Company general manager not ‘employer’ under FLSA

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Where the government alleged a company’s general manager was liable for unpaid overtime wages, based centrally on the extent of her involvement in management of employees, her involvement in hiring and her authority to set the rates of pay, but that claim was either unsupported by admissible evidence or flatly contradicted by evidence in the record, the general manager was not liable.

Background

The United States Department of Labor, or DOL, brings this action for unpaid overtime wages under the Fair Labor Standards Act, or FLSA, against Serenity Home Healthcare LLC, and three related business entities, Hildigard Ofori, the sole owner of the four companies, and Arafat Sheikhadam, the companies’ general manager. The DOL has filed a motion for summary judgment on all claims against all defendants.

Liability

Based on the undisputed facts and the defendants’ admissions, the court concludes as a matter of law that defendants failed to pay overtime pay and that their failure was willful and not in good faith. Accordingly, judgment for the required overtime pay and an equal amount for liquidated damages will be entered against Serenity and Ofori in an amount, as discussed below.

The DOL, however is not entitled to summary judgment against Sheikhadam. The DOL contends that Sheikhadam is an “employer” based centrally on the extent of her involvement in Serenity’s overall business operations, including her management of employees, her involvement in hiring and her authority to set the rates of pay. But that claim is either unsupported by admissible evidence or flatly contradicted by evidence in the record.

Injunctive relief

The DOL has requested that an injunction be entered against the defendants. In opposing that request, defendants only make the conclusory contention that the DOL has not met its burden to demonstrate that an injunction is necessary.

Serenity and Ofori have admitted their willful violations of their obligation to pay overtime as well as their failure in violation of 29 USC § 211(c) and applicable regulations to maintain records that that accurately reflect the premium pay for overtime hours. The DOL has also presented evidence that Serenity took steps to conceal their failure to pay overtime wages and in that regard, has represented, without challenge, that based on its review of defendants’ records, Serenity, in an attempt to appear in compliance with their obligation to pay overtime, has manipulated its employees’ rates of pay so that the total amount paid to an employee remains the same as it was when they were not paying overtime.

Further, the DOL argues that the harm from an injunction to the defendants is minimal because an injunction only requires the defendant to comply with the law and there is a strong public interest in having employees compensated properly under the law. Based on all the facts and circumstances presented, the court finds that an injunction is warranted to prevent further violations of the FLSA.

Relevant period

The parties dispute the applicable period for which DOL can recover overtime pay and liquidated damages. That issue revolves around the enforceability vel non of a tolling provision in a tolling agreement the parties signed on May 17, 2022. The court adopts defendants’ interpretation. Accordingly the defendants are liable for damages only for the three-year statutory period preceding the filing of the complaint on July 15, 2022.

Damages

Defendants have not challenged the computation of damages; and after a review of the government’s submission, the court finds that the estimation of damages is reasonable and sufficiently based on a reliable methodology. For this reason, the court finds that the government is entitled to compensatory damages from the liable defendants, jointly and severally, in the amount of $723,761.40, and for an equal amount of liquidated damages, for a total amount of $1,447,522.80.

Bankruptcy

Ofori and Sheikhadam have both filed a notice of bankruptcy. The court will enter judgment against Ofori as the government’s action in this case is exempt from the automatic stay in the bankruptcy code. However, the government will be directed to refrain from executing on that judgment unless leave is obtained from the bankruptcy court. The equitable relief that will issue in this case will only enjoin future violations of the FLSA and will not allow for the immediate enforcement of the monetary judgment against the defendants.

Plaintiff’s motion for summary judgment granted in part, denied in part.

United States Department of Labor v. Serenity Home Healthcare LLC, Case No. 1:22-cv-803, July 14, 2023. EDVA at Alexandria (Trenga). VLW 023-3-400. 15 pp.