Under the Fair Labor Standards Act, supervisory employees can be found personally liable for wage and hour violations.  A new unpublished opinion from the Fourth Circuit Court of Appeals (which includes North and South Carolina) demonstrates the danger to both the employer and its executives from poor recordkeeping and wage payment practices.  The case, Chao v. Self Pride, Inc., involved a suit by the Department of Labor against a residential care facility for disabled clients.  The suit alleged that supervisors arbitrarily reduced employees’ timesheets, penalizing them double for tardiness.  DOL also claimed that the employer improperly deducted for breaks during which employees were not allowed to leave the facility, and were required to perform periodic checks on residents.

The Fourth Circuit affirmed summary judgment for DOL.  The employer’s apparently arbitrary treatment of working time doomed its defense that the deductions made were for legitimate reasons under the FLSA.  In this case, the company’s CEO was found jointly and severally liable for the violations, because he personally approved the altered timesheets before they were submitted for payment.  Failure to adhere to overtime requirements cost both the company and its CEO over $700,000 in wages, interest and liquidated damages.