Thursday, March 7, 2013

Eleventh Circuit Addresses Undocumented Alien, Individual Liability, and Damages Issues Under FLSA

On March 6, 2013, the Eleventh Circuit Court of Appeals in Lamonica et al. v. Safe Hurricane Shutters, Inc. et al., 2013 U.S. Dist. LEXIS 4599 (11th Cir. Mar. 6, 2013), addressed three critical issues pertaining to FLSA claims.  Each of the three rulings provided greater coverage and damages than those argued by the employer-appellant. 

First, the Court ruled (again) that undocumented aliens are "employees" within the meaning of the FLSA.  Citing Patel v. Quality Inn S., 846 F.2d 700, 706 (11th Cir. 1988).   In so doing, the Court rejected the employer-appellant's contention that an intervening U.S. Supreme Court decision, Hoffman Plastic Compunds, Inc. v. NLRB, 535 U.S. 137 (2002) (holding that the NLRB cannot award backpay to undocumented aliens terminated in violation of the NLRA) overruled Patel and barred FLSA claims by undocumented aliens.  The Court reasoned that the NLRA and FLSA had materially different purposes and a ruling as to the NLRA could not be applied to FLSA claims.

Second, the Court reiterated the required analysis when determining individual liability under the FLSA.  The Court rejected the employer-appellant's contention that individual liability is limited to corporate officers.  The Court reasoned: "a supervisor's title does not in itself establish or preclude his or her liability under the FLSA . . . "  The Court then reasoned that the occasional, as opposed to consistent, exercise of control over employees may be sufficient to create individual liability under the FLSA.  The key question, the Court noted, is whether the individual exercised substantial control over matters related to the company's FLSA obligations

Finally, and significantly, the Court addressed the proper damage calculation for misclassification cases; an issue that has divided the district courts within Florida and the Circuit Courts of Appeals around the country.  The Court provided:

[T]he fluctuating workweek method is not the only or even the default method for calculating damages when an employee is paid a weekly salary.  In fact, it is conceptually subsumed within the broader rule that 'if the employee is employed solely on a weekly salary basis, the regularly hourly rate of pay, on which time and a half must be paid, is computed by dividing the salary by the number of hours which the salary is intended to compensate . . . Consequently, 'where the employee is paid solely on a weekly salary basis, the number of hours the employee's pay is intended to compensate -- not necessarily the number of hours he actually works -- is the divisor.' [citation ommitted] 
The Court then found no error with the jury's finding that the weekly salaries for the plaintiff-employees were intended to compensate them only for fourty hours of work, despite the fact they worked fluctuating hours for the same weekly salary.

The Court's decision makes clear that in every FLSA misclassification case a fact question will need to addressed as to what the salary was intended to compensate (40 hours, some greater number of hours, or any and all hours over 40).  The determination of this fact question will have a profound impact on damage calculations in every FLSA misclassification case.