. Florida United Methodist Children’s Home, Inc., 393 F. Supp. 2d 1282 (M.D. Fla. 2005).
21Gonzalez v. Unidad of Miami Beach, Inc., 2011 WL 2983671 (S.D. Fla. 2011).
22Walling v. Jacksonville Paper Co., 317 U.S. 564 (1943). See also Atlantic Coast Line R. Co. v.
Standard Oil Co. of Kentucky, 275 U.S. 257 (1927); Project Hope v. M/V IBN SINA, 250 F.3d 67 (2d Cir.
2001).
23Shultz v. Bob Johnson Meat Co., 306 F. Supp. 720 (C.D. Cal. 1969).
24Wirtz v. Sherman Enterprises, Inc., 229 F. Supp. 746 (D. Md. 1964).
4
(cid:2) A fraternal organization operating a home to care for sick and aged
residents, where employees used goods and materials that had traveled in
interstate commerce to prepare and serve food to residents, wash laundry,
clean the home, and perform maintenance tasks.26
(cid:2) Ambulance drivers who transported victims of accidents on public
highways within one state.27
(cid:2) Restaurant employees who regularly handled materials that had been
purchased from local distributors but had previously traveled in interstate
commerce.28
This last example illustrates one aspect of enterprise coverage that is broader
than individual coverage. Buying or using goods locally that previously traveled in
interstate commerce is generally not enough for individual coverage. Enterprise
coverage is different because it applies to employees “handling, selling, or otherwise
working on goods or materials that have been moved in or produced for commerce.”29
There has been much debate about the provisions of Section 203(s) that bring
within enterprise coverage employers with employees “handling, selling, or otherwise
working on goods or materials that have been moved in or produced for commerce by
any person.” 29 U.S.C. § 203(s)(1)(A)(i). What happens if the goods or materials are
handled by employees after they have “come to rest” following interstate transport, and
the purchase and handling of the goods or materials are purely intrastate? The
Eleventh Circuit recently rejected employers’ arguments that there is a “coming to rest”
exception to the “handling clause”:
The plain language of the statute compels this conclusion.
Defendants fall under enterprise coverage if they have
“employees handling, selling, or otherwise working on goods
or materials that have been moved in or produced for
commerce.” 29 U.S.C. § 203(s)(1)(A)(i) (emphasis added).
“The tense is in the past. There is no requirement of
continuity in the present.” So, if a district court, ruling for a
Defendant, applied the “coming to rest” doctrine-for instance,

25Jackson v. Airways Parking Co., 297 F. Supp. 1366 (N.D. Ga. 1969); see also Rodilla v. TFC-RB, LLC,
2009 WL 3720892 (S.D. Fla. 2009)(workers who moved rental cars at the airport on behalf of car rental
agencies). But see Garay v. B & G Volker Corp., 142 Lab. Cases ¶34,193 (S.D. Fla. 2000).
26Dole v. Odd Fellows Home Endowment Board, 912 F.2d 689 (4th Cir. 1990).
27Felker v. Southwestern Emergency Medical Service, Inc., 521 F. Supp. 2d 857 (S.D. Ind. 2007).
28Diaz v. Jaguar Restaurant Group, LLC, 649 F. Supp. 2d 1343 (S.D. Fla. 2009). See also Exime v.
E.W. Ventures, Inc., 591 F. Supp. 2d 1364 (S.D. Fla. 2008); Si v. CSM Inv. Corp., 2007 WL 1518350
(N.D. Cal. 2007); Rosso v. PI Management Associates, L.L.C., 2005 WL 3535060 (S.D.N.Y. 2005).
29Ramos v. Goodfellas Brooklyn’s Finest Pizzeria, LLC, 2009 WL 259669 (S.D. Fla. 2009); Galdames v.
N & D Inv. Corp., 2008 WL 4372889 (S.D. Fla. 2008). But see Williams v. Signature Pools & Spas, Inc.,
615 F. Supp. 2d 1374 (S.D. Fla. 2009).
5
by looking at where Defendant bought an item instead of
where an item was produced, we must vacate the judgment
for the Defendant if there is a question about where the
“goods” or “materials” were produced or where they have
moved.30
Despite the ease with which an employer will be found to engage in interstate
commerce, an employee must still present some evidence to prove FLSA coverage.31
Merely because the employer has credit cards or bank accounts with companies that
have out-of-state headquarters, has a website that can be accessed by out-of-state
individuals, and makes a few out-of-state phone calls, does not satisfy the test for
enterprise coverage.32 Courts will consider the regularity and frequency with which the
employees engaged in interstate commerce.33
There has been a bit of a battleground as of late as to whether immigrants
without work authorization can make up the group of at least two employees necessary
for an employer to be covered by enterprise liability. The impetus for the debate has
been the Supreme Court’s 2002 decision in Hoffman Plastic Compounds, Inc. v. NLRB,
535 U.S. 137, where the Court held that the National Labor Relations Board could not
award backpay for work never performed to an immigrant without work authorization.
Thus far, courts have been unconvinced that the rationale of Hoffman extends to the
FLSA, and have adhered to prior rulings that immigrants without work authorization are
employees for purposes of enterprise liability.34
IV. Enterprise Coverage, Multiple Defendants.
Section 203(r) of the FLSA also defines “enterprise” to include “the related
activities performed (either through unified operation or common control) by any person
or persons for a common business purpose,” even if performed in more than one
establishment or organizational unit.35 The significance is that if entities are considered
a single enterprise under the FLSA, the dollar value of their sales are combined for the
$500,000 enterprise threshold.36 Often, the focus in litigation is whether the multiple
entities have the requisite “common business purpose.”
Quoting decisions from other circuits, the Seventh Circuit in 2011 observed that
“more than a common goal to make a profit, however, must be shown to satisfy the

30Polycarpe v. E&S Landscaping Service, Inc., 616 F.3d 1217, 1221 (11th Cir. 2010).
31Williams v. Signature Pools & Spas, Inc., 615 F. Supp. 2d 1374 (S.D. Fla. 2009).
32Bien-Aime v. Nanak’s Landscaping, Inc., 572 F. Supp. 2d 1312 (S.D. Fla. 2008).
33Dent v. Giaimo, 606 F. Supp. 2d 1357 (S.D. Fla. 2009).
34Galdames v. N&D Investment Corp., 2011 WL 2496280 (11th Cir. June 23, 2011).
35Tafalla v. All Florida Dialysis Services, Inc., 2009 WL 151159 (S.D. Fla. 2009).
36Brock v. Executive Towers, Inc., 796 F.2d 698 (4th Cir. 1986).
6
requirement.”37 A common business purpose can exist where multiple entities perform
auxiliary or service activities such as warehousing, bookkeeping, advertising, and other
services, and there is “operational interdependence” between the entities.38 For
example, where employees are employed interchangeably or income is shared between
two businesses, there may be “operational interdependence.”39
One case illustrating these principles involved a motel and adjacent supper club.
Guests at the motel frequently patronized the restaurant and lounge, where they could
charge meals and drinks to their motel bills. Guests at the motel could also have meals
from the restaurant delivered to their rooms. The accounting, financial, and tax records
of the supper club were intermingled with those of the motel. Employees at the supper
club performed tasks at the motel such as delivering linens, providing room service,
cleaning rooms, and performing maintenance. The Court found that “these facts
establish that the operations of the motel, restaurant, and lounge are coordinated and
interdependent, and that they are directed toward providing complementary lodging,
food, and entertainment services to travelers.”40
V. “Any Person” Liability – The Liability Of Corporate Officers And
Supervisors For FLSA Violations.
If Section 203(d) of the FLSA defines as an employer “any person acting directly
or indirectly in the interest of an employer in relation to an employee,” this means that
corporate officers and supervisors are potentially liable for wage and hour violations.
Personal liability under the FLSA usually turns on a multi-part test:
(cid:2) whether the individual has a significant ownership interest in the corporation,
(cid:2) whether the individual had personal responsibility for the decision that lead to
the conduct which violated the FLSA,
(cid:2) whether the individual supervised and controlled employee work schedules
and conditions of employment;
(cid:2) whether the individual maintained employment records; and

37Hicks v. Avery Drei, LLC, 2011 WL 3606683 (7th Cir. August 17, 2011), citing Brennan v. Veterans
Cleaning Serv. ., Inc., 482 F.2d 1362, 1367 (5th Cir.1973); Wirtz v. Columbian Mut. Life Ins. Co., 380 F.2d
903, 907 (6th Cir.1967).
38Donovan v. Easton Land & Dev., Inc., 723 F.2d 1549 (11th Cir. 1984); Robles v. Argonaut Restaurant
& Diner, Inc., 2009 WL 3320858 (S.D.N.Y. 2009).
39Robles v. Argonaut Restaurant & Diner, Inc., 2009 WL 3320858 (S.D.N.Y. 2009); Chao v. Barbeque
Ventures, LLC, 2007 WL 5971772 (D. Neb. 2007). See similarly Gonzales v. El Acajutla Restaurant, Inc.,
2007 WL 869583 (E.D.N.Y. 2007).
40Martin v. Deiriggi, 30 WH Cases 1129 (N.D. W.Va. 1991).
7
(cid:2) whether the individual had control of significant aspects of the corporation’s
day-to-day operations, including the compensation of employees.41
As many courts have noted, the definition of “employer” under the FLSA is much
broader than the usual common law concept.42 One does not need to be an owner of
the business to be liable under the FLSA; rather, the degree of ownership is but one
factor that courts evaluate.
Many courts applying these tests have found corporate officers personally liable
for FLSA violations.43 For example, one court found a company’s president personally
liable for FLSA violations where she hired and fired employees, set work hours, directed
work activities, had the authority to set wages, and was ultimately in a position of
authority over the business decisions that led to the FLSA violations.44 In a similar
case, a court found a company’s president to be an “employer” subject to FLSA liability
where the president had “continuous contact” over payroll and other personnel

41Chao v. Hotel Oasis, Inc., 493 F.3d 26 (1st Cir. 2007); De Leon-Granados v. Eller & Sons Trees, Inc.,
581 F. Supp. 2d 1295 (N.D. Ga. 2008); Perez v. Palermo Seafood, Inc., 548 F. Supp. 2d 1340 (S.D. Fla.
2008).
42Boucher v. Shaw, 572 F.3d 1087 (9th Cir. 2009); Dole v. Elliot Travel & Tours, 942 F.2d 962, 965 (6th
Cir. 1991); see Chellen v. John Pickle Co., Inc., 446 F. Supp. 2d 1247 (N.D. Okla. 2006).
43See Boucher v. Shaw, 572 F.3d 1087 (9th Cir. 2009)(“Where an individual exercises ‘control over the
nature and structure of the employment relationship,’ or ‘economic control’ over the relationship, that
individual is an employer within the meaning of the Act, and is subject to liability.”); Luder v. Endicott, 253
F.3d 1020 (7th Cir. 2001)(“[A] supervisor who uses his authority over the employees whom he supervises
to violate their rights under the FLSA is [individually] liable for the violation.”); Baystate Alternative
Staffing, Inc. v. Herman, 163 F.3d 668 (1st Cir. 1998)(supervisory authority not sufficient for individual
liability under the FLSA; rather the individual defendant must have control over the work situation coupled
with personal responsibility for the decision that violated the FLSA); U.S. Dep’t of Labor v. Cole Enters.,
Inc., 62 F.3d 775 (6th Cir.1995)(finding an individual defendant liable under the FLSA because he had
power over, among other things, hiring, firing, rates of pay, schedule, and payroll); Reich v. Circle C.
Invs., Inc., 998 F.2d 324 (5th Cir. 1993)(“This Court has held that the FLSA’s definition of employer is
sufficiently broad to encompass an individual who, though lacking a possessory interest in the ‘employer’
corporation, effectively dominates its administration or otherwise acts, or has the power to act, on behalf
of the corporation vis-à-vis its employees.”); Lee v. Coahoma County, Mississippi, 937 F.2d 220 (5th Cir.
1991)(holding that an individual sheriff could be held an “employer” under the FLSA because the sheriff
“clearly falls within the class of managerial personnel considered employers by the FLSA” and could
exercise operational control under Mississippi law, though the district court did not make a finding to that
effect), modified on other grounds, 37 F.3d 1068 (5th Cir.1993); Brock v. Hamad, 867 F.2d 804 (4th Cir.
1989)(finding an individual defendant with power to hire and direct employees was an “employer” under
the FLSA); Donovan v. Janitorial Servs., Inc., 672 F.2d 528 (5th Cir. 1982)(upholding FLSA liability of an
individual, even though he did not direct the day-to-day management of the corporate defendant because
the individual’s “considerable investment” in the company gave him “ultimate, if latent, authority over its
affairs,” and he exercised authority by firing an employee, reprimanding others, and providing some direct
supervision of employees); Dole v. Haulaway Inc., 723 F. Supp. 274 (D. N.J. 1989)(“A corporate officer
with operational control is an ‘employer,’ along with the corporation, jointly and severally liable under the
[FLSA] for unpaid wages. Further, any such corporate officer is liable in his individual, not representative,
capacity.”); Osborn v. Computer Scis. Corp., 2005 WL 5878602 (W.D. Tex. 2005); Alba v. Loncar, 2004
WL 1144052 (N.D. Tex. 2004).
44Cross v. Arkansas Forestry Commission, 938 F.2d 912 (8th Cir. 1991).
8
matters.45 In a third case, a court found an individual to be an “employer” where he
served as president, general manager, chairman of the board and owner of 80% of the
employer’s stock, he actively participated in the overall supervision of the company as
well as in many day-to-day functions involved in operating the company, was frequently
on the premises, and several employees testified that they received specific instructions
from him on how to perform their job duties.46 Similarly, a court found that the owner of
a farm, together with his son and daughter-in-law, were joint employers under the
FLSA.47 In another case along the same lines, the brother of the owner of a videotape
business was a joint employer where the brother hired some employees and directed
their work.48
At times, an employer found to have violated the FLSA may turn around and file
a claim against its supervisors who allowed the uncompensated time to be worked,
seeking to have the supervisors indemnify the employer (pay the damages due the
employee). Courts routinely reject such indemnity claims. As the Fifth Circuit bluntly
said, “No cause of action for indemnity by an employer against its employees who
violate the Act appears in the statute, nor in 40 years of its existence has the Act been
construed to incorporate such a theory.” 49 Or, as the Second Circuit put it at greater
length:
First, the text of the FLSA makes no provision for
contribution or indemnification. Second, the statute was
designed to regulate the conduct of employers for the benefit
of employees, and it cannot therefore be said that employers
are members of the class for whose benefit the FLSA was
enacted. Third, the FLSA has a comprehensive remedial
scheme as shown by the ‘express provision for private
enforcement in certain carefully defined circumstances.’
Such a comprehensive statute strongly counsels against
judicially engrafting additional remedies. Fourth, the Act’s
legislative history is silent on a right to contribution or
indemnification. See Joint Hearings on H.R. 7200 and S.
2475 Before the Senate Comm. on Educ. and Labor and the
House Comm. on Labor, 75th Cong. (1937), reprinted in4
American Landmark Legislation: The Fair Labor Standards
Act of 1938, at 37-116 (Irving J. Sloan ed., 2d series, 1984) .
. . . Accordingly, we hold that there is no right to
contribution or indemnification for employers held liable

45Bauler v. Pressed Steel Car Co., 81 F. Supp. 172 (N.D. Ill. 1948), aff’d 182 F.2d 357 (7th Cir. 1948).
46Reed v. Murphy, 232 F.2d 668 (5th Cir. 1956).
47Sanchez-Calderon v. Moorhouse Farms, 995 F. Supp. 1098 (D. Or. 1997).
48Chao v. Vidtape, Inc., 196 F. Supp. 281 (E.D. N.Y. 2002).
49See LeCompte v. Chrysler Credit Corp., 780 F.2d 1260 (5th Cir. 1986). See generallyLyle v. Food
Lion, 954 F.2d 984 (4th Cir. 1992); Martin v. Gingerbread House, Inc., 977 F.2d 1405 (10th Cir. 1992);
Bailon v. Seok AM No. 1 Corp., 2009 WL 4884340 (W.D. Wash. 2009).
9
under the FLSA. Cases from other circuits support this
conclusion. Several have followed Northwest’s reasoning in
similar situations. See Martin v. Gingerbread House, Inc.,
977 F.2d 1405, 1408 (10th Cir.1992) (“a third party complaint
by an employer seeking indemnity from an employee is
preempted” by the FLSA); Lyle v. Food Lion, Inc., 954 F.2d
984, 987 (4th Cir.1992) (court should not “engraft an
indemnity action upon this otherwise comprehensive federal
statute,” i.e., the FLSA).50
VI. Religious Organizations And The FLSA.
Though religious organizations are normally exempt from the FLSA’s coverage
– since they do not have the “business purpose” necessary for enterprise coverage51 –
they can lose their FLSA exemption for non-religious employees if they “serve the
general public in competition with ordinary commercial enterprises.” The theory is that
“the payment of substandard wages would undoubtedly give churches and similar
organizations an advantage over their competitors. It is exactly this kind of ‘unfair
method of competition’ that the Act was intended to prevent.”52 In one case, a church
lost its FLSA exemption by renting out meeting halls, effectively competing with short
and long-term commercial landlords and special event locations.53 Similarly, a court
found that a church-operated school was covered by the FLSA.54
VII. Individual Defendants.
The FLSA defines “employer” to include “any person acting directly or indirectly
in the interest of an employer in relation any employee . . .” 29 U.S.C. § 203(d). It
defines “person” to include an “individual.” 29 U.S.C. § 203(a).55 It is not the title of the
individual that matters. It is the role the individual plays on behalf of the employer in
relation to the employee that matters in determining liability as an employer.
Thus, an individual who acts directly or indirectly in the interest of an employer in
relation to an employee may be liable for violations of the FLSA with respect to that

50Herman v. RSR Sec. Services Ltd., 172 F.3d 132 (2d Cir. 1999).
51See Schleicher v. Salvation Army, 518 F.3d 472 (7th Cir. 2008).
52Tony and Susan Alamo Foundation v. Secretary of Labor, 471 U.S. 290 (1985).
53Boekemeier v. Fourth Universalist Society in the City of New York, 86 F. Supp. 2d 280 (S.D.N.Y. 2000).
54Dole v. Shenandoah Baptist Church, 899 F.2d 1389 (4th Cir. 1990).
55 As discussed in more detail below, the term “employer” has been interpreted to encompass one or
more joint employers. Donovan v. Sabine Irrigation Co., 695 F.2d 190, 194 (5th Cir. 1983), citing, inter
alia, Falk v. Brennan, 414 U.S. 190, 195 (1973).
10