Unpaid Wages Can Create Personal Liability For Management Personnel
December 29, 2015

Effective January 1, 2016, SB 588 creates new ways for the Labor Commission to enforce judgments against employers arising from the employers’ nonpayment of wages for work performed in this state. It does this in three ways: (1) “authorizing the Labor Commissioner to use any of the existing remedies available to a judgment creditor and to act as a levying officer when enforcing a judgment pursuant to a writ of execution, as provided;” and (2) “authorize the Labor Commissioner to issue a notice of levy, as specified, if the levy is for a deposit, credits, money, or property in the possession or under the control of a bank or savings and loan association or for an account receivable or other general intangible owed to the judgment debtor by an account debtor.” The bill also authorizes “the Labor Commissioner to provide for a hearing to recover civil penalties against any employer, for a violation of those provisions regulating hours and days of work.” Also, this bill, “beginning 20 days after a judgment is entered by a court . . . in favor of the Labor Commissioner, or in favor of any employee pursuant to an appeal, . . . authorize[s] the Labor Commissioner to . . . collect any outstanding amount.” (3) Even more troubling than the first two, under this bill (hidden in the fine print of Section 10), now civil claims may proceed individually against a high-level employee “who violates, or causes to be violated, any provision regulating minimum wages or hours and days of work.” Indeed, Section 558.1 has added to the California Labor Code, to read:

“(a) Any employer or other person acting on behalf of an employer, who violates, or causes to be violated, any provision regulating minimum wages or hours and days of work in any order of the Industrial Welfare Commission, or violates, or causes to be violated, Sections 203, 226, 226.7, 1193.6, 1194, or 2802, may be held liable as the employer for such violation.

(b) For purposes of this section, the term “other person acting on behalf of an employer” is limited to a natural person who is an owner, director, officer, or managing agent of the employer, and the term “managing agent” has the same meaning as in subdivision (b) of Section 3294 of the Civil Code.

(c) Nothing in this section shall be construed to limit the definition of employer under existing law.” [Emphasis added.]

In other words, personal liability for managers! Note that although this law is new to California, it basically mirrors the federal standard which already had this very scary provision in place. See: http://www.leginfor.ca.gov/pub/15-16/bill/sen/sb_0551-0600/sb_588_bill_20150911_enrolled.pdf.

If you have questions about minimum wages or hours and days of work, or any other employment law questions, contact the employment attorneys at LightGabler for assistance.

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