No hiding behind the menu: Corporate layers, cash wages land Arizona restaurant in court

Both the Fair Labor Standards Act (FLSA) and the Arizona Minimum Wage Act (AMWA) require “employers” to pay employees minimum wage for all hours worked. Restaurant owners often use layered LLCs to separate ownership from operations, oftentimes intended to insulate the entities and owners from liability. When a lawsuit is filed against layered LLCs, many ask: Who is an employer? A recent Arizona federal court decision answers this question, serving as a reminder that layered LLCs won’t necessarily insulate certain entities or their individual owners from personal liability.

Order up: How the dispute began

Omar Silva worked as a cook at T-Bird Tavern from February 2024 until early March 2024, earning $18 an hour. During his employment, he was paid in cash, and the kitchen manager generally handled those payments. In his final workweek, March 1 through March 7, 2024, Silva worked a total of 39.3 hours.

The circumstances of Silva’s termination are sharply disputed. Silva claims he was fired by text message and never received his final pay of $707.39. Owner Troy Brandt asserts that he terminated Silva in person, handed him an envelope containing the full $707.39 owed, and watched him count the money.