California Labor Code 558.1 LC makes an employer’s owners, directors, officers, or managing agents individually liable if they violate wage and hour laws.
The entirety of the statute text reads as follows:
LC 558.1. (a) 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, Sections 203, 226, 226.7, 1193.6, 1194, or 2802, may be held liable as the employer for such violation.
(b) 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 subdivision (b) of Section 3294 of the Civil Code.
(c) Nothing in this section shall be construed to limit the definition of employer under existing law.
Legal Analysis
California Labor Code 558.1 LC renders a person individually liable if they:
- act on behalf of an employer; and
- fail to follow wage and hour laws (such as by not paying overtime or providing rest and meal breaks).
People “acting on behalf of an employer” are limited to the following positions:
- owners
- directors
- officers
- managing agents
Example: The COO of a Los Angeles startup refuses to pay their non-exempt employers time-and-a-half overtime pay. As an officer of the startup, the COO is individually liable to the underpaid employees.
Labor Code 558.1 LC serves to deter the higher-ups at a company from purposely violating wage and hour laws. Even if the company declares bankruptcy, LC 558.1 allows wronged employees to go after the responsible owners, directors, officers, and/or managing agents individually.1
Note that courts can award punitive damages in these cases only if the employer – or people acting on their behalf – acted with oppression, fraud, or malice.2
Legal References
- California Labor Code 558.1 LC – Liability of employer or other person acting on behalf of an employer. See also: Espinoza v. Hepta Run, Inc. (Cal. App. 2d Dist. 2022), 289 Cal. Rptr. 3d 145 (“We agree generally with Usher and the federal cases it cited that, in order to “cause” a violation of the Labor Code, an individual must have engaged in some affirmative action beyond his or her status as an owner, officer or director of the corporation. However, that does not necessarily mean the individual must have had involvement in the day-to-day operations of the company, nor is it required the individual authored the challenged employment policies or specifically approved their implementation. But to be held personally liable he or she must have had some oversight of the company’s operations or some influence on corporate policy that resulted in Labor Code violations.”); Usher v. White (Cal. App. 4th Dist. 2021), 279 Cal. Rptr. 3d 281; Voris v. Lampert (2019) 7 Cal.5th 1141 (“[LC 558.1] “targets individual officers who are involved in the failure to pay wages”). See also Reynolds v. Bement (2005) 36 Cal.4th 1075; Martinez v. Combs (2010) 49 Cal.4th 35; Lyles v. Sangadeo-Patel (2014) 225 Cal.App.4th 759; Kao v. Joy Holiday (2020) 58 Cal.App.5th 199 (“[I]t was appropriate to invoke the alter ego doctrine to hold appellants personally liable for wages owed to [worker]”).
- California Civil Code 3294.