Officers and managers fall within the FLSA’s definition of “employer” and thus can be personally liable for unpaid wages, says the 9th Circuit Court of Appeals in a recent decision. In Boucher v. Shaw, No. 05-15454 (9th Cir. Jul. 27, 2009), the court held that “the [employer’s] bankruptcy has no effect on the claims against the individual managers at issue here.” Pointing out that the FLSA defines “employer” as “any person acting directly or indirectly in the interest of an employer in relation to an employee,” the court found that the company’s Chief Executive Officer, Chief Financial Officer, and a manager responsible for labor and employment matters could be held independently liable for unpaid wages, even thought the company was dissolved.
What does this mean for employers? Officers and managers must be trained on FLSA issues such as proper classification of employees as exempt or non-exempt, and payment of overtime and minimum wage. We also recommend an annual wage and hour audit to insure compliance with the FLSA and corresponding state laws.