Dunn DeSantis Walt & Kendrick (DDWK) has obtained a win in a Bay Area employment law case that has potentially far-reaching implications for wage and hour disputes, as well as board member liability.
The lawsuit arises from claims made on behalf of an employee who was terminated by her employer, Chefling, after raising concerns about unpaid commissions. Firm partners Brad Lebow and David Cardone successfully appealed an order from the Superior Court for Santa Clara County, which had sustained a demurrer – a motion to dismiss – filed by one of the company’s board members. The board member was named personally in the lawsuit for his role in the decision not to pay the employee’s wages. Both the board member and Chefling, a subsidiary of UK-based Smarter Applications, have been represented by the international law firm Foley & Lardner.
The California Court of Appeal’s decision addressed questions about the pleading standard for claims that corporate board members can be held personally liable for their involvement in allegedly unlawful decisions to withhold employee wages. In its lengthy opinion, the Court of Appeal also noted that tactics to delay discovery – here, delaying the defendant board member’s deposition – cannot prevent plaintiffs from later including key information in an amended complaint. As a result, this lawsuit will now return to the trial court, and DDWK’s client’s claims will now proceed against Chefling and each board member alleged to have participated in the decision to deny her wages. DDWK’s client was awarded her costs incurred in the appeal.
“This decision reinforces employees’ rights to seek legal recourse when wages are wrongfully withheld. And it should provide clarity about the potential for personal accountability of corporate decision-makers who are personally involved in denying employee wages,” said Cardone. “It is also a reminder that procedural gamesmanship cannot be used by attorneys to evade accountability by their clients. For these reasons, we are evaluating whether to seek publication of the Court of Appeal’s opinion.”
The Court of Appeal’s decision is supportive of employees who seek to hold corporate leadership accountable for wage-and-hour violations. And it underscores the potential risks corporate board members face if they directly participate in decisions to deny employee wages.