The Importance of Complying with California Wage and Hour Laws
The California Supreme Court expanded the definition of “employer” to include supervisors who “exercise control over the wages, hours or working conditions” or “suffer or permit to work” their employees (Martinez v. Combs (2010) 49 Cal.4th 35). Yes, that means supervisors of companies may now be held personally liable for wage and hour claims including failure to pay overtime and not providing meal and rest breaks.
Therefore, the belief that a corporate veil may protect a corporate agent (officer, director, shareholder, etc.) from personally liability may be false. The agent cannot be held liable solely based on the fact that he is an officer, director or shareholder. However, if that agent also exercises control over the wages, hours or working conditions of the employee, then he is potentially liable for wage and hour claims. This includes the president of a company who also supervises an employee.
Also, under the theory of “joint employers,” a corporate agent may be liable for causing labor code violations. A California district court found (in Ontiveros v. Zamora (E.D. CA 2009)) that an employee had properly alleged that his employer-company’s owner personally “caused” labor code violations. This meant the owner could be subject to penalties. The court explained that the determination of a “joint employer” depends on a factual inquiry into the “totality of the working relationship of the parties.”
The increased risk of personal liability for wage and hour violations highlights the necessity of taking all preemptive steps to comply with wage and hour laws. Taking such steps may save YOU and your company substantial money in litigation costs. I can tell you that wage and hour cases are among the most expensive to litigate.
 Labor Code §558(a) provides that “Any employer or other person acting on behalf of an employer who violates, or causes to be violated, a section of this chapter or any provision regulating hours and days of work in any order of the Industrial Welfare Commission shall be subject to a civil penalty . . . in addition to an amount sufficient to recover underpaid wages.” [Emphasis added.]