Court of Appeal: No Individual Liability for Wages or UCL

The Wins Corporations were three garment manufacturers owned by the Wongs. After some business reverses, the businesses did not pay all wages due. The Labor Commissioner sought to hold the Wongs personally liable for the wages under a variety of theories. The trial court held they could not be personally liable. On appeal, the Labor Commissioner argued that managing agents like the Wongs may be held personally liable when the Labor Commissioner commences an action to recover wages under Labor Code section 1193.6. Relying on the Supreme Court's decision in Reynolds v. Bement, 36 Cal.4th 1075 (2003), the court of appeal held no personal liability for unpaid vacation, final pay, or associated penalties was available under the common law definition of "employer" applicable to these claims.
The court also rejected the Labor Commissioner's argument that the unfair competition law, Bus. Prof. Code section 17200 allowed for personal liability. The court reasoned that the remedy available under 17200 - restitution - could not apply to the Wongs. That's because they personally did not withhold the subject wages. As such, the could not be held liable for "restoring" those wages to the plaintiffs.
Of note, the Labor Commissioner did not dispute the superior court's conclusions that the Wongs were not "alter egos" and therefore waived the issue for appeal. (The superior court had determined the Wongs had respected corporate formalities and adequately capitalized the companies and, therefore, were not alter egos.) The Labor Commissioner also did not challenge the superior court's conclusion that the Wongs could not be held liable under a special statute applicable to the garment industry (section 2673.1) because she did not pursue that liability properly in the administrative forum. So, these theories remain potentially viable ways of holding corporate executives personally liable.

The case is Bradstreet v. Wong and the opinion is here.