Managers Can Be Held Liable For Unpaid Wages

It didn’t take long.  A lawsuit was filed yesterday in Kern County Superior Court against multiple defendants for alleged whistleblower retaliation, wrongful termination, discrimination and unpaid overtime.  The defendants include the company where the plaintiffs worked, as well as the CEO and HR Director “individually” and in their corporate capacities.  (Bonas v. Tejon Rach Co., Case No. BCV-16-TN02111601). 

Any manager and supervisor should pay attention to that one word – individually.  What it means is that the plaintiffs are seeking damages from the pockets of the corporate managers, not just the company. 

How did this happen?  The California Supreme Court and the California Court of Appeal ruled that corporate agents were not liable for overtime and minimum wage violations.  So what has changed? 

One change is the adoption of Labor Code § 558.1 which says: 

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, o4 2802, may be held liable as the employer for such violation. 

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….

Thank you Senator De Leon and our California politicians for imposing personal liability on the thousands of hard-working, and dedicated people who do their best to comply with the nation’s most ridiculous workplace laws.  So now if the company miscalculated an employee’s vacation accrual and failed to pay it out at the time of termination, a managing agent can be personally liable.  And if a paycheck stub omits a piece of information – that does not result in the underpayment of any wages – a manager gets to foot that bill too.  And what is the cost for an incorrect paycheck stub?  A possible $4,000 penalty … and attorneys’ fees. 

Can I say thank you again?