If an employee is owed back wages, it is common practice for the employee to bring a claim against their employer with the Division of Labor Standards Enforcement (“DLSE”) or file an action in the Superior Court. California Labor Code §558.1 states that “any employer or other person acting on behalf of an employer” who contributes to or causes a wage violation “may be held liable as the employer for such violation.”
Until recently, it was not always clear which individuals might be considered one of those “other person[s] acting on behalf of an employer” under §558.1, as guidance on exactly how much involvement an individual had to have with respect to the wage and hour violations at issue was lacking. However, the California Court of Appeal recently determined that an executive of an employer may be held personally liable for any wages owed to an employee who files such a claim.
In Seviour-Iloff, employees had filed a claim with the DLSE alleging that they were owed back wages. The Labor Commissioner found that the employees were owed back wages and that the employer’s Chief Executive Officer was personally liable for such wages. The employer and the CEO appealed the DLSE ruling to the Superior Court, which held that the CEO was not personally liable under §558.1.
The employees then appealed the Superior Court’s ruling and the Court of Appeal held that the language of §558.1 gives the employee discretion to choose whether or not to pursue wage claims against a person “acting on behalf of an employer” who causes a wage violation, in addition to pursuing claims against the employer itself. However, once that decision is made by the employee the court does not have discretion in holding such individuals personally liable for the wage violations (assuming it is established that they are in fact involved in the violations). Thus, the Court of Appeal reversed the Superior Court’s ruling, finding the CEO was in fact personally liable for the wage violations.
The Court of Appeal’s ruling means that executives should be more cautious and aware of any potential wage violations because they may be held personally liable for such wage violations (if they contributed to the violations in any way). Employers and executives can help prevent wage violations by posting required notices where employees will see them and by making sure that employees take rest and meal breaks, receive proper pay statements, and do not exceed the maximum number of hours they are allowed to work without receiving overtime pay. Regularly auditing your payment and recordkeeping practices with a knowledgeable employment attorney can go a long way towards cutting off this type of liability. If you have questions or would like to discuss such an audit, please contact Navigato & Battin.
 Seviour-Iloff v. LaPaille (2022) 80 Cal.App.5th 427.