Under California Labor Code section 558.1, any 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, or violates or causes to be violated labor code sections 203, 226, 226.7, 1193.6, 1194, or 2802 may be held liable as the employer for such violation. For purposes of this section, 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, and the term “managing agent” has the same meaning as in Civil Code 3294(b). White v Ultramar, Inc., 21 Cal.4th 563, 573 (1999). This law was enacted to discourage business owners from rolling up their operations and walking away from their debts to workers and starting a new company. Voris v Lampert (1999).
It’s important to note that an individual could not be liable under section 558.1 simply by virtue of his status as an owner, director or officer but he must have been “personally involved” in the alleged violations or “engaged in individual wrongdoing”. Usher v White 64 Cal.App.5th 883 (2021). The Usher court noted that there is no bright-line rule when it comes to finding individual liability, and this determination requires an examination of the particular facts of each case. The Espinoza v Hepta Run Inc. (2022) case in instructive. There, the court found that the company owner’s approval of the policy regarding paying employees was sufficient to show that he caused labor code violations and therefore could be held personally liable, even if the same owner was not involved in day to day business operations.