ASSEMBLY BILL 2613 SEEKS TO EXPAND PERSONAL LIABILITY FOR INDIVIDUAL MANAGERS IN CALIFORNIA

 

Assembly Bill 2613 seeks to expand the persons potentially liable to any “person acting on behalf of an employer”.  More specifically, liability would attach when an employee is not paid sums owed when due under Labor Code sections 201.3, 204, 204b, 204.1, 204.11, 204.2, 205, and 205.5, and the failure to pay is not the result of “an isolated or unintentional payroll error due to a clerical or inadvertent mistake”.  AB 2613 would amend Labor Code section 210 to require an employer or person acting on behalf of an employer to pay a penalty of $200 to each and every affected employee for each pay period where the wages due were not paid on time.  This penalty is in addition to other penalties which may apply, except that an employee may not recover penalties both under section 210 and under Labor Code sections 201.3, 204, 204b, 204.1, 204.11, 204.2, 205, or 205.5 for a failure to pay an employee on time. Further, the penalties under the proposed amendment will not apply to failure to pay the final wages of an employee who is discharged or quits, for which penalties under Labor Code section 203 may be recovered.

 

In essence, AB 2613 would hold an officer, director or manager liable for penalties for any payroll error other than “an isolated or unintentional payroll error due to a clerical or inadvertent mistake”.  There is no limitation or standard set for the value of the error, nor is there any limit on the amount of penalties that may accrue.  Further, it is clear that these penalties may be sought in a lawsuit at any time before the expiration of the statute of limitations on an action for the wages from which the penalties arise, which means that penalties might be sought for a period of three to four years, depending on the nature of the underlying claim for wages alleged.

 

We will leave it to the reader to determine if this new penalty is needed, but we note that California already has some of the most onerous and complex labor laws in the country, replete with numerous duplicative penalty provisions within the Labor Code.