4 ms·

Not paying employees for work already rendered is wage theft, which is actual theft.

by LastTrain 3y ago

s1artibartfast 3y ago
you cant prosecute a dead entity for theft.
- jessriedel 3y ago
  Courts can pierce the corporate veil for failure to pay employees.
  - s1artibartfast 3y ago
    Source? normally piercing the corporate veil requires serious executive misconduct.
    - thereisnospork 3y ago
      IANAL, but my understanding is in agreement with the GP - failing to pay wages is de facto 'serious executive misconduct'. a probably relevant article: https://www.severino-law.com/blog/oqz4dx2ivdnzt7aqqrvbk9et11pu2c-s8ysd https://www.severino-law.com/blog/oqz4dx2ivdnzt7aqqrvbk9et11...
      - s1artibartfast 3y ago
        This however is not a bankruptcy case, but a wage theft case. Going through a perfectly legal bankruptcy procedure is very different than working your severs 72 hours a week for years without overtime then refusing to show up at court. This comports with my understanding that piercing the veil usually requires illegal behavior.
        thereisnospork 3y ago
        I don't understand your point? It is a simple concept that wage liabilities, eg a last check that bounces, or 'wage theft'[0], can result in those liabilities passing through to become personal liabilities of the company's owner(s). Again IANAL, and ymmv based on specific circumstances, but piercing for unpaid wages is very much a thing in (at least) California law. [0]an obviously illegal activity?
        s1artibartfast 3y ago
        I understand what you said, I just don't think it is true and none of the provided sources say so. Meanwhile, everything I have read says they are simply priority creditors up to a limit. Beyond the limit, judges will pay other creditors before employees. >Because claims for unpaid wages due to insolvency do not fall under the Fair Labor Standards Act (FLSA) unless the employer willfully failed to pay wages owed and filed for bankruptcy as an attempt to avoid paying wages, the U.S. Department of Labor has no jurisdiction in this area and will not accept claims. https://www.shrm.org/resourcesandtools/tools-and-samples/hr-qa/pages/wagesandbankruptcy.aspx https://www.shrm.org/resourcesandtools/tools-and-samples/hr-...
        thereisnospork 3y ago
        >I understand what you said, You really don't seem to. The allowed recourse, under contention, for unpaid wages due to bankruptcy isn't via the FLSA, its a lawsuit against the company's owners. If you run a taco stand, don't pay your employee, and then declare bankrupcy - validly or not - you will plausibly be held liable, as person, not an LLC, in civil court for those wages. To be paid from your personal assets and or garnished from future income. Also your quote literally says 'unless declaring bankruptcy to avoid paying wages.'
        deleted 3y ago
        [deleted]
        s1artibartfast 3y ago
    - zmgsabst 3y ago
      Not paying employees is the easiest way to pierce the veil, eg https://www.arnoldporter.com/en/perspectives/advisories/2022/07/director-can-be-held-liable-for-failure-to-pay https://www.arnoldporter.com/en/perspectives/advisories/2022...
    - jessriedel 3y ago
      This seems to establish precedent that unpaid wages by a bankrupt company, even in the absence of serious misconduct, are sufficient justification for veil piercing: > The case therefore would up presenting a clear question of law: Where the workers are employed by a corporation, can an individual be held liable for penalties associated with statutory violations in the payment of wages where there was no allegation or finding that the corporate laws had been misused or abused for a wrongful or inequitable purpose? In other words, do sections 558 and 1197.1 allow workers to recover civil penalties for nonpayment of wages from individuals even when there are no other grounds for piercing the corporate veil under the doctrine of alter ego? > The court of appeal concluded that under the clear language of sections 558 and 1197.1, the State of California, through the Labor and Workforce Development Agency (“LWDA”), can recover penalties associated with unpaid wages from individuals. Furthermore, PAGA allows employees to stand in the shoes of the LWDA and recover those penalties. Accordingly, employees are also permitted to recover those penalties from individuals. https://hunterpylelaw.com/2021/02/individual-liability-for-wage-and-hour-violations-under-california-law/ https://hunterpylelaw.com/2021/02/individual-liability-for-w... See also the actual decision: https://law.justia.com/cases/california/court-of-appeal/2018/d069001.html https://law.justia.com/cases/california/court-of-appeal/2018... The only ambiguity to me in reading this is whether the court considered it different because the wages went unpaid for a while before bankruptcy.
      - s1artibartfast 3y ago
        >The only ambiguity to me in reading this is whether the court considered it different because the wages went unpaid for a while before bankruptcy. This is my entire point. If you go into chapter 7 bankruptcy, and a judge prioritizes senior creditors above unpaid wadges, you are clearly in different territory than if the corporation was neglecting wages before bankruptcy. Everyone keeps linking cases for pre-bankruptcy cases, or ones without bankruptcy at all. Meanwhile, There laws on the books about the prioritization or creditors, and where labors stands, and how much labor gets paid out before, and how much after other creditors.
        jessriedel 3y ago
- reaperman 3y ago
  *prosecute
  - s1artibartfast 3y ago
    Thanks
- bsder 3y ago
  In California, I believe that wages are one of the very few things that executives can be held personally liable for.
mktexprt 3y ago
[flagged]
paulddraper 3y ago
> Not paying employees for work already rendered is wage theft, which is actual theft. Correct. I can only assume "companies are not allowed to pay out employees" refers to suggestions of severance, health care, etc. in this thread. Not earned wages, which have high legal priority.

Not paying employees for work already rendered is wage theft, which is actual theft.

s1artibartfast 3y ago

you cant prosecute a dead entity for theft.

jessriedel 3y ago
Courts can pierce the corporate veil for failure to pay employees.
- s1artibartfast 3y ago
  Source? normally piercing the corporate veil requires serious executive misconduct.
  - thereisnospork 3y ago
    IANAL, but my understanding is in agreement with the GP - failing to pay wages is de facto 'serious executive misconduct'. a probably relevant article: https://www.severino-law.com/blog/oqz4dx2ivdnzt7aqqrvbk9et11pu2c-s8ysd https://www.severino-law.com/blog/oqz4dx2ivdnzt7aqqrvbk9et11...
    - s1artibartfast 3y ago
      This however is not a bankruptcy case, but a wage theft case. Going through a perfectly legal bankruptcy procedure is very different than working your severs 72 hours a week for years without overtime then refusing to show up at court. This comports with my understanding that piercing the veil usually requires illegal behavior.
      - thereisnospork 3y ago
        I don't understand your point? It is a simple concept that wage liabilities, eg a last check that bounces, or 'wage theft'[0], can result in those liabilities passing through to become personal liabilities of the company's owner(s). Again IANAL, and ymmv based on specific circumstances, but piercing for unpaid wages is very much a thing in (at least) California law. [0]an obviously illegal activity?
        s1artibartfast 3y ago
        I understand what you said, I just don't think it is true and none of the provided sources say so. Meanwhile, everything I have read says they are simply priority creditors up to a limit. Beyond the limit, judges will pay other creditors before employees. >Because claims for unpaid wages due to insolvency do not fall under the Fair Labor Standards Act (FLSA) unless the employer willfully failed to pay wages owed and filed for bankruptcy as an attempt to avoid paying wages, the U.S. Department of Labor has no jurisdiction in this area and will not accept claims. https://www.shrm.org/resourcesandtools/tools-and-samples/hr-qa/pages/wagesandbankruptcy.aspx https://www.shrm.org/resourcesandtools/tools-and-samples/hr-...
        thereisnospork 3y ago
        >I understand what you said, You really don't seem to. The allowed recourse, under contention, for unpaid wages due to bankruptcy isn't via the FLSA, its a lawsuit against the company's owners. If you run a taco stand, don't pay your employee, and then declare bankrupcy - validly or not - you will plausibly be held liable, as person, not an LLC, in civil court for those wages. To be paid from your personal assets and or garnished from future income. Also your quote literally says 'unless declaring bankruptcy to avoid paying wages.'
        deleted 3y ago
        [deleted]
        s1artibartfast 3y ago
  - zmgsabst 3y ago
    Not paying employees is the easiest way to pierce the veil, eg https://www.arnoldporter.com/en/perspectives/advisories/2022/07/director-can-be-held-liable-for-failure-to-pay https://www.arnoldporter.com/en/perspectives/advisories/2022...
  - jessriedel 3y ago
    This seems to establish precedent that unpaid wages by a bankrupt company, even in the absence of serious misconduct, are sufficient justification for veil piercing: > The case therefore would up presenting a clear question of law: Where the workers are employed by a corporation, can an individual be held liable for penalties associated with statutory violations in the payment of wages where there was no allegation or finding that the corporate laws had been misused or abused for a wrongful or inequitable purpose? In other words, do sections 558 and 1197.1 allow workers to recover civil penalties for nonpayment of wages from individuals even when there are no other grounds for piercing the corporate veil under the doctrine of alter ego? > The court of appeal concluded that under the clear language of sections 558 and 1197.1, the State of California, through the Labor and Workforce Development Agency (“LWDA”), can recover penalties associated with unpaid wages from individuals. Furthermore, PAGA allows employees to stand in the shoes of the LWDA and recover those penalties. Accordingly, employees are also permitted to recover those penalties from individuals. https://hunterpylelaw.com/2021/02/individual-liability-for-wage-and-hour-violations-under-california-law/ https://hunterpylelaw.com/2021/02/individual-liability-for-w... See also the actual decision: https://law.justia.com/cases/california/court-of-appeal/2018/d069001.html https://law.justia.com/cases/california/court-of-appeal/2018... The only ambiguity to me in reading this is whether the court considered it different because the wages went unpaid for a while before bankruptcy.
    - s1artibartfast 3y ago
      >The only ambiguity to me in reading this is whether the court considered it different because the wages went unpaid for a while before bankruptcy. This is my entire point. If you go into chapter 7 bankruptcy, and a judge prioritizes senior creditors above unpaid wadges, you are clearly in different territory than if the corporation was neglecting wages before bankruptcy. Everyone keeps linking cases for pre-bankruptcy cases, or ones without bankruptcy at all. Meanwhile, There laws on the books about the prioritization or creditors, and where labors stands, and how much labor gets paid out before, and how much after other creditors.
      - jessriedel 3y ago
reaperman 3y ago
*prosecute
- s1artibartfast 3y ago
  Thanks
bsder 3y ago
In California, I believe that wages are one of the very few things that executives can be held personally liable for.

mktexprt 3y ago

[flagged]

paulddraper 3y ago

> Not paying employees for work already rendered is wage theft, which is actual theft. Correct. I can only assume "companies are not allowed to pay out employees" refers to suggestions of severance, health care, etc. in this thread. Not earned wages, which have high legal priority.