September 2, 2022

A Wage and Hour Cautionary Tale

A recent California Court of Appeal ruling is a lesson learned regarding California Labor Code section 558.1 which allows an employee to bring a private right of action against “[a]ny employer or other person acting on behalf of an employer, who violates, or causes to be violated, any provision regulating minimum wages or hours and days of work in any order of the Industrial Welfare Commission….” (emphasis added). As defined by the statute, “the term “other person acting on behalf of an employer” is limited to a natural person who is an owner, director, officer, or managing agent of the employer…” who may be held liable as the employer.

Plaintiffs in the case of Seviour-Iloff v. LaPaille[i] claimed they were denied wages by their employer Bridgeville Properties, Inc. Under Labor Code section 558.1 Plaintiffs were allowed the discretion to claim the company’s CEO was personally liable for the wages owed. A lower court disagreed. However, on appeal, the Court found that Section 558.1 gives the employee – not the court – discretion in deciding whether to bring claims against the employer or a “person acting on behalf of an employer.”    

This is an impactful case and a stark reminder that liability for wage and hour claims can be personally leveled against anyone deemed “acting on behalf of an employer” as defined under the statute. To lower risk, employers should keep in mind the following best practices:

  • Employers are required to pay all employees in compliance with state, federal and local wage and hour laws.
  • Keep in mind that local minimum wage rates may exceed state minimums and that in all cases, employers are required to pay the higher of any applicable federal, state, or local minimum wage.
  • Nonexempt workers are entitled to overtime or premium pay under federal, state, and local wage and hour laws for all hours worked over a specifically mandated number of workweeks or workdays.

All employers should take the time to become familiar with their specific state and local minimum wage rates, effective dates, and projected increase dates.

[i] 80 Cal.App.5th 427