Opinion ID: 2630552
Heading Depth: 1
Heading Rank: 8

Heading: The Responsibility Of NationsWay For Wage And Compensation Payment To Employees Upon Termination

Text: In the case certified to us, the entity responsible for creating the employment relationship and meeting the payroll was NationsWay. The officers of NationsWay were not parties to the employment contracts. In addition, the officers were acting in their representative capacity, with actual authority from the NationsWay board of directors, when they filed the bankruptcy petition. [4] The other employees of NationsWay knew that the officers were acting for NationsWay. As agents of NationsWay, the officers were insulated from liability by the general principles of agency law. Under Leonard's view, the officers and agents of corporations are always responsible for wages due as a result of the employment relationship and must act as a surety in the event the payroll is not met. We disagree. We find no provision of the Wage Claim Actin contrast to the plain language of the Illinois and Kansas statutesthat makes the personal assets of officers available for recourse to other employees of the corporation when the hiring entity discharges them. We presume that the General Assembly knows the pre-existing law when it adopts new legislation or makes amendments to prior acts. See Vaughan v. McMinn, 945 P.2d 404, 409 (Colo.1997). The well-established principles of both corporate law and agency law insulate officers from personal liability unless they act outside the scope of their authority. In contrast to Leonard's contention of blanket personal liability, our Wage Claim Act does provide for agent liability in some circumstances. Section 8-4-117, 3 C.R.S. (2002), provides that any employer or agent of an employer  who refuses to pay wages, when under a duty to pay, is guilty of a misdemeanor in specified circumstances: any employer or agent of an employer who, being able to pay wages or compensation and being under a duty to pay, willfully refuses to pay as provided in this article, or falsely denies the amount of a wage claim, or the validity thereof, or that the same is due, with intent to secure for himself or another person any discount upon such indebtedness or any under-payment of such indebtedness or with intent to annoy, harass, oppress, hinder, delay, or defraud the person to whom such indebtedness is due, is guilty of a misdemeanor... § 8-4-117, 3 C.R.S. (2002) (emphasis added). The plain language of this section makes employers and agents liable for willfully or intentionally withholding employee wages. Significantly, when we examine the wage payment obligation of section 8-4-104(1)(a), the termination provision, and section 8-4-104(3), the civil penalty provision, we find no similar language making officers or agents liable for wage payment or civil penalties. Other related provisions of Colorado law demonstrate that the General Assembly did not intend blanket corporate officer and agent liability for unpaid wages and other compensation. In 1903, the General Assembly adopted the Colorado Wage Preference Act to provide that debts to employees shall be considered preferred claims when the employing business is suspended by creditor action: when the business of any person, corporation, company or firm shall be suspended by the action of creditors or be put into the hands of a receiver or trustee, then in all such cases the debts owing to laborers, servants or employees, which have occurred by reason of their labor, or employment shall be considered and treated as preferred claims and such laborers, or employees shall be preferred creditors, and shall first be paid in full ... Ch. 70, sec. 1, 1903 Colo. Sess. Laws 143 (recodified and now appearing as section 8-10-101, 3 C.R.S. (2002)). This provision explicitly recognizes that the person or entity obligated to pay wages and other compensation because of the employment relationship may experience creditor-initiated court proceedings. Although this provision is not directly applicable in federal bankruptcy situations, it evidences the intent of the General Assembly to provide protection for employees in a creditor situation by granting them preferred status, not by giving them the opportunity to collect their wages from the personal assets of officers. Personal liability of officers for wages in the event of business insolvency would be a sharp departure from corporate law principles, and we would expect the General Assembly to state such intent specifically or by necessary implication. No such language or evident intent appears in Colorado's Wage Claim Act. To the contrary, the General Assembly recognized the problem of corporate insolvency and created in section 8-4-117 an exception to employer and agent criminal liability in circumstances of state creditor proceedings that involve limited corporate control over assets. [5] In the absence of some exception, neither the officers nor the directors of a corporation are personally responsible for the debts of a corporation merely because they are officers or directors of the corporation. See William Meade Fletcher, Fletcher Cyclopedia Corporations § 1117 (Perm. ed.2002 rev. vol. 3A). Requiring officers of a corporation to act as sureties for wage payment out of their personal assets in the event of business insolvency or bankruptcy would be a substantial deterrent to serving as an officer. This is not a liability that one normally anticipates in occupying such a position with a company, and the Wage Claim Act provides no clear notice that employee officers of a corporation incur such a legal obligation.