Opinion ID: 2567023
Heading Depth: 2
Heading Rank: 2

Heading: Plaintiffs Exercises Control Liability Theory

Text: In a series of regulations concerning employment in a wide variety of industries and occupations, the IWC since 1947 has defined employer to include an individual who exercises control over the wages, hours, or working conditions of any person. (Wage Order No. 9, subd. 2(F) (hereafter the IWC employer definition).) [6] Noting that section 510, in obligating an employer to pay overtime compensation, does not define that term, and that section 1194, in providing any employee with a private right of action to recover unpaid minimum or overtime wages, does not specify potential defendants, plaintiff argues we should apply the IWC employer definition in order to determine who are proper defendants here. That definition, plaintiff asserts, includes corporate control figures like the individual defendants. While plaintiff does not contend any statute expressly subjects corporate control figures to liability, as employers, for unpaid wages, he argues that we can infer the IWC's authority to specify appropriate section 1194 defendants from its powers to fix a minimum wage and to provide safeguards to insure employees receive the minimum and overtime wages due them. (See Cal. Drive-in Restaurant Assn. v. Clark (1943) 22 Cal.2d 287, 302, 140 P.2d 657 [discussing IWC's power to provide safeguards to insure receipt of the minimum wage].) Applying the IWC employer definition to corporate control figures, plaintiff posits, is reasonably necessary to effectuate the purposes of section 1194. (See Agricultural Labor Relations Bd. v. Superior Court (1976) 16 Cal.3d 392, 411, 128 Cal.Rptr. 183, 546 P.2d 687; see generally Gov.Code, §§ 11342.1 [scope of agency authority], 11342.2 [validity of regulations].) The individual defendants disagree that the IWC employer definition applies to this case, insisting none of them may be held personally liable for any overtime or other compensation owed to plaintiff by his corporate employer. They argue that California's labor statutes do not impose personal liability on corporate officers and directors for unpaid wages owed by a corporate employer and that common law principles protect them against incurring civil liability, as employers, for economic harm plaintiff's corporate employer may have caused him. In resolving the question, we look in the first instance not to the IWC's authority nor to the asserted necessity of its employer definition, but to the IWC's intent in promulgating the employer definition. The best indicator of that intent is the language of the provision itself. ( Williams v. Superior Court (1993) 5 Cal.4th 337, 350, 19 Cal.Rptr.2d 882, 852 P.2d 377.) As plaintiff acknowledges, the plain language of Wage Order No. 9 defining employer does not expressly impose liability under section 1194 on individual corporate agents. Nor can we infer that the Legislature, simply by amending sections 510 and 1194 several times after the IWC adopted its employer definition, impliedly intended to incorporate that definition into a unified remedial scheme comprised of those statutes and the regulations. [7] A statute will be construed in light of the common law unless the Legislature `clearly and unequivocally' indicates otherwise. ( California Assn. of Health Facilities v. Department of Health Services (1997) 16 Cal.4th 284, 297, 65 Cal.Rptr.2d 872, 940 P.2d 323.) We agree with the individual defendants that, had the Legislature intended to depart from the common law by engrafting Wage Order No. 9 onto section 1194, it would have more clearly manifested that intent. Neither section 510 nor section 1194 contains any reference to the IWC employer definition: section 510 in detailing certain obligations of an employer leaves that term undefined; section 1194, without mentioning employer, simply provides that any employee receiving less than the applicable legal minimum wage or legal overtime compensation is entitled to recover the same in a civil action. In this circumstancea statute referring to employees without defining the termcourts have generally applied the common law test of employment. ( Metropolitan Water Dist. v. Superior Court (2004) 32 Cal.4th 491, 500, 9 Cal.Rptr.3d 857, 84 P.3d 966 [discussing Gov.Code, § 20028, subd. (b)].) [8] California courts have applied this interpretive rule to various statutes dealing with public and private employment. ( Metropolitan Water Dist., supra, at p. 500, 9 Cal.Rptr.3d 857, 84 P.3d 966; see also id. at p. 500, fn. 5, 9 Cal.Rptr.3d 857, 84 P.3d 966, citing cases.) Under the common law, corporate agents acting within the scope of their agency are not personally liable for the corporate employer's failure to pay its employees' wages. (See, e.g., Oppenheimer v. Robinson (1957) 150 Cal.App.2d 420, 424, 309 P.2d 887; see generally Fletcher Cyclopedia Corporations (perm. ed. supp. 2002) § 41.) This is true regardless of whether a corporation's failure to pay such wages, in particular circumstances, breaches only its employment contract or also breaches a tort duty of care. It is well established that corporate agents and employees acting for and on behalf of a corporation cannot be held liable for inducing a breach of the corporation's contract. ( Shoemaker v. Myers (1990) 52 Cal.3d 1, 24, 276 Cal.Rptr. 303, 801 P.2d 1054.) And [d]irectors or officers of a corporation do not incur personal liability for torts of the corporation merely by reason of their official position ( United States Liab. Ins. Co. v. Haidinger-Hayes, Inc. (1970) 1 Cal.3d 586, 595, 83 Cal.Rptr. 418, 463 P.2d 770). For the foregoing reasons, we agree with the Court of Appeal that plaintiff cannot state a section 1194 cause of action against the individual defendants. Had the Legislature meant in section 1194 to expose to personal civil liability any corporate agent who exercises control over an employee's wages, hours, or working conditions, it would have manifested its intent more clearly than by mere silence after the IWC's promulgation of Wage Order No. 9. The DLSE, as amicus curiae, warns that the Court of Appeal's failure to accept plaintiff's theory of corporate agent liability based on the IWC employer definition may pose an obstacle to the Labor Commissioner's ability to recover some wages owed to California employees. Apparently it is existing DLSE practice in wage claim actions prosecuted (§ 98.3) or informally heard and determined (§ 98) by the Labor Commissioner to apply the IWC employer definition, including its exercises control prong, so as to permit the naming of certain corporate agents as joint defendants with corporate employers. The DLSE, concerned lest its practice in this regard be called into question, urges that we recognize plaintiff's theory and direct California courts to apply it in private court actions (as the DLSE apparently does in the administrative context) in light of federal cases determining, on the basis of economic reality, who qualifies as an employer under the FLSA (29 U.S.C. § 201 et seq.). We previously have determined that the DLSE's administrative policies are not due general interpretive deference unless they are promulgated in accordance with the Administrative Procedure Act, section 11340 et seq. of the Government Code. (See Tidewater, supra, 14 Cal.4th at pp. 568-577, 59 Cal.Rptr.2d 186, 927 P.2d 296.) And while it is true that [f]ederal decisions have frequently guided our interpretation of state labor provisions the language of which parallels that of federal statutes ( Building Material & Construction Teamsters' Union v. Farrell (1986) 41 Cal.3d 651, 658, 224 Cal.Rptr. 688, 715 P.2d 648), where the language or intent of state and federal labor laws substantially differ, reliance on federal regulations or interpretations to construe state regulations is misplaced ( Ramirez v. Yosemite Water Co. (1999) 20 Cal.4th 785, 798, 85 Cal.Rptr.2d 844, 978 P.2d 2). While the FLSA contains an express definition of employer (29 U.S.C. § 203(d)), [9] section 1194 does not. In any event, we have no occasion in resolving this private dispute to address questions concerning the DLSEs use, in administrative proceedings, of the IWC employer definition. Nor are we persuaded that our narrow holding that plaintiff cannot employ the IWC employer definition to state a section 1194 cause of action against the individual defendants will have the sweeping effect the DLSE fears. Defendants concede the DLSE may utilize the IWC employer definition in exercising its prosecutorial discretion to determine who are appropriate wage claim defendants. And while the DLSE in its adjudicatory role (see generally § 98 [Berman hearings]; Cal.Code Regs., tit. 8, § 13502) is of course obligated to follow the substantive law (§§ 95, 98, subd. (a)), there is no question that IWC wage orders are among the valid sources thereof (§ 517, subd. (a)). We also disagree that our holding today poses an obstacle to the Labor Commissioner's recovering wages owed California workers. Imposition of individual civil liability under the IWC employer definition is not the only means by which an employee can seek recovery against a corporate agent. The Berman hearing procedure is designed to provide a speedy, informal, and affordable method of resolving wage claims ( Cuadra v. Millan, supra, 17 Cal.4th at p. 858, 72 Cal.Rptr.2d 687, 952 P.2d 704) and, as defendants concede, nothing in that process precludes hearing officers from finding individual corporate agents liable for unpaid wages when such liability is proven on established common law [10] or statutory [11] theories. Moreover, pursuant to section 558, subdivision (a), any person acting on behalf of an employer who violates, or causes to be violated a statute or wage order relating to working hours is subject to a civil penalty, payable to the affected employee, equal to the amount of any underpaid wages. [12] As noted earlier, the Legislature has provided that aggrieved employees may under certain circumstances maintain civil actions to recover such penalties. (§ 2699, subd. (a).)