Seyfarth Shaw LLP | www.seyfarth.com Litigating CA Wage & Hour Class and PAGA Actions (23rd Edition) 205 XXI. Individual Liability A. No Individual Liability for Wages Some plaintiffs seeking unpaid wages have sued corporate officials personally. In 2005, in Reynolds v. Bement,979 the California Supreme Court held that individuals cannot be held liable for overtime pay under Labor Code Sections 510 or 1194. Reynolds left open the possibility, however, that individual supervisors could be held liable for civil penalties. Seyfarth Shaw advocated in Reynolds that California law does not impose individual liability on managers for wage and hour violations. Rather, the law imposes the primary civil obligation to comply with the wage and hour laws—including the obligation to provide back pay or damages—upon “employers” (a term that is not defined), while expanding the scope of criminal liability or civil punishment to broader categories, such as “other persons” or “officers or agents” of an employer. Where the Legislature wanted to create individual liability, it referred to “any person” being liable, as opposed to cases where it held that an “employer” is liable.980 The plaintiffs attempted to justify suing individual officers for damages by invoking the expansive definition of “employer” contained in the IWC Wage Orders. The defendants responded that to the extent anything in the Wage Orders could be read as creating individual liability for failure to pay overtime, such pronouncements are void in that they would exceed the scope of the Labor Code, which authorizes the IWC to adopt only regulations “consistent with” the Labor Code.981 In 2005, the California Supreme Court in Reynolds largely adopted the defendants’ position, holding that under general common law principles of managerial immunity, managers are not liable for the corporate employees’ failure to pay wages. Reynolds found nothing in the plain meaning of the relevant Labor Code sections or in public policy to read individual overtime liability into the overtime statute.982 Reynolds left the door open, however, to the recovery by an employee of statutory penalties from individual supervisors, such as the recovery of Section 558 penalties through a PAGA claim.983 Moreover, Reynolds 979 36 Cal. 4th 1075 (2005). 980 Compare Lab. Code § 553 (criminal liability for overtime violations available against “[a]ny person”) with Lab. Code § 510 (discussing only “employer’s” liability); see also Lab. Code § 1197.1 (imposing a civil fine on “[a]ny employer or other person acting either individually or as an officer, agent, or employee of another person” who fails to pay the minimum wage); Lab. Code § 210 (imposing a fine on “every person” who fails to make payments on paydays as required by §§ 204, 204b, and 205); Lab. Code § 215 (imposing criminal liability against “[a]ny person, or the agent, manager, superintendent or officer thereof” who violates statutory requirement to post a notice identifying when and where pay is made); Lab. Code § 1175 (imposing criminal liability on “[a]ny person, or officer or agent thereof” who fails to make certain kinds of work records and to make those records available to state inspectors). 981 Lab. Code § 517(a). 982 Reynolds, 36 Cal. 4th at 1087. 983 Id. at 1089.
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