Multiple Individuals Found to be Employers in FLSA Case Against Construction Companies

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On February 12, 2013, the U.S. District Court for the Eastern District of New York (Leal v Masonry Serv. Inc ., E.D.N.Y., No 1:12-cv-00588, February 12, 2013) held that a construction worker sufficiently alleged that multiple individuals were his “employers” under the FLSA because each had operational control over his work. The Court stated,

“To determine whether an individual defendant is an employer within the meaning of the FLSA, “the overarching concern is whether the alleged employer possessed the power to control the workers in question . . . with an eye to the ‘economic reality’ presented by the facts of each case.” Herman v. RSR Sec. Servs. Ltd., 172 F.3d 132, 139 (2d Cir. 1999) (citations omitted). Under the “economic reality” test, the relevant factors include whether the alleged employer: (1) had the power to hire and fire the employees; (2) supervised and controlled employee work schedules or conditions of employment; (3) determined the rate and method of payment; and (4) maintained employment records. Id. However, these factors are not exclusive. Indeed, under the “economic reality” test, which encompasses the totality of the circumstances, “any relevant evidence may be examined so as to avoid having the test confined to a narrow legalistic definition.” Id. Here, Plaintiff has alleged that the Moving Defendants, in their capacity as owners and directors of construction businesses operating within this district, had the power to hire and terminate employees, control work schedules and conditions of employment, and set wages. Plaintiff’s allegations of operational control, considered together, are sufficient to allege the Moving Defendants’ status as Plaintiff’s employer, as that term is defined under the FLSA and NYLL.”

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John and Anthony Cimino, owners of LTCI, Limited, a theatre refurbishing construction company, were sentenced for unlawful employment of illegal aliens and tax evasion.

Syracuse, NY— United States Attorney, Richard S. Hartunian, announced that John Cimino, age 55, of Doylestown, PA, Vice-President of LTCI, Limited, was sentenced yesterday in United States District Court to six months home confinement, twelve weekends in a residential reentry center, and three years of supervised release for tax evasion and conspiracy to conceal, harbor, and shield illegal aliens from detection for commercial advantage and private financial gain. Anthony Cimino, age 57, of West New Hope, PA, President of LTCI, Limited, was sentenced to six months home confinement and three years supervised release for conspiracy to conceal, harbor, and shield illegal aliens from detection for commercial advantage and private financial gain. “Homeland Security Investigations is committed to holding businesses accountable when they knowingly hire an illegal workforce,” said Nick DiNicola, assistant special agent in charge of HSI Albany, NY. “Employers who willfully violate our nation’s hiring laws gain an unfair economic advantage over their law abiding competitors. Our goal is to protect job opportunities for the nation’s legal workers and level the playing field for those businesses that play by the rules.”

In April 2008, agents from the U.S. Immigration and Custom’s Enforcement (ICE), Homeland Security Investigations, discovered that LTCI, Limited, a Philadelphia based construction company specializing in the refurbishment of movie theaters, was employing undocumented illegal aliens at their worksite located at the Shoppingtown Mall movie theaters in DeWitt, NY. The investigation revealed that LTCI had hired and employed eight illegal aliens at this site.

A further investigation conducted by agents from the Internal Revenue Service-Criminal Investigation Division (IRS-CID), revealed that during 2007 and 2008, LTCI’s Vice President, John Cimino, who was in charge of the company’s payroll, evaded federal tax owed on the Employer’s Quarterly Federal Tax Return (Form 941) by paying his employees (both legal and illegal) a majority of their overtime wages “off the books.”

In addition to home confinement and supervised release, United States District Court Judge David N. Hurd imposed a fine of $20,000 on each defendant. The Ciminos forfeited $223,000 to the United States as proceeds from the unlawful employment of the illegal aliens. Additionally, the Ciminos paid $622,492 for under-reported payroll taxes owed, which included $225,000 in penalties.