Scalia v. Employer Solutions Staffing Group, 2020 WL 992564 (9th Cir. 2020)

Employer Solutions Staffing Group (“ESSG”) contracts with other companies to recruit employees and place them at jobsites for which ESSG provides administrative tasks such as payroll processing. ESSG conceded that it qualifies as an “employer” of the recruited employees under the Fair Labor Standards Act (“FLSA”). One of ESSG’s employees (Michaela Haluptzok) was responsible for processing payroll for a company whose employee called Haluptzok and told her without explaining why to pay all overtime hours as “regular hours.” Haluptzok complied even though in order to follow the employee’s instructions, Haluptzok had to ignore numerous error messages in ESSG’s software concerning the applicability of overtime payments. By the time ESSG’s relationship ended with the employer in question, more than 1,000 violations had occurred in which employees did not receive their earned overtime pay.

The Secretary of Labor sued ESSG and others over the FLSA violations, and the district court granted the Secretary’s motion for summary judgment, holding that ESSG had willfully violated the FLSA and awarded the Secretary $78,500 in unpaid overtime plus an equal amount in liquidated damages for the willful violation. The Ninth Circuit affirmed the judgment, holding that an employer may be liable even for the actions of a low-level employee such as Haluptzok. The Court also held that the violation was willful and, therefore, a three-year statute of limitations applied – as did an award of liquidated damages. Finally, the Court found there to be no right to indemnification or contribution from the other employers involved in the case.