California: “Other Persons” Can Be Personally Liable for Civil Penalties for Wage & Hour Violations

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September 28, 2018

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In Atempa v. Pedrazzani, a California Court of Appeal stated that individual owners and officers of a Company can be held personally liable for wage and hour violations. Specifically, Labor Code Section 558 and 1197.1 state both the employer and any “other person” who cause wage and hour violations are subject to civil penalties. The lawsuit dated back to 2013 when two former employees sued their employer and the business owner for a variety of wage and hour violations, including unpaid overtime and minimum wage violations.

The court ultimately stated the Company and owner were each liable for civil penalties based on those wage and hour violations. The court reasoned that there did not need to be an “allegation or finding of either an alter ego relationship between the individual officer or agent and the corporate employer or acts by the individual officer or agent outside the scope of the agency for the corporate employer.” “Neither of these statutes mentions the business structure of the employer, the benefits or protections of the corporate form, or any potential reason or basis for disregarding the corporate form.”  The owner’s participation in the payment of wages in violation of the overtime pay and minimum wage laws were enough to qualify him as any “other person.”

The most important lesson from this case is that wage and hour violations expose an employer to civil penalties while simultaneously exposing individuals such as owners, officers, directors, or managers to personal liability for mishandled wage and hour compliance. Moreover, the court stated that private plaintiffs may pursue and collect these penalties for “aggrieved employees” from such “other persons” on behalf of the state of California through the Private Attorneys’ General Act (PAGA).

Action Items

  1. Have your management team trained on wage and hour compliance.
  2. Have an audit performed of your internal wage and hour practices.
  3. Subscribers can call our HR On-Call Hotline at (888) 378-2456 for further assistance.

Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser.

© 2018 ManagEase

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