Personal Liability for Wage and Hour Violations

November 20, 20205

Employers often assume liability for wage-and-hour violations rests solely with the company. But under the Fair Labor Standards Act (“FLSA”), managers, supervisors, HR professionals, and even executives can face personal liability for unpaid wages, overtime violations, and recordkeeping failures.

Unlike many other employment statutes, the FLSA’s definition of “employer” is expansive; it’s broad enough to capture individuals who exercise control over pay practices and working conditions. The critical information for those affected is the ability to recognize when personal liability arises, understand how courts evaluate the issue, and use that knowledge to minimize risk.

1. The FLSA’s Expansive Reach

The FLSA defines an “employer” as “any person acting directly or indirectly in the interest of an employer in relation to an employee.” This definition goes well beyond the typical corporate entity. Courts have repeatedly held that individuals who control day-to-day operations that affect employees’ pay and hours can also qualify as “employers.”

This means a court could hold any manager or supervisor who makes decisions about work schedules, pay, or classification personally responsible for violations, regardless of whether the company indemnifies or defends those supervisors from that exposure.

2. The Test for Supervisor Liability

Courts evaluate personal liability under the “economic reality” test, and they generally ask whether the individual:

• Has the power to hire or fire employees

• Supervises and controls work schedules or conditions of employment

• Determines the rate or method of payment

• Maintains employment records

• Has operational control over significant aspects of the business

While titles are not the sole factor to determine liability, authority bestowed by those titles does matter. Individuals frequently found personally liable include:

• Plant managers and operations managers

• HR directors and payroll managers

• Executive leadership (CEOs, CFOs, managing members)

• Owners of small/mid-size companies

• Front-line supervisors who direct daily work and approve overtime

Even if an individual did not know the violations occurred or have any intent to violate the law, careless misclassification decisions, failure to pay overtime, or blindness to off-the-clock work can trigger liability.

3. Damages Under the FLSA

Personal liability under the FLSA is joint and several. This means individuals can be responsible for the full amount owed, or liability may be apportioned among responsible individuals.

Potential personal exposure includes:

•  Unpaid minimum wages

• Unpaid overtime

• Liquidated damages (typically doubling the back pay award)

• Attorney’s fees and costs

• Civil money penalties for repeat or willful violations

Importantly, bankruptcy does not necessarily discharge FLSA wage liabilities, and D&O insurance may not cover intentional or willful wage-and-hour violations. It is difficult to insure against this exposure, even for the company itself.

4. The Risk Analysis

Some common situations tend to increase the likelihood that plaintiff’s lawyers name individual managers in wage-and-hour lawsuits:

A. Misclassification of employees

Someone decides that employees are exempt or not. These decisions are critical and, when they are not, which is especially common with “working supervisors,” administrative staff, and leads, the individuals responsible for those mistaken classifications are exposed.

B. Off-the-clock work

A supervisor who allows or encourages employees to work before or after their shifts without pay, or during meal breaks, is particularly at risk.

C. Unauthorized overtime

Companies often refuse to pay overtime because it was “not approved.” Under the FLSA, overtime worked must be paid, even if it violated policy. The proper course is to pay the time and then discipline for the policy violation. Any approach that fails to pay the employee creates exposure for the individual who made the decision.

D. Time-clock edits

A common practice employers often use is to “correct” time entries without verification that the time was accurate or and without any notice or acknowledgement from the employee. This practice creates exposure even when the supervisor believed the process to be merely administrative.

E. Retaliation claims

Some leaders become frustrated and take disciplinary action after an employee raises a wage concern. Retaliation claims can create personal liability, and they are among the riskiest because the damage claims have no real limit.

5. Recent Trends

Recent enforcement trends indicate an increased willingness by plaintiffs and the Department of Labor to pursue individuals:

•  More lawsuits name HR managers and operations leaders personally

• DOL scrutiny increased for “working supervisors” in industries like manufacturing, logistics, hospitality, and distribution

• Intentional and aggressive pursuit of liquidated damages

• Expansion of joint-employer theories – these often capture managers in multi-entity organizations

Because FLSA claims often arise in collective actions, individuals can become involved in large-scale litigation with massive exposure amounts.

6. Compliance Steps for Managers and Supervisors

To minimize personal exposure (and company exposure), leaders should consider some best practices:

A. Understand classification rules

 Ensure exempt vs. non-exempt classifications align with actual job duties—not titles or salary alone.

B.  Never allow “off-the-clock” work

If employees perform work, it must be paid. Address policy violations through discipline—not by withholding pay.

C. Follow clean timekeeping practices

Require employees to record all hours worked and never alter time entries without verification and documentation.

D. Pay overtime correctly

Avoid blanket prohibitions on overtime; instead, require pre-approval but pay for all overtime actually worked.

E. Maintain accurate records

Courts often interpret poor documentation as evidence of wrongdoing.

F. Escalate wage concerns

When in doubt, supervisors should elevate issues to HR or payroll rather than making independent decisions that could create liability.

G. Ensure no retaliation occurs

Employees must be free to raise wage concerns without fear of negative consequences.

7. Practical Takeaways

Personal liability for managers and supervisors exists under the FLSA.

• Operational control, not job title, determines exposure.

• Individuals can be liable for unpaid wages, doubled damages, and legal fees.

• Good timekeeping practices and prompt escalation of wage concerns reduce risk.

Companies that train supervisory personnel and treat wage-and-hour compliance as a shared responsibility significantly reduce both corporate and personal liabilities.