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Individual managing employees are
not personally liable for unpaid wages

Cornell v. Benedict (Virginia 10/13/2022)
Sent to Custom Alerts™ subscribers on 10/16/2022

Sometimes, under some statutes, individual managing employees can be personally liable when an employer fails to pay wages. And, under other statutes, they are not.

In this case from Virginia, a group of clinicians filed a collective action against the employer and two of the employer's managing employees for unpaid wages under Virginia Code 40.1-29(J).

The clinicians argued the two employees should be considered employers who were liable, jointly and severally, with the employer. The two managing employees argued they were not employers.

The Supreme Court of Virginia held that the employees had no personal liability because they were not "employers."

Under 40.1-29(J), an employer is defined as "an individual, partnership, association, corporation***who employs another to work for wages, salaries, or on commission and shall include any similar entity acting directly or indirectly in the interest of an employer in relation to an employee."

The clinicians argued the definition under 40.1-29(J) mirrored the definition found in the federal Fair Labor Standards Act. The court disagreed with the clinicians' statutory interpretation and found that under 40.1-29(J) the term "employer" was narrower than Congress used in the FLSA.

The court looked at the definition of "entity," which is defined as "an organization that has a legal identity apart from its members or owners." The court explained absent from the legal definition of "entity" was any reference to natural persons or individuals. Thus, the court concluded the statute omitted individuals from joint employer liability for unpaid wages under 40.1-29(J).

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