Anyone filing a claim for wages, overtime, missed meal and rest breaks, waiting time penalties, and reimbursement for employee expenses has to decide whether to file a claim with the California Labor Commissioner or file a lawsuit in Superior Court. Each has its pros and cons. The advantage of filing a claim with the Labor Commissioner is that it is very user friendly and has no filing fees or discovery. It is less expensive and takes much less time to get a hearing than it does to get a trial in Superior Court. However, an award by the Labor Commissioner can be appealed by either side to Superior Court.
One advantage to filing a lawsuit in Superior Court is that attorney’s fees can be recovered. Until now, another advantage was that one could recover certain penalties that could not be recovered in a claim filed with the Labor Commissioner. That is now changed as of January 1, 2016.
Senate Bill 588 broadens the scope of claims that can be filed with the Labor Commissioner by making the employer and “any person acting on behalf of the employer” liable for the penalties that previously could only be recovered in a lawsuit filed in Superior Court. This includes penalties for underpayment of wages, late payment of wages, missed meal and rest breaks, and improper wage statements.
Senate Bill 588 defines “any person acting on behalf of the employer” as “an owner, director, officer, or managing agent of the employer.” Therefore employers will no longer be able to hide behind the “corporate shield.” There is also a provision for “successor liability,” which is intended to prevent business owners from avoiding liability by transferring their business to a new entity.
The extension of liability to “any person acting on behalf of the employer” also applies to lawsuits filed in Superior Court. However, the enactment of this legislation is likely to make the Labor Commissioner more receptive to imposing liability on an individual acting on behalf of an employer, which historically has been a challenge.
SB 588 also grants additional powers to the Labor Commissioner for enforcing judgments. However, it says nothing about the funding that will be needed in order to exercise these powers so it remains to be seen how this will play out. The bottom line: Next year it will be harder for business owners to avoid liability for wage and hour violations.
