©2023 Seyfarth Shaw LLP www.seyfarth.com 2023 Cal-Peculiarities | 255 on behalf of an employer” may be held liable for violations of the directives appearing in the Wage Orders and in various provisions of the Labor Code. The Legislature defines “other person acting on behalf of an employer” as “a natural person who is an owner, director, officer, or managing agent of the employer.”451 The “managing agent” definition mirrors the definition found in California’s punitive damages statute. Under that statute and case law, “managing agents” are all employees who exercise substantial independent authority and judgment in their corporate decision-making such that their decisions ultimately determine corporate policy. The Courts of Appeal have been a bit inconsistent in applying the Act. In one case, restaurant employees seeking unpaid wages sued their corporate employer and also Paolo Pedrazzani—the corporation’s owner, president, secretary, and director. The employees invoked PAGA to seek civil penalties under Labor Code sections 558 and 1197.1, which authorize recovery of civil penalties against the employer “or other person acting on behalf of an employer” who violates or causes a violation of those statutes. After a bench trial, the trial court issued civil penalties against Pedrazzani individually as an “other person” who caused violations of the overtime and minimum wage statutes. The Court of Appeal affirmed, reasoning that Pedrazzani could be personally liable for civil penalties—even in the absence of a viable “alter ego” theory—because sections 558 and 1197.1 authorize the Labor Commissioner to recover civil penalties, and because PAGA authorized plaintiffs to recover those penalties in the Labor Commissioner’s place: “California … has decided that both the employer and any ‘other person’ who causes a violation of the overtime pay or minimum wage laws are subject to specified civil penalties.” The Court of Appeal concluded that if a party other than the employer committed or caused to be committed violations of the overtime and minimum wage laws, then that party is personally liable for “certain civil penalties regardless of the identity or business structure of the employer.”452 In another case, a former truck driver sought penalties from his former employer and the employer’s owner for meal and rest period violations. The Court of Appeal found the employer’s owner personally liable under section 558.1, even though the owner was not personally involved in the actions that led to the violations. The Court of Appeal concluded that to be personally liable, the individual does not necessarily need to have been involved in “the day-to-day operations of the company” or have “authored the challenged employment policies or specifically approved their implementation.” To be personally liable, the Court found that the owner “must have had some oversight of the company’s operations or some influence on the corporate policy that resulted in Labor Code violations.”453 Some courts, however, have found no liability for owners. In one case, service technicians for television satellite systems brought a class action lawsuit against their LLC employer and an LLC member, claiming they were misclassified as independent contractors. The Court of Appeal ruled that the individual defendant was not personally liable under section 558.1 because she did not qualify as an “owner” under the statute. In order to be liable as an “owner,” the individual defendant must have been “personally involved in the purported violation.” If there was no such finding, then she must have had “sufficient participation in the activities of the employer,” such that she could have been ”deemed to have contritubed to” the violations. The Court of Appeal concluded that although the LLC member signed class member paychecks, this did not give rise to the inference that the LLC member’s involvement with the employer contributed to the alleged misclassification violations. Recently, in upholding both a private right of action and individual liability under section 558.1, the Court of Appeal interpreted the statute as reflecting the Legislature’s intent to convey that discretion to prosecute an individual under the statute (even where the employer can satisfy any judgment) rests with the party prosecuting the claim, and not with the court.454 The Court of Appeal reasoned that “the party prosecuting the wage violation may not need to pursue such liability in the event the employer satisfies any outstanding judgment.”455 This, however, does not mean that the employee must limit whom she seeks a judgment against in litigation.456
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