Personal Liability for Failure to Pay Wages

A recent Washington State Court of Appeals case, Moore v. Blue Frog Mobile, Inc., serves as a timely reminder that certain individuals associated with an employer can be held personally liable if employees’ wages are not paid by the employer.  As the Moore case points out, RCW 49.52.050 and RCW 49.52.070 authorize criminal and civil penalties when an officer, vice principal, or agent of an employer (or an elected public official) “Willfully and with intent to deprive the employee of any part of his wages, shall pay an employee a lower wage than the wage such employer is obligated to pay such employee by any statute, ordinance or contract.” RCW 49.52.050(2).  Any officer, vice principal or agent who violates this statute can be held liable in a civil action for twice the amount of the unpaid wages, along with attorneys’ fees and costs under RCW 49.52.070. 

 In the Moore case, the CEO testified that he believed that Mr. Moore, who was the former Chief Operating Officer (COO) of the company, had breached the non-disparagement portion of a separation agreement by submitting a declaration in a lawsuit between the company and a third party, and terminated Mr. Moore’s severance payments.  Mr. Moore sued the company, the CEO and two board members.  He subsequently settled with the two board members, obtained a stipulated judgment against the company, and prevailed on summary judgment against the CEO.  The CEO appealed.  The case on appeal focused on whether the CEO and Mr. Moore had a bona fide dispute regarding the wages because Mr. Moore would not be entitled to double damages if their dispute was bona fide.  The Court of Appeals reversed the summary judgment and sent the case back to the trial court to be determined by a jury. 

 Besides serving as a reminder that certain individuals can be held personally liable for the failure to pay wages, the Moore case also serves as a reminder that “wages” is a very broad term, and includes compensation such as severance payments in addition to salary.  Though not referenced in the Moore case, other cases have applied the term “wages” to include payments to employees such as commissions and contract ratification bonuses.  However, there are limits to what the courts consider to be wages, as illustrated by Byrne v. Courtesy Food, Inc. where the Washington State Court of Appeals held that a television won by an employee at an automobile  auction while he was purchasing cars for his employer was not a wage.

This article is not legal advice, and should not be relied on for any purpose.  It is a summary of a complex area of the law, which may have changed since this article was posted on February 19, 2010.

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Tags: Personal Liability for Nonpayment of Wages, Wage and Hour Laws, Wrongful Withholding of Wages

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