206 Litigating CA Wage & Hour Class and PAGA Actions (23rd Edition) Seyfarth Shaw LLP | www.seyfarth.com reaffirmed that a manager might be held liable under an alter ego theory if the employee proves the elements for this common law liability theory.984 In 2010, the Supreme Court backtracked on Reynolds when it issued its ruling in Martinez v. Combs.985 Martinez held that “[i]n actions under section 1194 to recover unpaid minimum wages, the IWC’s Wage Orders do generally define the employment relationship, and thus who may be liable.”986 Martinez noted that the Wage Orders set forth a multi-pronged, disjunctive definition of employment: an employer is one who, directly or indirectly, or through an agent or any other person, engages, suffers, or permits any person to work, or exercises control over the wages, hours, or working conditions of any person.987 The “engage, suffer, or permit” component of the definition does not require a common law “master and servant” relationship, but is broad enough to cover “irregular working arrangements the proprietor of a business might otherwise disavow with impunity.”988 Further, “phrased as it is in the alternative (i.e., wages, hours, or working conditions), the language of the IWC's 'employer' definition has the obvious utility of reaching situations in which multiple entities control different aspects of the employment relationship, as when one entity, which hires and pays workers, places them with other entities that supervise the work.”989 Martinez noted that the plaintiffs in Reynolds had conceded that “the plain language of Wage Order No. 9 defining employer does not expressly impose liability under section 1194 on individual corporate agents.”990 “In a footnote, we added that the ‘plaintiff ... ha[d] not persuaded us that one may infer from the history and purposes of section 1194 a clear legislative intent to depart, in the application of that statute, from the common law understanding of who qualifies as an employer.’”991 The Martinez plaintiffs, however, gave the Supreme Court extremely detailed, exhaustive briefing on the history of California’s minimum wage law, the IWC, and the Wage Orders. This effort apparently convinced the Supreme Court that “an examination of section 1194 in its full historical and statutory context shows unmistakably that the Legislature intended to defer to the IWC’s definition of the employment relationship in actions under the statute.”992 As a result, Martinez limited the application of Reynolds: In sum, we hold that the applicable Wage Order‘s definitions of the employment relationship do apply in actions under section 1194. The opinion in Reynolds, supra, 36 Cal. 4th 1075, properly holds that the IWC‘s definition of employer does not impose liability on individual corporate agents acting within 984 Id. 985 Martinez v. Combs, 49 Cal. 4th 35 (2010). 986 Id. at 52 (emphasis added). 987 Id. at 57. 988 Id. at 58. 989 Id. at 59. 990 Id. at 63. 991 Id. (citations omitted). 992 Id. at 64.
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