When an employer is sued for back wages and overtime, or when a suit may be on the horizon, there sometimes is an attempt to avoid the suit by emerging as a “new” employer, seemingly without ties to the old one, i.e. the one being sued. Well, the law has several doctrines for dealing with that situation and holding that original entity liable. Two plaintiffs, paralegals, are now testing these principles. They are suing and alleging that their former employer improperly transferred assets to a new entity it formed in order to get out of the suit. The case is entitled Briceno et al. v. Cuprys & Associates Attorneys and was filed in federal court in the Southern District of Florida.

The plaintiffs both quit in 2019 because they claim they were not being paid properly. Their firm then went out of business in September 2019 and then a new entity, titled Serving Immigrants Inc., came into existence, but with the same people in charge. The plaintiffs allege that the defendant “engaged in a fraudulent closing/transfer/selling of its assets just to escape” its obligations under the Fair Labor Standards Act, including the law’s record-keeping requirements.”

The plaintiffs assert the records of their hours worked should be in the possession of their former employer, yet charge that the firm did not keep accurate records of hours worked, whether for them or other putative class members. They assert that the “defendants knew and showed reckless disregard of the provisions of the act.” In an important tactic, the Complaint lists the Owner of the firm, Magdalena Cuprys, as a defendant, setting the stage for a possible personal liability approach.

The plaintiffs seek (as they all do) liquidated damages and attorney fees. The proposed class includes all current and former employees who performed non-exempt work, such as all of the paralegals who worked for the law firm.

The Takeaway

This case highlights the dangers for employers of trying to evade a FLSA suit by changing the name of the company or starting a supposed new company, albeit with the same ownership, management and business purpose. Unless the new business is really new and not a subterfuge, a plaintiff lawyer will try to pierce that “veil,” as will a court. Whether the doctrine is an alter ego or single employer or some variation on that theme, such an artifice will not protect against liability.

Nice try, though…

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