Business owners, officers, and managers, this is why you need to pay attention to wage and hour issues.
Tow truck driver Marquis Mariscal sued JLS Towing, alleging the company misclassified him and other drivers as independent contractors and paid them a flat rate per vehicle towed, no matter how many hours they worked. No overtime, ever, even past 40 hours a week.
He not only sued the company, but also its president, Summer Settle, personally, claiming she directed the company's operations, set schedules, made hiring and firing calls, and controlled how drivers got paid.
Settle moved to dismiss the claims against her individually, arguing Texas law shields corporate officers from LLC liability. The court disagreed.
In wage and hour cases, the corporate shell is not a liability force field. The Fair Labor Standards Act doesn't care what your state's business code says. The FLSA defines "employer" to include any person acting in the interest of an employer, and courts have long held that a corporate officer with operational control over the workforce can be personally liable, jointly and severally, right alongside the company.
Liability is not absolute, and depends on the balancing of these four factors:
1. Power to hire and fire. Not just a vote at the board table, but the actual authority to bring someone on or let them go.
2. Control over schedules and working conditions. Did this person set hours, assign shifts, or supervise day-to-day work?
3. Control over pay. Did they decide the rate, the method, or whether overtime got paid at all?
4. Maintenance of employment records. Someone has to keep the books on hours and pay. If it's you, that's evidence of control.
Mariscal alleged Settle checked every one of those boxes. That was enough to survive dismissal.
Being a co-owner who occasionally weighs in isn't enough on its own. Someone actually has to run the operation for liability to trigger. If you set the pay structure, sign off on schedules, and decide who gets hired or fired, an LLC or other corporate form won't save you when the overtime math goes wrong.
Titles don't create liability. Control does, and control doesn't come with a shield. If compliance isn't reason enough to get your wage and hour house in order, personal liability should be.