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Another Hole in the Corporate Veil? California Employer Liability Extends to Individuals

By Goria Weber & Jarvis on Jul 19, 2016 at 06:21 PM

Effective January 1, 2016, the new law expands potential liability for wage and hour violations to individual shareholders, directors, officers and managing agents of an employer who act on behalf of the employer. A "managing agent" is an employee with substantial control in corporate decision making -- think high-level managers, payroll managers, controllers, CFOs, etc.


Not only does this law expose shareholders to personal liability for a corporation’s debts and liabilities, it further exposes employees of the corporation to personal liability, going against the long-standing rule that employees are not liable for their actions except under very limited circumstances (i.e. sexual harassment, beating up a co-worker on their lunch hour).


On an administrative law level, the Department of Labor and Standards Enforcement (DLSE) is routinely implementing this new law naming the individual owner and the corporation on all wage and hour claims. While it will take some time to find out how far the State courts will reach with this new law, employers should brush up on their labor practices and policies, not just for the sake of the business itself and the shareholders, but in the interest of the individuals in charge of carrying out those practices.


Dave Jarvis & Meghan DeSpain


Melinda S. Shapiro,

Law Offices of Melissa S. Shapiro