Nicholas Gray v. Michael Powers
673 F.3d 352
| 5th Cir. | 2012Background
- Gray sued PEG and Powers for FLSA minimum wage violations, arguing Powers was an employer personally liable due to his PEG membership.
- PEG formed in 2007 to run Pasha Lounge; Powers contributed funds and supervised remodeling but was rarely involved in daily operations.
- Ritchey, hired by PEG, managed staff and day-to-day club operations; Gray worked as a bartender February–September 2007 and later as general manager March–September 2008.
- Gray testified Powers did not supervise his day-to-day work; Powers occasionally visited and made minor comments but did not hire/fire or set schedules for bartenders.
- The district court granted summary judgment for Powers; on appeal, the Fifth Circuit affirmed, applying the economic reality four-factor test.
- The court held that Powers did not have sufficient control over hiring, supervision, pay, or records to be an FLSA employer.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Was Powers an FLSA employer under the economic reality test? | Gray asserts Powers had control as PEG member to hire/fire and set terms. | Powers lacked unilateral hiring/firing power and day-to-day control; only PEG collectively controlled operations. | No; Powers did not satisfy the four-factor test individually. |
| Did Powers supervise work schedules or employment conditions? | Powers, as a PEG member, could influence staffing decisions. | There is no evidence Powers directly supervised schedules or employment conditions. | No; insufficient evidence of supervision or control by Powers. |
| Did Powers determine the rate or method of payment for Gray? | Powers occasionally signed checks and discussed tips, implying payment control. | These actions do not show Power to determine pay or method of payment for employees. | No; Powers did not determine pay or payment method. |
Key Cases Cited
- Baystate Alt. Staffing, Inc. v. Herman, 163 F.3d 668 (1st Cir. 1998) (employment status requires more than status-based inference of control)
- Castillo v. Givens, 704 F.2d 181 (5th Cir. 1983) (farm owner not liable where contractor controls pay/hours; operational control matters)
- Dole v. Elliot Travel & Tours, Inc., 942 F.2d 962 (6th Cir. 1991) (owner with control over day-to-day functions can be liable)
- Dole v. Solid Waste Servs., Inc., 733 F. Supp. 895 (E.D. Pa. 1989) (shared control by multiple principals evaluated under economic realities)
- Herman v. RSR Security Servs. Ltd., 172 F.3d 132 (2d Cir. 1999) (shareholder with broad authority can be an employer; fact-specific)
- Williams v. Henagan, 595 F.3d 610 (5th Cir. 2010) (economic reality test applies to each potential employer)
- Graves v. Graves, 909 F.2d 1549 (5th Cir. 1990) (apply four-factor test to each entity alleged to be an employer)
- Chao v. Barbeque Ventures, L.L.C., 547 F.3d 938 (8th Cir. 2008) (employers cannot delegate payroll duties to escape liability)