Los Angeles, Calif. (June 22, 2021) - In an opinion issued on May 28, 2021, the California Court of Appeal for the Fourth Appellate District affirmed summary judgment in favor of an individual owner of a company who was personally sued for alleged wage and hour violations under Labor Code section 558.1. Usher v. White, D077133 (Cal. May 28, 2021).

Background

Plaintiffs Jackie Oneal Usher and Eric Leung were service technicians who sued White Communications, LLC and DirecTV, LLC for allegedly misclassifying them and other service technicians as independent contractors. The plaintiffs brought a putative class action asserting various Labor Code claims, which were premised on their misclassification theory. The plaintiffs amended their complaint to add two individual defendants, Shirley White and Jeff White, pursuant to Labor Code section 558.1, which imposes personal liability for certain wage and hour violations.

Ms. White moved for summary judgment, arguing she was not personally liable under section 558.1 because she neither employed the plaintiffs nor "violate[d]," or "cause[d] to be violated," any provision of the Labor Code. The plaintiffs argued, among other things, that there was no need to establish a direct causal connection between Ms. White and the alleged Labor Code violations because Ms. White was potentially liable under Labor Code section 558.1 merely because she was the acting owner and managing member of White Communications, LLC during the relevant time period.

The trial court granted summary judgment for Ms. White holding Labor Code section 558.1 does not create strict liability on behalf of individual actors. Rather, it requires some participation in the violation. The trial court determined that summary judgment was appropriate, under the facts presented, because Ms. White was not personally involved in the determination to classify the plaintiffs or other service technicians as independent contractors, which formed the basis of all ten causes of action.

The Court of Appeal affirmed that to be personally liable under Labor Code section 588.1, the individual must either have been personally involved in the alleged violations or had sufficient participation in the activities of the employer over those responsible for the alleged wage and hour violations, such that the "owner" may be deemed to have contributed to, and thus for purposes of statute, "cause[d]" a violation.

Employers Should Be Aware of Possible Individual Liability

This is the first decision by a California Court of Appeal addressing the circumstances in which an owner, director, or managing agent of an employer company may be personally liable under Labor Code section 558.1. While this remains a highly fact-specific inquiry, employers should be aware of this basis for individual liability for violations of the Labor Code.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.