Business Owner Found Personally Liable, Employment Law Case Study

The ruling issued by the US Court of Appeals for the Second Circuit against John Catsimatidis is an eye-opener to employers and business owners across the US. By holding Gristedes Supermarket owner, John Catsimatidis, personally liable for a Fair Labor Standards Act class action suit, the Court fundamentally redefined the meaning of ‘employer’ under FLSA guidelines. This ruling sets a new precedence that broadens the interpretation of ‘employer’ and District Courts may now apply this analysis in other contexts, which could have a significant impact on future cases.

Qualifying as an 'employer'

The Catsimatidis case originally began in 2004 as a class action lawsuit against various Gristedes Supermarkets’ corporate and individual defendants by several manager and co-managers working in the supermarket. The plaintiffs in the case claimed they were misclassified as exempt under NYLL and FLSA and were wrongfully denied overtime. Two years of litigation led to a settlement agreement of $3.5M by the supermarket to the plaintiffs in the case with $425,000 paid initially and following with 27-month installment payments thereafter. The defendants in the case defaulted on their settlement obligations and the plaintiffs subsequently sought enforcement of the settlement against Catsimatidis, Gristedes Supermarket owner, personally. The Court found that Catsimatidis qualified as an ‘employer’, and thus, held him personally liable.

The Appeal

Catsimatidis appealed this ruling, stating that he was merely a high-level executive and made only general corporate decisions. Catsimatidis argued that the FLSA defined an ‘employer’ as one who exercises day-to-day decision making within the business and that his role in the company did not qualify under that interpretation. To determine Catsimatidis’ capacity at Gristedes Supermarket, the Court endorsed a ‘totality of circumstances’ versus ‘operational control’ test and found that Catsimatidis exercised decision-making which directly affected the conditions of the employees’ employment and made general managerial decisions, including the responsibility for decisions in respect to employee wages.

What The Decision Means

Although this decision is quite notable because of its broadening definition of ‘employer’ under the Fair Labor Standards Act, this is still a case where circumstances played a significant role in the outcome. Had the corporate defendant not defaulted on their payment obligations, Catsimatidis would not have been held personally liable. Nonetheless, the ruling by the US Court of Appeals for the Second Circuit does prompt much food for thought.

If you think your rights have been violated or have questions about a potential case contact our New York City Employment Lawyers today.