On the Hook: Company Owners and Managers At Personal Risk for Unpaid Employee Wages


If a company does not timely pay all wages due to an employee, the South Carolina Payment of Wages Act (SCPWA) allows the employee to file a lawsuit for three times the amount of unpaid wages, plus court costs and attorneys fees. The lawsuit for unpaid wages can be filed not only against the company, but also against agents and officers who permit the company to violate the SCPWA.

In Allen v. Pinnacle Healthcare Systems, LLC, neurologist Aaron Allen sued his employer, Pinnacle Healthcare, a member-managed limited liability company that is now defunct, and four individuals affiliated with Pinnacle. Allen sought $780,000 based on his employment contract. Following a trial, three of the individuals were found to be jointly and severally liable for Allen’s unpaid wages, prejudgment interest, and attorney’s fees.

On July 27, 2011, a three-judge panel of the South Carolina Court of Appeals voted 2-1 to affirm judgment against two of the individuals. One of the individuals was the executive manager who organized the company and owned 40 percent of it. The other was a member of Pinnacle Healthcare who owned 20 percent of the company.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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