SB 588: IGNORANCE IS NOT BLISS WHEN YOU’RE LIABLE

On January 1, 2016, Senate Bill (SB) 588 known as the “The Fair Days Pay Act” went into effect. The purpose of the bill was to enhance the Labor Commissioners ability to enforce California Division of Labor Standards Enforcement (DLSE) judgments. Specifically, this bill authorizes the Labor Commissioner to use any of the existing remedies available to a judgment creditor and to act as a levying officer when enforcing a judgment. In other words, this legislation allows the Labor Commission to file a lien or levy on an employer’s property in order to assist the employee in collecting unpaid wages and other compensation, penalties, and interest owed to the employee when there is a judgment against the employer. In addition, it prevents an employer from closing its business and reopening under a new name in order to avoid their debts to workers.

Let’s simplify this – California law now makes individuals potentially liable for employer violations of the complex wage and hour rules. You heard right – individuals, not just companies, could be held liable for wage and hour violations. Unfortunately, there is a standalone provision that creates personal liability for not only owners but directors, officers, and managing agents of employers for wage and hour violations.

What does that mean? Here’s an example – if you are an HR Director and you’ve misclassified an employee and have been paying the worker incorrectly you could be held personally liable in the event of an audit or claim. Since you, the HR Director, are an extension of the employer and acting on behalf of the employer when making these judgments by classifying and determining how the employee will be paid, may be held personally liable if incorrect. Any employer or other person acting on behalf of an employer who violates any provision regulating minimum wages or hours and days of work, payment of wages on termination of employment, pay stub reporting requirements, meal period premium, recovery of attorney fees for lawsuits to recover unpaid minimum wage and/or overtime, failure to pay minimum wage for all hours worked, reimbursement of business expenses, may be held liable as the employer for such violation.

Since the bill is still somewhat new, it will take some time for the courts to determine how SB588 will be applied and interpreted. It is strongly suggested that all employers evaluate their wage and hour compliance and ensure that there are appropriate employment practices in place with a vetted Human Resources professional and have liability insurance. More Businesses are partnering with outsourcing companies like Bizhaven to ensure compliance by working with our industry-leading Human Resources partners who are experts in navigating through the very convoluted wage and hour rules in California.