September 9, 2010

Unpaid Wages, Part 3

In Parts 1 and 2, I discussed some of the consequences for not paying wages and strongly advised employers to pay their employees in full and on time whenever at all possible.  The trouble is, sometimes it just isn't possible because the money isn't there.  In that all-too-common situation, the employer is often "judgment proof."  In other words, even if the employee wins the lawsuit and gets a judgment, they cannot collect on it because there are no assets to take.  You can't squeeze blood from a beet. 

Washington's lawmakers recognized how often employers in unpaid wage cases are judgment proof and, in their attempt to ensure payment of wages, made certain individuals personally liable for unpaid wages.  Under RCW 49.52.070, any "officer, vice principal or agent of any employer" who wrongfully withholds wages shall be personally liable (except when the employee knowingly submits to the withholding, as discussed in Part 2.)  In practice, courts have interpreted this to mean those with some control over the payment of wages, especially check-writing authority, are personally liable.  Ellerman v. Centerpoint Prepress, 143 Wn.2d 514 (2000); Durand v. HIMC Corp., 151 Wn.App. 818 (2009).  The Durand court also noted that personal liability in these cases does not turn on piercing the corporate veil, so an employer's corporate structure does not protect the individuals from personal liability.  Federal law on the issue is similar, though not identical.  It is worth taking a look at this post for a discussion of federal law.

Individuals who have some control over the payment of wages need to be sure those wages are being paid.  Otherwise, they risk personal liability and may end up paying those wages out of their own paychecks.