Section 558.1 of the California Labor Code provides that a "person acting on behalf of an employer" may be liable "as the employer" for violating, or causing to be violated, any provision regulating minimum wages or hours and days of work in any order of the Industrial Welfare Commission, or violating, or causing to be violated, Sections 203, 226, 226.7, 1193.6, 1194, or 2802 of the Labor Code. The statute defines a "person acting on behalf of the employer" as being 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 Section 3294(b) of the California Civil Code.

The statute is very poorly constructed. While it clearly imposes liability, it does not specify whether this liability may be enforced in a private action. Further, in stating that a person "may" be liable, it is unclear whether the plaintiff or the court has discretion to enforce the liability. In a recent decision, the California Court of Appeal answered both of these questions.

As to the first question, the Court held that a private right of action does exist under Section 558.1.

As to the second question, the Court held:

[W]e conclude the Legislature's use of the term "may" does not grant judicial discretion in imposing liability. Rather, we interpret the term as reflecting a recognition by the Legislature that the party prosecuting the wage violation may not need to pursue such liability in the event the employer satisfies any outstanding judgment. The trial court erred in concluding LaPaille was not liable for the wage violations undersection 558.1.

Seviour-Iloff v. LaPaille, 2022 WL 2314114, at *8.

Both of these holdings should give pause to corporate directors or officers of companies with California employees.

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