Owners and Managers Cannot Be Held Personally Liable For Wage Violations

In a recent California case (Bradstreet v. Wong) the appellate court held that owners and managers cannot be held personally liable for wage violations. In the case the owners encouraged the employees to continue working without pay because the company was having financial problems. The company subsequently went bankrupt and the  Labor Commissioner went after the owners to pay the back wages and subsequent penalties. The appellate court basically stated the Commissioner couldn’t do it. The owners and managers were protected under the corporate veil.

Now although this is good news it is critical to understand that owners and managers must not use this information to violate the Labor Code. The corporation can still be held liable and an owner can still hold managers and supervisors accountable if they engage in a behavior contrary to company policies.

I thought it was important to convey this news because we have told managers that they can be held personally liable. These days are gone, at least for now. It is still important to remember that this case does not apply to sexual harassment and discrimination claims. It is always safer to comply with state and federal guidelines.