Successor Liability and Your Federal Unpaid Overtime Case in Georgia

When your employer fails to pay you what you’re owed under the law, you inevitably are going to face certain challenges in getting that compensation. Having your employer engage in legal subterfuge to avoid paying you should not be one of them, but it does happen. Any time you need to pursue legal action for the pay you’ve wrongfully been denied, but especially when your employer has engaged in illegal steps to try to escape paying, you need the advocacy of a knowledgeable Atlanta unpaid overtime lawyer.

One of those techniques may be for your employer simply to shutter their old business and create a new one at the same location, run by the same people, doing the same work.

A pair of paralegals who worked at a law office in Miami recently filed a legal action where they claimed that that was what happened to them. According to the paralegals, the employer improperly failed to pay them proper regular and overtime compensation, so they quit in the summer of 2019 and initiated a Fair Labor Standards Act lawsuit in federal court.

One month later, though, the law firm went out of business. In its place arose a new law firm. The new law firm allegedly offered the same services at the same location and was managed and controlled by the same people as the old law firm.

This, according to the paralegals, meant that what the employer did was “a fraudulent closing/transfer/selling of its assets just to escape from its FLSA obligations,” and the new law firm was a “mere continuation” of the old one. That, the paralegals argued, made the new firm a “successor in interest” and liable for the wages the old firm wrongfully denied them.

The paralegals’ case has a distinct chance of success. The 11th Circuit Court of Appeals, whose rulings directly govern federal lawsuits in Georgia, Florida, and Alabama, declared in 2016 that a worker could pursue a claim of successor liability in an FLSA case. In that 2016 case, the workers were nurses who won a judgment for wrongful denial of overtime pay in violation of the FLSA, but the employer had ceased operations by the time the case was resolved.

Necessary to ‘Prohibit Employers… From Avoiding Liability’

The appeals court declared that “successor liability is appropriate in suits to enforce federal labor or employment laws to prohibit employers who violated those laws from avoiding liability by selling, or otherwise disposing of, their assets and” going out of business.

If you’re seeking to hold an entity liable for FLSA damages based upon a theory of successor liability, you need to prove several things. Those things include that: (1) the successor business had notice of your ongoing lawsuit, (2) your [subsequently shuttered] employer would have been able to provide the relief you sought prior to the transition; (3) your employer “could have provided the relief after the sale” and (4) the successor can provide what you’re seeking.

Additionally — and critically importantly — you must demonstrate the existence of “continuity between the operations and work force of the predecessor and the successor.”

That last criterion is why the Miami paralegals made a point to include in their complaint an allegation that the new law firm was providing the same services (immigration law-related legal services) at the same location (an office suite in the Miami suburb of Coral Gables, Florida) and managed by the same people as the old law firm.

Your minimum wage or unpaid overtime lawsuit may potentially face many hurdles, up to and including an employer that “goes out of business” (but doesn’t really) as a means of avoiding paying you what you’re owed. Whatever challenges your case faces, be certain that you’re prepared to encounter them head-on – and overcome them – with representation from the skillful Atlanta unpaid overtime attorneys at the law firm of Parks, Chesin & Walbert. Our team has successfully helped many workers with legal issues like yours, and we’re here to help you get what you’re owed. Contact us through this website or at 404-873-8048 to schedule a consultation.

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