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Unintentional Employers: Understanding Liability for FLSA Violations

The Fair Labor Standards Act (FLSA) mandates that employers pay employees at least minimum wage and overtime, unless exemptions apply. However, the FLSA’s definition of “employer” is broader than commonly understood, as demonstrated in the Spears v Patel et al case decided by the Eleventh Circuit Court of Appeals. Despite not being an owner or officer, hotel manager Sunny Patel was found individually liable for FLSA violations against William Spears, a front desk clerk he supervised.

Spears worked long hours across several Alabama hotels operated by Sunny’s father, Rick Patel Sr., and Sunny himself. Despite Rick Sr. signing paychecks, Sunny occasionally did so and was responsible for daily operations. He collaborated with Rick Sr. on setting rates and adjusting prices, supervised Spears directly, and scheduled his shifts.

When Spears sued for unpaid minimum wage and overtime, the court found both Patels individually liable under the FLSA, a ruling upheld on appeal. The Eleventh Circuit emphasized that anyone with significant involvement in supervising employees or controlling company operations can be deemed an “employer” under the FLSA. This includes managers like Sunny, despite their non-executive status.

Federal Employments Lawyers in DC find that this case underscores that non-owners or officers can face personal liability for FLSA violations, especially in roles involving substantial control over employee supervision or financial matters. This precedent affects businesses across Alabama, Georgia, and Florida, urging vigilance in complying with FLSA requirements and properly classifying employees to avoid severe penalties.

Federal Employment Lawyers in DC note that FLSA violations can lead to substantial liabilities, including back wages, liquidated damages, litigation costs, and attorneys’ fees. The ability to pursue claims collectively enhances the financial risk for employers, making compliance crucial. Businesses must educate their leadership, ensure proper classification and compensation of non-exempt employees, and conduct regular audits to align with FLSA standards and mitigate legal exposure.

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