Will my corporation protect me against personal liability?


If you are thinking to yourself, that the reason you decided to form a business entity was to protect your personal assets, think again.  Beginning January 1, 2016, a business owner can be sued personally for wage and hour violations.

We’ve handled several cases this year where a business was sued for wage and hour violations, meaning that the employee was claiming that they did not get proper breaks and lunch periods.  The cases we’ve seen this year, have included claims against the business owners personally. 

“A Fair Day’s Pay Act” amends the Labor Code and allows an aggrieved employee to bring a claim directly against an owner, director, officer, or managing agent of the corporation.  A managing agent includes supervisors, payroll managers and human resource managers of the company.

A business owner found to be liable of wage and hour violations must pay the employee back wages, the employee’s attorney fees, and civil penalties which is $2,500 for the first offense and $100 each day thereafter a business owner continues to do business violating the law, up to a $100,000.  If the judgment is not paid within 30 days after the deadline to appeal has expired, the employer must post a bond to continue to do business in California.  The bond depends on the amount of unpaid wages and can range from $50,000-$150,000.  If the employer does not post the bond, they can have their business license(s) revoked.

Don’t let this happen to your business.  If you need a simple excel spreadsheet on how to keep track of meal periods and rest periods, email me at Cindy@HacklerFlynnLaw.com and I will share one with you.