New Fair Day’s Pay Act Lets Employees Hold Owners Individually Responsible for Missed Wages

Wages Concept. Folders in Catalog.While a company has always been liable to its employees for failing to pay fair wages or failing to follow California’s many labor laws, a new act is in place which strengthens the Labor Commissioner’s power to penalize companies that violate the law. Additionally, employees may now be able to hold an individual person responsible for a company’s labor law violations.

Under the Fair Day’s Pay Act (FDPA), the California Labor Commissioner is able to take dramatic action against a company that has not paid its employees’ wages. For example, the Commissioner can issue a stop work order and shut down the company until back wages are paid. The Commissioner can also issue levies against the company’s bank accounts and accounts receivable. Additionally, the Commissioner can put a lien against any property owned by the company.

The law also imposes criminal and civil liability against individuals in certain circumstances. In general, the law expands the Labor Commissioner’s authority to pursue individuals when there is evidence of unpaid overtime, unpaid minimum wage, denied meal/rest breaks, untimely termination pay, inadequate wage statements, and failure to reimburse for employee business expenses.

When the company’s owners, officers, directors, or managing agents are found to have underpaid or overworked employees, these individuals can be personally liable for the compensation the employees are owed. Rather than hiding behind the corporate veil, these individuals could have their own personal property or bank accounts seized after a judgment.

To determine if an individual should be held responsible for company violations, the Labor Commissioner will hold a hearing. If the Commissioner finds that a person was acting on behalf of the employer and should be held responsible, then the Commissioner has the power to act as a judgment creditor against that individual.

Finally, the FDPA made it more difficult for employers to avoid liability by simply shutting down the business. If the Labor Commissioner finds that a new business is similar in operation and ownership to the old business, and that the employees are engaged in substantially the same work in the same conditions with the same supervisors, then the new business may also be required to pay the former company’s penalties for violating the labor laws.

The FDPA should strengthen the protections enjoyed by California workers, and will likely act as a powerful impetus for employers to make sure that they are not violating the law. Contact Labor Law Office, APC today to speak with an experienced Wage Law attorney in Sacramento.

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Labor Law Office, APC

2740 Fulton Avenue, Suite 220
Sacramento, CA 95821

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2017-12-13T21:46:33+00:00 April 15th, 2016|Wage and Hour|