Personal Liability For Wage And Hour Violations Resurfacing in California
Ever since the California Supreme Court issued its decision in Reynolds v. Bement, 36 Cal.4th 1075 (2005), it has been fairly well settled that individuals cannot be personally liable for their corporate employer’s violation of state wage and hour laws. However, creative plaintiff attorneys have found a way to use the Private Attorneys General Act (PAGA) to reinstate the specter of personal liability.
On Friday, Judge Karlton in the Eastern District federal court in Sacramento, California ruled on a defendant’s motion for judgment on the pleadings in Ontiveros v. Zamora, et al. The plaintiff had alleged wage and hour violations against both his corporate employer and an individual officer of the company. The plaintiff bolstered his claims against the individual defendant by describing a high degree of control exercised by the individual, and attributed the wage and hour violations to actions and decisions by the individual. The defendants filed a motion for judgment on the pleadings, arguing that the individual defendant should be dismissed because Reynolds did not permit individual liability.
The Court denied the motion as to the individual, holding that the plaintiff had stated a viable theory supporting personal liability against the corporate officer. Specifically, Judge Karlton pointed to Labor Code Section 558, which prohibits any employer “or any other person acting on behalf of an employer” from violating or causing to be violated certain Labor Code Statutes and IWC Wage Order provisions. Violators of Section 558 (or the underlying Labor Code statutes or Wage Order provisions) are subject to a civil penalty. This civil penalty can be collected by an aggrieved employee pursuant to PAGA. Since the plaintiff alleged that the corporate officer had “caused” the violation of numerous Labor Code and Wage Order provisions, he could proceed with his claims against that officer. The Court also held that claims against the individual could be pursued under a joint employer theory, because the plaintiff had alleged that the corporate employer and the officer were joint employers.
Although California courts are not bound to follow this federal decision, reinstatement of personal liability against individuals for wage and hour violations is a troubling development for employers, supervisors, and corporate officers.