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Solis v. A-1 Mortg. Corp.

United States District Court, W.D. Pennsylvania

March 21, 2013

A-1 MORTGAGE CORPORATION, a corporation, MARIA MAKOZY, individually, and GREGORY MAKOZY, individually, Defendants

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For HILDA L. SOLIS, SECRETARY OF LABOR, UNITED STATES DEPARTMENT OF LABOR, Plaintiff: Albert W. Schollaert, LEAD ATTORNEY, United States Attorney's Office, Pittsburgh, PA; Jordana L. Greenwald, LEAD ATTORNEY, U.S. Department of Labor, Office of the Solicitor, Philadelphia, PA; Paul A. Marone, LEAD ATTORNEY, U.S. Department of Labor, Office of the Solicitor, Region III, Philadelphia, PA.

For MARIA S. MAKOZY, individually, Defendant: David L. Fuchs, Pittsburgfh, PA; James R. Cooney, Robert O Lampl Law Office, Pittsburgh, PA; Robert O. Lampl, Pittsburgh, PA.

For GREGORY MAKOZY, individually, Defendant: David L. Fuchs, Pittsburgfh, PA; James R. Cooney, Robert O Lampl Law Office, Pittsburgh, PA; Robert O. Lampl, Pittsburgh, PA.


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Joy Flowers Conti, United States District Judge.


I. Introduction

Pending before the court is a motion for summary judgment (ECF No. 88) filed by plaintiff Hilda Solis, Secretary of the United States Department of Labor (the" Secretary" ), against defendant Gregory Makozy (" defendant" ). This action arises from defendant's involvement with A-1 Mortgage Corporation (" A-1" ), a mortgage brokerage firm. Defendant's wife, Maria Makozy (" Mrs. Makozy" ), was the president of A-1. [1] In this case, the Secretary alleges that defendant willfully violated the requirements of the Fair Labor Standards Act of 1938, as amended, 29 U.S.C. § 201 et seq. (" FLSA" ), by failing to pay employees of A-1 the requisite minimum wage, failing to pay employees overtime compensation, and failing to maintain accurate records of employees' hours. The Secretary seeks back wages, liquidated damages, and injunctive relief.

The Secretary argues that the affidavits of former A-1 employees, together with payroll checks issued by the company, demonstrate that no genuine issues of material fact exist with respect to whether the FLSA applies to defendant and whether he committed the alleged violations. Defendant responds that summary judgment would be improper largely because his own affidavit, coupled with Mrs. Makozy's testimony in her deposition in the present case as well as in a prior civil matter, [2] contradicts the Secretary's assertions. Defendant contends that genuine issues of material fact remain about whether he is an " employer" within the meaning of the FLSA; whether he violated the FLSA's minimum wage, overtime, and recordkeeping provisions; whether he did so willfully; whether he is liable for unpaid wages and liquidated damages; and whether injunctive relief is warranted.

Because defendant failed to provide sufficient evidence relating to his denials, the court concludes that no genuine disputes exist. The Secretary's motion for summary judgment will be GRANTED.

II. Factual Background

A-1, one of the original defendants in this case, was a mortgage brokerage firm located in Cranberry Township, Pennsylvania, and licensed by the Pennsylvania State Department of Banking. (Joint Concise Statement (" JCS" ) (ECF No. 98) ¶ ¶ 1-2.) A-1 generated sales leads through radio, TV, and Internet advertisements and provided them to its loan officers. (JCS ¶ 6.) The company's telemarketer would follow up by telephone with these potential customers, including some in Maryland and Florida, asking them to refinance their loans. (Id. ¶ 7.) Throughout the period of time relevant to this action, A-1's annual dollar volume of sales exceeded $500,000. (Id. ¶ 5.)

Mrs. Makozy was A-1's president, sole corporate officer, and sole shareholder.

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(Id. ¶ ¶ 3-4.) Defendant's degree of involvement in the management of the business is the subject of the instant motion. (See, e.g., id. ¶ 8.) While the Secretary claims that it was actually defendant who managed A-1, defendant asserts that Mrs. Makozy managed A-1's day-to-day operations and that he merely assisted " as necessary" as a " consultant." (Id. ¶ ¶ 4, 8.)

Mrs. Makozy described defendant as a " consultant." (Id. ¶ ¶ 4, 13.) When defense counsel inquired about the basis for this characterization during a 2010 deposition, Mrs. Makozy responded:

Q. Was there some other reason that Mr. Makozy was acting as a consultant instead of as an employee of A-1?A. He was a consultant, he was never an employee of A-1.Q. And why was that?A. Because he was not an employee.

(Maria Makozy Dep., Def.'s Resp. to Pl.'s Statement of Material Facts, App'x (" Def.'s App'x" ) D (ECF No. 94-4) at 33.) In a previous civil action, Mrs. Makozy testified that defendant " assist[ed]" her in the operation of A-1. (Id. ¶ ¶ 8, 12.) She permitted defendant to use the title of " manager" [3] and left him in charge when she was not in the office. (Id. ¶ 4.)

In the course of his duties at A-1, defendant interviewed prospective employees and made recommendations to Mrs. Makozy about whom to hire and fire. [4] (Id. ¶ 9, 14-15.) Mrs. Makozy testified in a deposition that defendant met with A-1's accountants and advertising vendors; apprised the employees about A-1's dress code, their work hours, start times, and the duration of the work day; called in employees' hours to ADP for payroll purposes; handled vacation requests; and trained employees in the use of the company's mortgage origination software. (JCS ¶ 8.) Mrs. Makozy acknowledged that defendant had the ability to write checks and, even if he did not personally sign them, he had at least theoretical authority to do so because he was listed as an authorized signer on A-1's bank account. (JCS ¶ ¶ 8, 35; Makozy Dep., Def.'s App'x D at 45, 50-51.)

A-1's employees approached defendant with questions and work-related issues, which he attempted to resolve. (JCS ¶ 11.) Although defendant claims that Mrs. Makozy managed A-1's daily operations, several of the company's former employees reported that he set their work hours and the loan officers' commission rates and quotas. (Id. ¶ 10.) According to Mrs. Makozy, she set the terms of their compensation, while defendant discussed them with the employees. (Makozy Dep., Def.'s App'x D at 56-57.) The employees maintain, and defendant denies, that they only conferred with Mrs. Makozy if they needed her help with a title issue. (JCS ¶ 16.)

Between December 2, 2001 and November 23, 2003, the Pittsburgh District Office of the Wage and Hour Division (" Wage Hour" ) of the United States Department of Labor (" DOL" ), investigated A-1's compliance with the FLSA. (Id. ¶ 19.) As a result, Wage Hour determined that A-1 failed to pay its twenty-three loan officers, who worked purely on commission, a minimum

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wage and time and one-half for any overtime hours. (Id. ¶ 20.) Wage Hour concluded that A-1 did not accurately record the hours its employees actually worked and did not observe regular pay dates. (Id. ¶ 21.) On April 10, 2004, Mrs. Makozy and defendant, who was then A-1's general manager, entered into a stipulation with the Secretary's representative in which A-1 agreed to pay all back wages and to comply with the FLSA in the future. (Id. ¶ ¶ 19, 22.)

Wage Hour investigated A-1 again between November 30, 2003 and July 11, 2004. (Id. ¶ 23.) This investigation revealed that A-1 paid employees for their work weeks after they performed it via backdated checks and failed to record accurately the employees' hours and the commission payments they earned. (Id. ¶ ¶ 25-26.) Wage Hour concluded that A-1 failed to comply with the FLSA's requirements after the first investigation and subsequently failed to pay its employees at least minimum wage for all the hours they worked. (Id. ¶ 24.) On December 22, 2004, a consent judgment was entered, imposing civil penalties on the Makozys and enjoining them from further violating the FLSA and withholding back wages. (Id. ¶ 27.) Mrs. Makozy signed the consent agreement as an authorized officer of the corporation, and defendant signed as a " consultant." (Id. ¶ 28.)

Wage Hour's third investigation of A-1's compliance with the FLSA's minimum wage, overtime, and recordkeeping provisions, conducted between October 1, 2005 and May 30, 2008, gave rise to the present action. (Id. ¶ 29.) Wage Hour's investigator, Polly Lupean (" Lupean" ), concluded that A-1 failed to pay twenty-one of its employees the minimum wage for all the hours they worked each week. (Id. ¶ 30.) Lupean also found that twenty loan officers were paid strictly on commission and were not guaranteed a minimum wage. (Id. ¶ 31.) Loan officers Don Noland (" Noland" ) and Jeremy Wells (" Wells" ) stated in their declarations that they never received ADP payroll checks at all. (JCS ¶ 39; see also (Noland Decl., Pl.'s Br. in Supp. of Mot. for Summ. J., App'x (" Pl.'s App'x" ) P (ECF No. 89-3) ¶ 25; Wells Decl., Pl.'s App'x R (ECF No. 89-3) ¶ 22.) Secretary Jessica Hollenberger (" Hollenberger" ) was not paid at all for the eight hours she worked on her last day at A-1. (JCS ¶ 31-32.)

Defendant denies that these employees were not paid for all the hours they worked. Id. ¶ ¶ 30-32.) With the exception of Hollenberger, for which defendant cites his own affidavit, he bases these denials on Lupean " disregarding" the A-1 time sheets indicating that the employees had, in fact, worked forty hours per week. (Id.) Lupean, however, determined based upon her interviews with A-1's employees that those time sheets had been falsified. (Id. ¶ ¶ 31-32.)

Lupean found that, while A-1's employees were issued biweekly payroll checks, defendant withheld payroll checks owed to some loan officers, including Jennifer Stuber (" Stuber" ) and Deborah Stadelmyer (" Stadelmyer" ), without changing the checks' issue dates, until the officers closed a loan. (JCS ¶ ¶ 33-34; see also Stuber Decl., Pl.'s App'x Q (ECF No. 89-3) ¶ 26; Stadelmyer Decl., Pl.'s Reply Br., Supp. App'x (" Pl.'s Supp. App'x" ) T (ECF No. 96-1) ¶ ¶ 29-30.) Lupean concluded that these loan officers were only paid minimum wage checks when their loans closed and funded, and they were owed a commission. (JCS ¶ 35, 41.) The loan officers' declarations state that those who did not close loans during a pay period were not paid during that period. (Id. ¶ 38, 40.) According to loan officer Joseph Gentry (" Gentry" ), defendant told him that, if the

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DOL contacted him, he should report that he had " no complaints" and was paid biweekly, even though he was paid only when he closed a loan. (Id. ¶ 58.) Defendant, citing his own affidavit, denies these allegations and claims that he lacked the authority to, and did not, issue checks to A-1's employees. (Id. ¶ ¶ 33-35, 40-41, 59.)

The Secretary alleges that, as a result of A-1's practice of withholding checks, some A-1 employees went weeks or months without being paid. (Id. ¶ 41.) In support of this contention, the Secretary cites ADP payroll and A-1 commission checks that corroborate the employees' declarations. (Id. ¶ ¶ 43, 45, 47, 49.) For example, while ADP payroll checks issued to loan officer Vincent Ciminera (" Ciminera" ) were dated August 31, 2007, September 14, 2007, September 28, 2007, and October 12, 2007; the check processing date stamped on the back of the checks indicates that they were not deposited until October 31, 2007, the same date an A-1 commission check dated October 31, 2007 was deposited. (Id. ¶ ¶ 42-43.) Similarly, ADP payroll checks purport on their faces to have been issued to Gentry on July 20, 2007, August 17, 2007, August 31, 2007, and September 14, 2007, but the processing date shows that they were not deposited until October 16, 2007, which was the same date an A-1 commission check dated October 15, 2007 was deposited. (Id. ¶ ¶ 44-45.) Two ADP checks appear to have been issued to loan officer Paul Minutello (" Minutello" ) on January 6 and 20, 2006. (Id. ¶ 48.) The check processing date stamped on the back of the checks, however, shows that they were not deposited until March 20, 2006, more than ten weeks later, at the same time Minutello deposited an A-1 commission check dated March 13, 2006. (Id. ¶ 49.) Finally, an ADP payroll check purporting to have been issued to loan officer Andrew Hetes (" Hetes" ) on August 31, 2007 was not, according to the processing date, deposited until September 14, 2007, at the same time an A-1 commission check dated September 12, 2007 was deposited. (Id. ¶ ¶ 46-47.) In their declarations, the employees explained that they typically deposited any checks they received from A-1, whether ADP payroll checks or A-1 commission checks, within three days of receiving them, and one week at the latest. (Id. ¶ ¶ 36-37, 47, 49.)

Defendant denies that the employees' paychecks were withheld. (Id. ¶ ¶ 43, 45, 47, 49.) He argues that Lupean did not account for checks for which copies of the front and back were not provided and did not verify the timing of the employees' deposits. (Id.) Defendant maintains that he was not responsible for issuing A-1's checks, and he argues that an employee's failure to deposit a check until a given date does not necessarily mean that the check was not, in fact, issued to the employee in a timely fashion. (Id.)

The Secretary alleges that, when the loan officers worked more than forty hours per week, defendant did not pay them at all for the hours worked in excess of forty, let alone at time and one-half their regular pay rate. (Id. ¶ 50.) The Secretary claims that defendant told A-1's loan officers not to record more than forty hours per week, regardless of how many hours they actually worked. (Id. ¶ 51.) The Secretary asserts that defendant instructed the loan officers to indicate on their time sheets that they took one-hour lunch breaks, whether or not they actually did, and not to indicate that they worked late or on weekends. (Id. ¶ 52.)

To support these claims, the Secretary cites the declarations of several A-1 employees. Minutello, who stated that he regularly exceeded forty hours of work per week, reported that defendant returned a

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time sheet that accurately reflected his hours worked and instructed him not to show more than forty hours per week in the future. (Id. ¶ 53.) Defendant told Minutello to change his start times to " make [his time sheet] look more authentic." (Id. ¶ 54.) Gentry stated, while he did not record his hours at all while he was employed at A-1, in early May 2008, after Wage Hour commenced its most recent investigation, defendant asked him to return to the office to complete backdated time sheets that did not accurately reflect the hours he actually worked. (JCS ¶ 58; Gentry Decl., Pl.'s Supp. App'x J (ECF No. 96-1) ¶ ¶ 18, 27-30.) Hetes, Noland, and Wells also did not keep time records while working at A-1. (JCS ¶ ¶ 57.) Ciminera reported that he did not record his hours worked after filling out one or two time sheets when he first began working for A-1. (Id. ¶ 56.) According to Stuber, defendant told her that the DOL required that her time sheets show that she took a lunch break, even though she usually ate at her desk. (Id. ¶ 55, 60.)

Defendant denies these allegations, again claiming that Lupean " disregarded" employee time sheets showing that they worked forty hours per week. (Id. ¶ ¶ 50-57.) The Secretary relies upon Lupean's determination, based upon her interviews of A-1's employees, that those time sheets had been falsified. (Id.) During its investigation, Wage Hour calculated that the back wages A-1 owed to twenty-one former employees for unpaid minimum wages and overtime totaled $68,272.11. (Id. ¶ 61.) Defendant denies that any back wages are due and argues that, even if they were, Wage Hour's calculation was incorrect because Lupean based her calculation upon interviews and did not verify the amounts. (Id.) Lupean, however, explained that because she believed defendant falsified the time sheets -- and keeping track of employees' hours is the employer's responsibility under the FLSA -- " there would be nothing else to review" to verify the employees' actual hours worked. (Lupean Dep., Def.'s App'x C (ECF No. 94-3) at 38-39.)

III. Standard of Review

Federal Rule of Civil Procedure 56 provides, in relevant part:

(a) Motion for Summary Judgment or Partial Summary Judgment.

A party may move for summary judgment, identifying each claim or defense -- or the part of each claim or defense -- on which summary judgment is sought. The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law. The court should state on the record the reasons for granting or denying the motion.

. . .
(c) Procedures.
Supporting Factual Positions.

A party asserting that a fact cannot be or is genuinely disputed must support the assertion by:

(A) citing to particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations (including those made for purposes of the motion only), admissions, interrogatory answers, or other materials; or
(B) showing that the materials cited do not establish the absence or presence of a genuine dispute, or that an adverse party cannot produce admissible evidence to support the fact.

Fed. R. Civ. P. 56(a), (c)(1)(A)-(B).

Rule 56 of the Federal Rules of Civil Procedure " mandates the entry of summary judgment, after adequate time for

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discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial."

Marten v. Godwin, 499 F.3d 290, 295 (3d Cir. 2007) (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986)).

An issue of material fact is in genuine dispute if the evidence is such that a reasonable jury could return a verdict for the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); see also Doe v. Abington Friends Sch., 480 F.3d 252, 256 (3d Cir. 2007) (" A genuine issue is present when a reasonable trier of fact, viewing all of the record evidence, could rationally find in favor of the non-moving party in light of his burden of proof." ) (citing Liberty Lobby, 477 U.S. at 248; Celotex Corp., 477 U.S. at 322-23).

" [W]hen the moving party has carried its burden under Rule 56(c), its opponent must do more than simply show that there is some metaphysical doubt as to the material facts . . . . Where the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no genuine issue for trial."

Scott v. Harris, 550 U.S. 372, 380, 127 S.Ct. 1769, 167 L.Ed.2d 686 (2007) (quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986)).

In deciding a summary judgment motion, a court must view the facts in the light most favorable to the nonmoving party and must draw all reasonable inferences, and resolve all doubts in favor of the nonmoving party. Doe v. Cnty. of Centre, Pa., 242 F.3d 437, 446 (3d Cir. 2001); Woodside v. Sch. Dist. of Phila. Bd. of Educ., 248 F.3d 129, 130 (3d Cir. 2001); Heller v. Shaw Indus., Inc., 167 F.3d 146, 151 (3d Cir. 1999). A court must not engage in credibility determinations at the summary judgment stage. Simpson v. Kay Jewelers, Div. of Sterling, Inc., 142 F.3d 639, 643 n.3 (3d Cir. 1998).

IV. Discussion

At issue in the present motion are FLSA provisions relating to compensation, recordkeeping, and damages. Specifically, the Secretary argues that defendant violated (1) the FLSA's minimum wage requirement, 29 U.S.C. § 206 (2006) (" § 6" ); (2) the FLSA provision mandating time-and-one-half compensation for overtime hours worked, 29 U.S.C. § 207 (2006) (" § 7" ); and (3) the FLSA requirement that employers keep accurate records of their employees' hours and compensation, 29 U.S.C. § 211(c) (2006) (" § 11(c)" ). The Secretary argues that these violations were willful and that this court should award back wages, liquidated damages, and injunctive relief.

Defendant contends that the FLSA's provisions do not apply to him because he is not, in fact, an " employer" within the meaning of the statute. Defendant also denies having violated § § 6, 7, and 11(c), as well as any willfulness or liability for damages.

A. " Employer"

Before the court can address whether, as a matter of law, defendant violated the FLSA, it must first settle the preliminary matter of whether or not defendant is subject to its provisions at all. The Secretary contends, and defendant denies, that he is an " employer" within the meaning of the FLSA.

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1. Defining " Employer" for FLSA Purposes

There is no dispute that A-1 was the employer of the employees in issue. The question presented is whether defendant may also be classified as an employer of those employees. It is clear that " [a] 'single individual may stand in the relation of an employee to two or more employers at the same time under the [FLSA].'" In re Enterprise Rent-A-Car Wage & Hour Empl. Practices Litig., 683 F.3d 462, 467 (3d Cir. 2012) (quoting 29 C.F.R. § 791.2(b)). The FLSA provides in pertinent part, that an employer " includes any person acting directly or indirectly in the interest of an employer in relation to an employee . . . ." 29 U.S.C. § 203(d) (" § 3" ) (emphasis added). Courts have interpreted § 3's terms broadly in order to better effectuate the statute's sweeping remedial objectives. See, e.g., Dole v. Elliott Travel & Tours, Inc., 942 F.2d 962, 965 (6th Cir. 1991); Donovan v. Sabine Irrigation Co., Inc., 695 F.2d 190, 194 (5th Cir. 1983) (referencing " the firmly-established guidon that the FLSA must be liberally construed to effectuate Congress' remedial intent" ), abrogated on other grounds, McLaughlin v. Richland Shoe Co., 486 U.S. 128, 108 S.Ct. 1677, 100 L.Ed.2d 115 (1988); Bonnette v. Ca. Health & Welfare Agency, 704 F.2d 1465, 1469 (9th Cir. 1983), abrogated on other grounds, Garcia v. San Antonio Metro. Transit Auth., 469 U.S. 528, 105 S.Ct. 1005, 83 L.Ed.2d 1016 (1985).

The United States Court of Appeals for the Third Circuit has recognized this broad approach to the definition of an employer under the FLSA. In In re Enterprise, the court identified a number of decisions in which the United States Supreme Court used expansive language to describe the term " employer" used in § 3. In re Enterprise, 683 F.3d at 467-68. The courts of appeals referred to the Supreme Court's acknowledgement in Nationwide Mut. Ins. Co. v. Darden, 503 U.S. 318, 326, 112 S.Ct. 1344, 117 L.Ed.2d 581 (1992), that Congress defined " employer" " expansively" and explained that the definition of " employer" had been called " 'the broadest definition that has ever been included in any one act.'" Id. (quoting United States v. Rosenwasser, 323 U.S. 360 n.3, 363, 65 S.Ct. 295, 89 L.Ed. 301 (1945) (referring to Senator Black's remarks on the Senate floor)).

Because of the breadth of the FLSA, the employer need not necessarily have " [u]ltimate control" for an employer-employee relationship to exist; " even 'indirect control' may be sufficient. Id. at 468. In other words, the alleged employer must exercise 'significant control.'" Id. (emphasis added) (quoting N.L.R.B. v. Browning-Ferris Indus. of Pa., 691 F.2d 1117, 1123 (3d Cir. 1982)). Other courts have interpreted the term " employer" broadly enough to hold a corporation's managers liable in their individual capacities despite the corporation's bankruptcy. See Boucher v. Shaw, 572 F.3d 1087, 1093-94 (9th Cir. 2009); Donovan v. Agnew, 712 F.2d 1509, 1511 (1st Cir. 1983); Chung v. New Silver Palace Rest., Inc., 246 F.Supp.2d 220, 226 (S.D.N.Y. 2002).

As noted, whether an employer-employee relationship existed between A-1 and the affected loan officers is not at issue for the purposes of the matter at hand; rather the Secretary argues that defendant is also an employer of the employees in issue for FLSA purposes in his individual capacity. Individuals acting in a supervisory capacity may be liable in their individual capacities as an employer under the FLSA. See Haybarger v. Lawrence Cnty. Adult Prob. and Parole, 667 F.3d 408 (3d Cir. 2012) (discussing an individual supervisor's liability as an employer under the Family and Medical Leave Act,

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29 U.S.C. § 2601 et seq., noting the definition of " employer in that act is " materially identical to that in FLSA. . . ." ). In Haybarger, the court of appeals found an individual supervisor could be an employer because the FLSA would permit such individual liability. Id. at 417. The court referred to the language in the FMLA, which defines employer and is virtually identical to the language in the FLSA, and noted:

Having concluded that an individual supervisor at a public agency may be held liable under the FMLA, we must next determine whether there exists a genuine dispute of material fact concerning whether [the supervisor] was Haybarger's employer under the FMLA. We return to the FMLA's statutory language, which states that an " employer" includes " any person who acts, directly or indirectly, in the interest of an employer to any of the employees of such employer." § 2611(4)(A)(ii)(I). We believe this language means that an individual is subject to FMLA liability when he or she exercises " supervisory authority over the complaining employee and was responsible in whole or part for the alleged violation" while acting in the employer's interest. Riordan v. Kempiners, 831 F.2d 690, 694 (7th Cir.1987) (discussing individual liability under the FLSA's analogous definition of an " employer" ). As the Fifth Circuit explained in interpreting the FLSA's analogous employer provision, an individual supervisor has adequate authority over the complaining employee when the supervisor " independently exercise[s] control over the work situation." Donovan v. Grim Hotel Co., 747 F.2d 966, 972 (5th Cir.1984) (quoting Donovan v. Sabine Irrigation Co., 695 F.2d 190, 195 (5th Cir.1983)); see also Falk v. Brennan, 414 U.S. 190, 195, 94 S.Ct. 427, 38 L.Ed.2d 406 (1973) (holding that a company exercising " substantial control of the terms and conditions of the work" of the employees is an employer under the FLSA).


2. The Enterprise Test

In In re Enterprise, 683 F.3d 462, the Court of Appeals for the Third Circuit recently developed a test to determine " whether a defendant is a plaintiff's 'employer' within the meaning of that term under the FLSA." Id. at 468. There, the court was faced with the question whether a parent company was a joint employer of the assistant managers employed by certain of its subsidiaries, which primarily rent and sell vehicles to the public under the Enterprise name. Id. at 464-65. The defendant parent company moved for summary judgment on the ground that, because it was not a joint employer within the meaning of the FLSA, it could not be liable under the statute. Id. at 466-67. The district court granted the parent company's motion, and the assistant managers appealed. Id. at 466-67.

On appeal, the court of appeals affirmed the district court's grant of summary judgment. Id. at 471. In formulating a new test for determining joint employer status, [5] the court looked primarily to the tests used by the Court of Appeals for the Ninth

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Circuit in Bonnette, 704 F.2d at 1470, and this court in Lewis v. Vollmer of America, No. 05-1632, 2008 WL 355607 (W.D. Pa. Feb. 7, 2008). In re Enterprise, 683 F.3d at 468-70. As a result of this " melding," the court of appeals set forth the " Enterprise test," which consists of four factors:

1) the alleged employer's authority to hire and fire the relevant employees; 2) the alleged employer's authority to promulgate work rules and assignments and to set the employees' conditions of employment: compensation, benefits, and work schedules, including the rate and method of payment; 3) the alleged employer's involvement in day-to-day employee supervision, including employee discipline; and 4) the alleged employer's actual control of employee records, such as payroll, insurance, or taxes.

Id. at 469. [6] These factors, the court of appeals reasoned, " reflect the facts that will generally be most relevant in a joint employment context." Id.

The court cautioned, however, that " these factors do not constitute an exhaustive list of all potentially relevant facts, and should not be blindly applied." Id. (emphasis in original). That is, the Enterprise factors are not necessarily the " sole considerations" that enter into a determination of joint employer status. Id. at 469-70. " [O]ther indicia of 'significant control'" may be considered along with the four factors delineated above. Id. at 470. In fact, " all factors . . . are to be considered and weighed in deciding whether a joint employer status has been found" in a given case. Id. (accepting the argument that additional factors such as the corporate structure and nature of the business in which the parties were engaged should be considered). This built-in flexibility dovetails with the court of appeals' pragmatic approach in developing a new test " consistent with those considerations of the real world where such additional economic concerns are prominent," as well as ...

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