Holding Both Corporate Entities and Individuals Liable in Your California Unpaid Wages Case
As an employee, you may face many potential pitfalls when it comes to getting the pay you deserve. You may be denied regular wages or overtime compensation you earned. Then, even after you win a legal action, your employer may try to dodge paying by playing corporate shell games. Each of these risks highlights the importance of having an experienced San Mateo wage and hour lawyer
on your side when pursuing your unpaid wages case. A knowledgeable legal representative can give you the confidence that you are using every tool and technique available to get all of what you're owed.
One aspect of this process may be suing not just your corporate employer but also certain corporate officers like a CEO. This can be vital if the corporation that employed you was something that lawyers call "judgment-proof."
Thanks to a recent unpaid wages
case from our north, it is even clearer than ever that workers may have the right to pursue a wage claim against individuals like corporate officers, directors, or managers.
In that case, L.I. was the handyman for Bridgeville, a tiny town that became famous in 2002 for being the first entire city to be auctioned on eBay. L.I. received no pay from the corporation that owned the town. Neither did his wife, who also performed tasks for the corporation. They lived rent-free, which was their only compensation. The couple's rent otherwise would have been $650 per month.
In 2016, the employer fired the couple and, in January 2017, the couple filed an action with the state Labor Commission accusing the corporation of illegally underpaying them. Specifically, the couple sought unpaid regular wages, unpaid overtime, and waiting time penalties. In their action, the couple named the corporation and its CEO as defendants.
The Superior Court declined to hold the CEO personally liable for the debt. In a significant win for the employees, the Court of Appeal reversed that ruling.
Individuals Acting on Behalf of the Employer are Possibly Liable
California law allows, in certain situations, a worker harmed by their employer's violation(s) of the Labor Code to sue an individual or individuals "acting on behalf of" that employer." The Legislature's goal in enacting the labor statutes relevant to this case was to address wage theft, according to the court. To help achieve that, it created a mechanism to allow the Labor Commission to collect unpaid wage judgments. The creation of that mechanism, however, did not deprive workers of their "private right of action" to sue their employer and those acting on behalf of it."
That meant the couple had a valid claim against the corporation and the CEO.
The court also gave the employees a "win" in addressing waiting time penalties. The Court of Appeal decided that the lower court improperly calculated the amount owed to the couple. Waiting time penalties arise when an employee resigns (with at least 3 days' notice) or is fired, and the employer willfully does not pay them on a timely basis. The penalty for that nonpayment is equal to the worker's daily rate of pay and can be as much as 30 days of payment.
Much like overtime cases, waiting time penalty cases often involve a payment that's too low. California law says that the correct way to calculate the daily rate of pay is to consider "all amounts for labor performed by employees." The key word there was "all." It means the employer should have included the free rent the couple received in calculating the workers' daily rate of pay. Since the rent wasn't included, the appeals court sent the case back to increase the waiting time penalty award.
Unpaid wages cases require many things. They demand a deep familiarity with the relevant facts. They also require a highly intensive knowledge of the relevant statutes and case law. To ensure you're getting that sort of highest-level legal representation, set up a free consultation
with one of the helpful and experienced San Mateo wage and hour attorneys at Galine, Frye, Fitting & Frangos, LLP.
We've dedicated countless hours to helping workers across the Bay Area and Northern California, and we're ready to fight to get justice for you. Contact us at 650-345-8484 or through our website.