By: Leiann Laiks, Esq.
In California, Labor Code 558.1 LC poses a significant consideration for employers, as it holds individuals personally accountable for violations of wage and hour laws. Let’s break down what this means for businesses:
Key Points of Labor Code 558.1 LC:
- Individual Liability: The statute stipulates that individuals who act on behalf of an employer and fail to comply with wage and hour laws may be held personally liable for such violations.
- Persons Covered: Those “acting on behalf of an employer” encompass specific roles within the organization, including owners, directors, officers, and managing agents.
Illustrative Example:
Consider a scenario where the Chief Operating Officer (COO) of a Los Angeles startup, who is involved in the day-to-day management of an employee (hiring, discipline, firing) neglects to pay non-exempt employee overtime wages. As an officer of the company, the COO could be individually liable for the underpayment.
Purpose and Implications:
Labor Code 558.1 LC serves as a deterrent, reminding senior figures within a company of their responsibilities regarding wage and hour compliance. Importantly, even if a company faces bankruptcy, this provision empowers aggrieved employees to seek recourse from accountable individuals.
Mitigating Risk:
Businesses can take proactive measures to mitigate potential liability under Labor Code 558.1 LC by ensuring strict adherence to wage and hour laws and fostering a culture of compliance within the organization.
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Leiann Laiks is an employment attorney in San Francisco.
This blog is written as of April 2024. Recommendations and legal requirements are changing rapidly, so please continue to review our legal updates or review postings on relevant government websites.
All blogs on this site are for educational purposes only, do not constitute legal advice or opinion, and should not be applied to your situation, or any specific situation, without consultation with counsel. Strategy Law, LLP does not provide any legal advice concerning any matter discussed in a blog except upon formal engagement including, without limitation, execution of Strategy Law, LLP’s formal legal services agreement, and with respect to specific factual situations. No blog constitutes a guaranty, warranty, or prediction regarding the result of any legal matter discussed in the blog or any representation.
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