A bill passed by the legislature and awaiting the governor’s signature [Update: He signed it.] would drastically expand individual and successor liability for wage and hour violations. SB 588 (which its sponsor, Senate President pro Tem Kevin De León, would like you to call “A Fair Day’s Pay Act“) purportedly intends to help employees who can’t collect judgments because their employers change their names or hide their assets.
But the bill isn’t limited to those situations. It allows the Labor Commissioner to conduct hearings to determine whether a “person acting on behalf of an employer” should be held personally liable for an employer’s violations. The Labor Commissioner would also be able to levy those individuals’ accounts or property to enforce a judgment. It also allows the Labor Commissioner to seek payment from a successor employer if:
- It does “substantially the same work in substantially the same working conditions under substantially the same supervisors;” or
- It “produces substantially the same products or offers substantially the same services, and has substantially the same body of customers.”
That’s an awfully tenuous link between companies and one that would have led to widespread litigation even with four fewer substantiallys.
In the long-term care industry, failure to pay a judgment for wages or to obtain a bond can lead to a facility’s license being denied.
I don’t oppose any law that holds accountable companies that victimize their employees. But as I’ve said before, not understanding ridiculously complicated payroll laws is not “wage theft.” These draconian measures should not be used to pressure legitimate employers into resolving questionable claims to avoid their executives being subjected to levies and criminal penalties.