Background
The Acting Secretary of Labor sued a nail salon and its owners for violating minimum wage, overtime, recordkeeping, and anti-retaliation provisions of the Fair Labor Standards Act. The district court granted summary judgment for the Secretary and imposed discovery sanctions after defendants deleted text messages and surveillance footage.
The court’s reasoning
The appellate court reviewed the district court’s imposition of discovery sanctions for abuse of discretion and found the deletion of electronically stored information prejudiced the Secretary’s case. The court affirmed the employee classification based on the defendants’ control over technicians’ hours, assignments, and pay. It upheld the finding of willful violations due to efforts to evade the Department of Labor investigation, warranting an extended statute of limitations and liquidated damages.
What it means going forward
Employers must preserve all employment records during investigations and face severe sanctions for spoliation. Nail salon owners exercising significant control over workers are likely to be deemed employers under the Fair Labor Standards Act.