Second Circuit Clarifies Damages and Shareholder Liability under the FLSA

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October 1, 2018

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In Tapia v. BLCH 3rd Ave. LLC, the Second Circuit Court of Appeal clarified that there is no double recovery of liquidated damages under the FLSA where damages are also awarded under state law. Additionally, the court reviewed direct shareholder liability under the FLSA by looking at the operational control of the alleged employer, including whether the individual has the power to: (1) hire and fire employees, (2) supervise and control employee work schedules or conditions of employment, (3) determine the rate and method of payment, and (4) maintain employment records.

There, the court found evidence that the shareholder only partially satisfied the fourth criteria of operational control. Ultimately, the court stated that status as a significant shareholder was not alone enough to show that the employer exercised or possessed financial control over the company to be held personally liable.

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Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser.

© 2018 ManagEase

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