A company and its owners were held liable for more than $40,000 in back wages and damages under the Fair Labor Standards Act (FLSA). The company appealed on the grounds that one of the workers was an illegal immigrant and both had broken the law. In addition, two of the owners argued that they were not corporate officers and could not be held liable under the FLSA. Would the verdict stand?

What happened. “Raymond” and “Louis” worked as installers for Safe Hurricane Shutters in Florida. They worked in a fluctuating workweek arrangement, being paid a set salary for whatever hours they worked in a week. In 2008, the workers filed an FLSA complaint seeking back pay for hours worked beyond 40 in a week. A jury awarded Raymond $20,849 and Louis $1,312, and the court awarded double the amounts in liquidated damages.

On appeal, the company argued that Raymond and Louis could not recover damages because both had failed to accurately report their income to the IRS. The company further claimed that Louis was an illegal immigrant and had applied for his job using a false Social Security number. In addition, two of the owners argued that they were merely “absentee owners” and did not exercise day-to-day control over the company’s operations.

What the court said. The 11th Circuit Court of Appeals, which covers Alabama, Florida, and Georgia, cited its previous ruling in Patel v. Quality Inn South that “undocumented aliens are ‘employees’ who may recover unpaid wages under the FLSA.” The court further noted that the law bars recoveries by participants in an illegal act only when the act “is the subject of the suit.” Because Raymond and Louis “did not participate in [the company’s] decision whether to pay them overtime,” the court found that their alleged improprieties were irrelevant.

The court further found that the owners, who were on-site from 1 to 2 weeks per month and owned about 23 percent of the company apiece, controlled sufficient aspects of the company’s “day-to-day functions, including compensation of employees,” to be held liable under the FLSA.

Finally, the court reviewed the jury’s interpretation of the fluctuating workweek when awarding damages and ruled that there “was sufficient evidence for the jury to find that the weekly salaries paid [Raymond and Louis] were intended to compensate them for only 40 hours of work.” Since the company could not provide any documentation to the contrary, the jury’s damages stood. Lamonica et al. v. Safe Hurricane Shutters, Inc., 11th Cir. Court of Appeals, No. 11-15743 (3/6/2013).

Point to remember. Fluctuating workweeks can save employers time and money, but they require thorough, proper documentation just like any other compensation plan.