This action was brought by the Secretary of Labor under Section 17 of the Fair Labor Standards Act of 1938, as amended (“FLSA” or “Act”), 29 U.S.C. § 201
et seq.,
to enjoin Sabine Irrigation Co., Inc. (Sabine), Charles H. Alberding and Joseph E. Scally from violating the Act’s minimum wage requirement and to restrain them from continuing to withhold unpaid wages. Following a bench trial the district court entered judgment in favor of the Secretary against Alberding and Sabine, but dismissed the action against Scally.
Donovan v. Sabine Irrigation Co., Inc.,
Background Facts
Sabine, a Louisiana corporation with its principal office in St. Charles, Louisiana, was engaged until early 1979 in the business of supplying water for irrigation to rice farmers in Calcasieu Parish, Louisiana. Water was pumped from the Sabine River into a central canal, and then diverted into the rice fields. This water was vital to the production of the rice crop, the bulk of which was sold in interstate commerce. Sabine’s employees operated the pumping station, inspected and repaired levees and constructed and maintained the bridges, gates, flumes and underpasses.
Alberding and a co-venturer each purchased one-half of Sabine’s stock in the early 1950s. Alberding transferred this stock in the early -1960s, but continued as corporate president, a position he has held for over 30 years. During the pertinent period, Scally served as Sabine’s vice-president, and Alberding’s wife, B.W. Alberding,
The period covered in the Secretary’s complaint extends from October 1976 to November 1978. Throughout this period, Sabine utilized a Tulsa, Oklahoma business address and shared a Tulsa office with Sabine Canal, Washington, and multiple other corporations owned and operated by Alberding, including the Tulsa Apartments Corporation, Hotel Services Company and Universal Wholesale Supply Company. Primary responsibility for Sabine’s daily operations was delegated to Joe Bond, on-site manager. Bond supervised the work crews until stricken with cancer in 1976, whereupon Gerald Clark assumed this duty. Mrs. Bond, who assisted her husband once he became ill and briefly held the post of general manager upon his death in April 1978, tabulated employee work hours and forwarded payroll work sheets to Miriam Covington, a 30-year employee of Hotel Services Company who managed the Tulsa office, and Shirley Goddard, an employee of Tulsa Apartments Corporation. Covington and Goddard regularly performed services for Sabine but were not on its payroll.
Due to the transient character of the workforce, the Bonds were allowed to compensate for the continuous turnover by filling vacant positions as they arose. However, the Bonds were not authorized to hire additional laborers, deviate from the $2.00 per hour pay rate established by the Tulsa office, write checks on Sabine’s checking account with a St. Charles bank, or pay bills. The Tulsa office reimbursed the Bonds for any emergency purchases. Inquiries by Sabine’s suppliers regarding arrears in payment on trade accounts were directed to Tulsa. Any proceeds from the sale of rice received by the Bonds were transmitted to the Tulsa office or deposited in Sabine’s account. Alberding’s permission was required for special purchases, the addition of extra men to the workforce and the transfer of funds from one or more of his other corporations when needed to meet Sabine’s payroll and trade obligations.
The district court described the Tulsa office’s pervasive control of Sabine’s affairs, and Alberding’s role therein, as follows:
At all times material to this action, Sabine’s Tulsa office administered the business affairs of Sabine Irrigation Company and defendant Alberding maintained contact with the Tulsa office several times a week. Miriam Covington ... and Shirley Goddard .. . were responsible for, and did pay, all bills incurred by Sabine Irrigation Company. If there were insufficient funds in the Sabine account, defendant Alberding would authorize Mrs. Covington to transfer funds from the Hotel Services account. On occasion, defendant Alberding would send a personal check or a check drawn on the account of some other corporation to cover the deficiency. All payroll checks for Sabine’s employees were cut and mailed from the Tulsa office and all records regarding payment of Sabine’s bills and payroll were kept in the Tulsa office. The Tulsa office deducted federal income tax and social security from the payroll and all records pertaining to these withholdings were kept in the Tulsa office. The Tulsa office deducted federal income tax and social security from the payroll and all records pertaining to these withholdings were kept in the Tulsa office. The Tulsa office handled all insurance arrangements for Sabine Irrigation and ensured that all ad valorem taxes were paid on Sabine real estate. Finally, the Tulsa office handled all Sabine’s income tax returns.
Evidence of numerous ledger transactions reflecting the transfer of funds between
A decline in the world rice market during the post-Vietnam War era caused a devastating reversal of Sabine’s fortunes. Only infusions of capital by Alberding, commencing in 1976, saved the corporation from financial collapse. Sabine ceased doing business in early 1979, when Alberding discontinued monetary support, but remains a viable corporate entity.
Based on these facts, the district court concluded that Alberding was an employer, with Sabine, of the corporation’s irrigation personnel and enjoined both' defendants from future violations of the FSLA’s minimum wage provisions and from failing to make restitution of backpay accruing from October 1976 to January 1979. Appellant Alberding concedes that Sabine is an employer covered by the Act, and that it did not comply with federal minimum wage requirements in the years complained of, 1 but argues that he is not an employer, that even if he were, his transgressions were not willful for purposes of the application of the three-year limitations and, finally, that the issuance of the injunction was improper.
Employer
An “employer” is defined under Section 3(d) of the Act as including “any person acting directly in the interest of an employer in relation to an employee.” This term has been interpreted to encompass one or more joint employers,
Falk v. Brennan,
Our determination of Alberding’s status is not circumscribed by formalistic labels or common-law notions of the employment relationship,
Bartels v. Birmingham,
Alberding maintains that as nominal president of Sabine he may not be held accountable for FLSA infractions simply because his monetary transfusions enable Sabine to stave off bankruptcy, there being no evidence that he owned stock in the company or exerted supervisory control over daily corporate operations. Respecting the first argument, we perceive the parameters of § 203(d) as sufficiently broad to encompass an individual who, though lacking a possessory interest in the “employer” corporation, effectively dominates its administration or otherwise acts, or has the
Contrary to appellant’s suggestion, neither the Act nor jurisprudence designates stock ownership in a corporate employer as the
sine qua non
of employer status where other forms of control of the employment relationship have been proven. No one factor is dispositive; rather, it is incumbent upon the courts to transcend traditional concepts of the employer-employee relationship and assess the economic realities presented by the facts of each case.
See Goldberg v. Whitaker House Cooperative,
Guided by this precept, we are persuaded that the district court properly resolved the question of Alberding’s status:
Since 1976, Mr. Alberding, through his employee Miriam Covington, has exercised pervasive control over the business and financial affairs of Sabine Irrigation. The evidence is clear that Mr. Alberding maintained continuous contact with his Tulsa office and indirectly controlled many matters traditionally handled by an employer in relation to an employee (such as payroll, insurance, and income tax matters). In addition, the evidence is clear that Mr. Alberding’s financial gymnastics directly affected Sabine’s employees by making it possible for Sabine to meet its payroll and keep its employees supplied with the equipment and materials necessary to perform their jobs. Thus, we hold that Mr. Alberding is an employer within the meaning of the Act and therefore personally liable along with Sabine Irrigation Co. for any wages found to be due and owing to the employees in question.
The trial court discounted appellant’s self-serving disavowals of involvement in Sabine’s operations. Instead, the court credited the substantial evidence of Sabine’s symbiotic association with various corporations owned and/or managed by Alberding, and the latter’s dominion over the Tulsa office and resultant authority, however indirect, over the conduct of Sabine’s business, including all significant phases of its relationship with the irrigation personnel. While the Bonds may have performed many of the functions of an employer, ultimate control was vested in Alberding.
Donovan v. Janitorial Services, Inc.; Shultz v. Mack Farland & Sons Roofing Co., Inc.,
Willfulness
An action for delinquent minimum wage payments is foreclosed unless instituted within two years after the cause of action accrues, except where the defendant’s noncompliance was willful, in which case the action may be commenced within three years after said accrual. Section 6(a) of the
As we noted in
Coleman v. Jiffy-Jane Farms, Inc.,
When measured against these standards, the evidence of appellant’s disregard of the Act’s minimum wage requirements is adequate to establish willfulness, thereby triggering the three-year liability provision. Sabine was investigated by the Wage and Hour Division of the Department of Labor in 1971, and the Act’s proscriptions were then explained. Alberding and Scally were named defendants in three FLSA actions brought by the Secretary, 3 one of which culminated in a stipulation of compliance and dismissal. Alberding’s protestation that he was unaware of the 1974 amendments revoking the prior exemption for irrigation laborers is of no avail, given his general knowledge that the FLSA was in the picture. Donovan v. Grantham; Coleman v. Jiffy-June Farms, Inc.
Injunctive Relief
Finally, appellant contends that the district court abused its discretion in restraining him from future violations of the FLSA and from withholding payment of statutory minimum wages adjudged due and owing. Section 17 of the FLSA, 29 U.S.C. § 217,
4
authorizes the district courts to issue both prospective and restitutionary injunctions.
Donovan v. Brown Equipment and Service Tools, Inc.,
In deciding whether to issue a prospective injunction, the district court must evaluate the previous conduct of the employer and the dependability of his promises for future compliance. In light of the evidence presented, including the proliferation of FLSA suits brought against Alberding and his corporations within a five-year period, and the limited efforts to conform to legislative strictures, we conclude that the district court properly enjoined appellant from further noncompliance with the Act.
AFFIRMED.
Notes
. Sabine’s employees were paid $2.00 per hour from October 1976 through November 1978, whereas the minimum wage was $2.20 per hour in 1976, $2.30 per hour in 1977 and $2.65 per hour in 1978.
. As noted above, Tucker Moore, Alberding’s son-in-law and an employee of a corporation of which Alberding is majority stockholder and president, owns all stock in Sabine by virtue of his ownership of Sabine Canal and Washington. Compare Donovan v. Janitorial Services, Inc. (where individual defendant owned no stock in subject corporation, but his spouse owned 35% of employer company and otherwise controlled its operations through his wholly-owned corporations, said defendant was deemed to be an employer of subject company’s personnel). Regardless of the locus of title to Sabine’s stock and the nature and extent of Alberding’s control or ability to control its titular holder, Moore, the economic realities extant herein dictate that we view Alberding’s substantial investment in the corporation as giving rise to a strong inference of his control of Sabine’s business and financial affairs.
. Brennan v. Rolling Hills Management Corp., Docket # 71-C-240 (N.D.Okla.1971); Dunlop v. Tulsa Apt. Co., Civil Action # 73-C-309 (N.D.Okla.1973); Dunlop v. McAlester Corp., Civil Action # 75-117-C (E.D.Okla.1975).
. Under Section 17 of the Act, 29 U.S.C. § 217:
The district courts, ... shall have jurisdiction, for cause shown, to restrain violations of section 15 [29 U.S.C. § 215], including in the case of violations of section 15(a)(2), [29 U.S.C. § 215(a)(2), rendering unlawful the failure to comply with minimum wage and overtime strictures of the Act], the restraint of any withholding of payment of minimum wages or overtime compensation found by the court to be due to employees under this Act ....