A recently enacted law in California imposes personal liability on business owners for employee wage and hour violations. We have seen a wave of filings by attorney’s taking advantage of the substantial penalties, damages and simplified collection procedures available in these cases.

As of January 1, 2016, a new law known as the” A Fair Day’s Pay Act,” expands personal liability to owners, directors and managing agents of a company for willful wage and hour violations. Labor Code Section 588.1 was added to make clear that the term “employer” includes a natural person who is an owner or director of a company and that personal liability extends to these individuals. Under this law, employees can bring actions and obtain judgment enforceable against an owner’s personal assets. Additional enforcement powers are added through liens, levy’s and penalties for failure to satisfy a judgment.

Business owners should insure that business and personal assets are properly structured so that the extent of personal liability and business risk can be measured and limited to avoid unexpected losses to personal savings and assets.    Also see “Asset Protection Strategies”