When does “operational control” lead to personal liability?
The First Circuit’s rationale for holding the hotel’s president personally liable was, in essence, his undisputedly “instrumental role [in] running the hotel[,] managing its employees [and] causing the corporation to violate the FLSA.” The First Circuit emphasized that “a corporate officer with operational control of a corporation’s covered enterprise is an employer” within the meaning of the FLSA and, therefore, can be held personally liable for willful violations of the statute. In determining whether a corporate officer has sufficient “operational control” to warrant personal liability for a willful violation, the First Circuit instructed that the following basic factors must be carefully evaluated: • ownership interest in the corporation • degree of control over the corporation’s financial affairs and compensation practices • role in causing the corporation’s statutory violation How can you avoid personal liability under FLSA? While the First Circuit’s decision in Hotel Oasis recog
