Legal Question in Employment Law in California
Peronal liability for corporation's failure to pay wages
I served as CEO of a small start-up that eventually declared bankruptcy. Final wages to employees, plus accumulated vacation time, was not paid. An employee filed a complaint with the CA Labor Board against the corporation and me. The Labor Board held me personally liable for the unpaid wages, claiming that as the employee's supervisor I was acting as ''the employer.''
What happened to the notion of corporate protection for this type of liability? Frankly, I lost more money than any of other employee, and I never gave anyone the impression that they worked ''for me.'' Payroll was always handled via the company's payroll service, etc.
I plan on appealing the decision, but I'd like to understand this issue better.
2 Answers from Attorneys
Re: Peronal liability for corporation's failure to pay wages
California has a broad definition of the term "employer." Directors, officers, and other corporate employees can be and are personally liable for violations of the California Labor Code.
Your corporation's insurance company's D&O policy should pay for your defense. Failing that, you should seek an attorney experienced in Labor Law issues in your area as soon as possible for advice on your situation.
Re: Peronal liability for corporation's failure to pay wages
I agree with Mr. Pickett, that you can be held personally liable for wage violations. In addition, be aware that if you are going to appeal the Labor Commissioner's decision, you have only 15 days from the date the decision was mailed to you and, in addition to the filing fee, you must post a bond with the court in the amount of the full award. When you add the cost of an attorney to represent you, this is a decision you must think over very carefully.
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