The Fair Labor Standards Act (FLSA) provides steep penalties for “employers” who violate its requirements. Who, exactly, is an “employer”? The statute states an employer is “any person acting directly or indirectly in the interest of an employer in relation to an employee. . . .” 29 U.S.C. Section 203(d). The Ninth Circuit had the occasion to interpret this section in the recent case of Boucher v. Shaw. The court gave an expansive interpretation, looking at the nature of the employment relationship as a whole and the degree of control exercised by the would-be employer. It went further than a prior Ninth Circuit case, which had held an FLSA “employer” needed to have a significant ownership interest in the corporation. The Boucher court found the defendant’s CFO, who had no ownership interest, to be an “employer” within the meaning of the FLSA, along with the CEO and another officer who owned a substanial part of the company.
Knowing this risk of personal liability, it would serve senior management well to ensure their company is in compliance with the FLSA. A wage and hour audit can be the perfect, cost-effective solution.
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