California Bill Would Make Successor Employers Liable For Unpaid Wages

Allen Matkins

Allen Matkins

California Assembly Member Lorena Gonzalez recently amended AB 3075 to impose successor liability for unpaid wages.  The bill would, among other things, add a new Section 200.3 to the California Labor Code:

A successor employer is liable for any wages, damages, and penalties its predecessor employer owes pursuant to a final judgment after the time to appeal therefrom has expired and no appeal therefrom is pending, to any of the predecessor employer’s former workforce if the successor employer meets any of the following criteria:

(a) Uses substantially the same facilities or substantially the same workforce to offer substantially the same services as the predecessor employer. This factor does not apply to employers who maintain the same workforce pursuant to Chapter 4.5 (commencing with Section 1060) of Part 3.

(b) Has substantially the same owners or managers that control the labor relations as the predecessor employer.

(c) Employs as a managing agent any person who directly controlled the wages, hours, or working conditions of the affected workforce of the predecessor employer. The term managing agent has the same meaning as in subdivision (b) of Section 3294 of the Civil Code.

(d) Is an immediate family member of any owner, partner, officer, or director of the predecessor employer.

AB 3075 would also amend the Corporations Code to a requirement on "filers" of articles of incorporation to attest that "the purpose of the corporation is lawful and that the filer is not an owner, director, officer, managing agent, or any other person acting on behalf of an employer, that has an outstanding final judgment issued by the Division of Labor Standards Enforcement or a court of law, a no appeal therefrom is pending, for violation of any wage order or provision of the Labor Code."  See Bill Proposes Bizarre Article Attestation Requirement.

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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