Written by Galen T. Shimoda and Justin Rodriguez
There are a multitude of different employment arrangements that people can enter into when agreeing to perform work on behalf of another, whether performed on behalf of a person, corporation, or other business entity. In order to effectuate the state's broad public policy in favor of ensuring employees receive all wages they are due, there is a rather expansive and liberal view of those who are responsible for paying wages that were unlawfully withheld. Generally, only employers are responsible for paying employees at least the minimum wage for all hours worked and overtime pay for hours worked in excess of eight per day or forty per week. An entity will be considered an employer if it has an employment agreement with a person, allows the person to perform work, or fails to prevent the person from performing work on the individual's or entity's behalf. Additionally, individual who causes California's wage and hour laws to be violated may be held liable for penalties, including all unpaid wages, through the Private Attorney General Act. Thus, an employee need not even be officially hired by a person or entity in order to be owed unpaid minimum and overtime wages by that person or entity. So long as the employer has knowledge (or has reason to believe) that an employee is working, the law recognizes this time as compensable
It is not even necessary that a single person or entity control all aspects of the employment relationship. For example, there can be joint employers, which results in making two or more entities liable for the unpaid wages. The California Supreme Court has specifically identified the "employer" language found in the California Wage Orders as applying to temporary employment agencies and the employers who contract with such agencies to obtain employees. Another example may be a third party company who is hired to perform Human Resources functions for the company, including issues regarding the wages and hours worked.
The practical effect of the laws determining who is an employer in the context of a wage and hour lawsuit is twofold: on the one hand, it allows an employee a greater chance of recovering wages that are owed to them when one of the persons or entities in experiencing financial difficulties; on the other hand, it allows an employer to diffuse the cost of litigation and possibly a settlement or judgment against them. In fact, the Labor Code specifically states that a person is jointly and severally liable if they knowingly advise an employer to misclassify an employee as an independent contractor. This can be very beneficial for an employer who wishes to fight what they believe is an unmeritorious underlying wage and hour claim, but is worried about the risk of having to pay attorney's fees if the employee is successful in proving their claims.
If you believe you are owed wages by your employer our have had a claim for wages made against you and seek representation, contact our office to have an objective analysis of your potential case.