Clyde Snow

Are You Personally Liable for Employee Wage Claims?

by | Aug 19, 2020

Many business owners and executives are surprised to learn that even if their business is a corporation or a limited liability company (LLC), they may be personally liable for wage claims filed by their employees.

Federal Law

Under the federal Fair Labor Standards Act (FLSA) as interpreted by federal courts, you may be personally liable for wage claims if you are an owner, officer, executive, or high-level manager and any of the following is true:

  • You have overall control over the operations of the company;
  • Your reporting chain includes employee managers or supervisors;
  • You have oversight of payroll;
  • You have authority to hire and fire employees; or
  • You have control over employee work schedules and pay rates.

This is not a complete list of factors that may lead to liability, and none of these factors necessary means that a court would find you liable under the FLSA. But if any of these factors are present, you should take a personal interest in ensuring that employees at your organization are properly paid.

Potential liability under the FLSA includes unpaid wages, liquidated damages equal to the amount of unpaid wages, attorney fees, and costs.

Utah Law

Under Utah law, personal liability is slightly narrower than under the FLSA. The Utah Payment of Wages Act (UPWA) defines “employer” to incorporate the FLSA definition, but it carves out individuals who do not hold specific high-level positions. (Utah Code § 34-28-2(c).) Thus, you cannot be personally liable under the UPWA unless you are

  • an officer;
  • a manager of a manager-managed limited liability company;
  • a member of a member-managed limited liability company;
  • a general partner of a limited partnership; or
  • a partner of a partnership.

Potential liability under the UPWA includes unpaid wages, penalties, attorney fees, and costs. For a terminated employee, it may also include unused vacation, sick leave, PTO, floating holidays, bonuses, and severance if a contract or policy provides that these amount will be paid out upon termination. (Utah Admin. Code R610-3-4.)

Personal liability under the FLSA and the UPWA may be covered by Director & Officer liability insurance policies. Check with your company’s risk management department to find out if you are covered.

Thanks to Chris Snow for contributing research for this post!

Sign up for our latest updates.


Recent Posts

Ripple Effect 151: Discover Ag. Podcast

Tara Vander Dussen, Co-Host of the Discover Ag. Podcast, joins us for a lively and informative discussion about agricultural news and information. We dive into the presence and impact of social media, themes and trends, and why the new “food curious” movement is...

Ripple Effect 150: Colorado River Authority of Utah

Amy Haas, Executive Director of the Colorado River Authority of Utah, talks us through the inception of the entity, how it executes its mission to protect and defend Utah’s portion of the Colorado River, and where the Authority is leading out in tackling hard...

Ripple Effect 149: Watershed Improvements for Carbon Credits

Alex Johnson, Chief Strategic Officer for Virridy, walks us through this Company’s unique, and very innovative, platform to merge monitoring water quality improvements with selling carbon credits on the voluntary carbon market. Hint – treating water is energy...

Ripple Effect 148: Scaling Up! H2O – from Host to Guest!

In this very special episode, Emily joins the podcast not as a host, but as a guest! Join us as our beloved host Emily Lewis takes the spotlight on an entirely separate water podcast - 'Scaling Up! H2O.' Here's your chance to get personal with our host....

Ripple Effect 147: Snow Report 2023-2024

Jordan Clayton, Supervisor for the Utah Snow Survey at NRCS, joins us to discuss the status of Utah’s snow year and our water supply. Good news – after a slow start, the State is overall at 102% of normal. Bad news – we have a long way to go in the water year and we...

Ripple Effect 146: 2024 Legislative Preview!

Jeff Gittins joins us to discuss upcoming bills for the 2024 Legislative Sessions. A couple key bills, notes, and lots of follow-up tweaks for the last couple years of policy. As always, a great discussion; and check-out Jeff’s Utah Water Law and Water Rights blog.

Ripple Effect 145: 2024 Water Preview: Its Going to be Awesome!

Shaina Shay, Owner and Editor of The Water Report, shares her insights as to what will be big in 2024! PFAS, the Energy Water Nexus, Colorado River, Technology, and Aging Infrastructure all make an appearance. Shaina always brings thoughtful commentary and a unique...

Related Posts