California Supreme Court Ruling Increases Risk of Individual Liability In Wage And Hour Actions


In a significant ruling for California employers, on May 20, 2010, the California Supreme Court addressed the question of who is included in the definition of “employer” for purposes of liability in a Labor Code Section 1194 action for unpaid wages. In Martinez v. Combs, the California Supreme Court adopted the Industrial Welfare Commission’s (IWC’s) definition of employer: one who exercises control over the wages, hours, or working conditions of the employee; or suffers or permits the employee to work; or engages the employee. This definition of employer is broader than many understood to be the case under the California Supreme Court’s previous decision in Reynolds v. Bement, and has clear implications in important areas such as officer and director liability and the misclassification of independent contractors.

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