If you are an owner, officer, director, managing agent or other person acting on behalf of an employer in California you should be proactive in complying with the labor code. Provisions in the “A Fair Day’s Pay Act” included changes that can directly affect these positions. Specifically, section 558.1 touches upon expansion of liability for wage and hour violations.
This section details, “any employer or other person acting on behalf of an employer, who violates, or causes to be violated…may be held liable as the employer for such violation,” and further continues to extrapolate, “the term ‘other person acting on behalf of an employer’ is limited to a natural person who is an owner, director, officer or managing agent of the employer…”
What could you be held liable for?
In addition to violations of the Industrial Welfare Commission (IWC), Section 558.1 refers to the following Labor Code sections that employers may be held liable for:
- 203: “Failure to pay…any wages of an employee who is discharged or who quits…”
- 226: Failure to provide wage statements that do not possess all nine requirements in accordance with section 226.
- 226.7: Failure to provide rest, meal and recovery periods.
- 1193.6 and 1194: steps for recovering unpaid wages.
- 2802: Un-reimbursed business expenses.
The new law amends other portions of the labor code and allows the Labor Commissioner to investigate, and recover civil penalties from liable individuals. Individual corporate defendants are no longer immunized from personal liability and employees can bring suit against them. Along with the expansion of liability, the Labor Commissioner has also been granted enhanced power to enforce judgments. The Labor Commissioner has the power to levy individual’s accounts and property to seek payment.
The coupling of expansion of liability and the Labor Commissioner’s increased authority to go after personal property make it important to avoid violations.
Steps you can take
- Be proactive and consult your labor and employment counsel.
- Ensure you have the right employee scheduling and payroll tools.
- Enacting an auditing of pay practices to minimize risk of violations.