Background
Defendants Nicole Brown and Asia Trinh, owners of a nail salon, appealed district court orders granting summary judgment to the United States Secretary of Labor. The district court had found violations of the Fair Labor Standards Act regarding minimum wage, overtime, recordkeeping, and anti-retaliation provisions. The court also imposed discovery sanctions for spoliation of electronically stored information and awarded attorneys’ fees.
The court’s reasoning
The Ninth Circuit reviewed the imposition of discovery sanctions for abuse of discretion, finding the district court did not err in sanctioning the deletion of text messages and surveillance footage. The court affirmed the grant of summary judgment de novo, concluding that the technicians were employees because the owners exerted near-complete control over their work, schedules, and pay. The record showed the owners willfully violated the Act by coaching technicians to evade investigation and backdating agreements, warranting an extended statute of limitations and liquidated damages.
What it means going forward
The ruling reinforces that business owners who exert significant control over workers’ schedules, pay, and client relations are liable as employers under the Fair Labor Standards Act. It also signals that spoliation of evidence in employment disputes can lead to severe sanctions, including the preclusion of evidence and mandatory payment of attorneys’ fees.