State Supreme Court Reaffirms Commitment to Personal Liability for Wage and Hour Claims
In a unanimous decision, the Washington State Supreme Court answered two questions regarding wage withholding as certified by the Western District of Washington. A corporation’s Board of Directors had determined to file Chapter 7 bankruptcy on a date before the normal payroll date, and then argued that they could not be held liable for wage withholding because no pay was due until after Chapter 7 had been filed. The Court was not impressed with this argument, citing that the wages were accrued before the bankruptcy filing, became due upon the date of filing, and that the filing could not eliminate the obligation to pay. Moreover, when the Board of Directors participated in the decision to file for bankruptcy without ensuring that accrued wages would be paid, this constituted willfulness and subjected the Directors to personal liability under RCW 49.52.050 and.070. The decision may be found here: https://www.courts.wa.gov/opinions/pdf/930562.pdf
This decision reiterates how seriously our State takes the nonpayment of wages or other compensation due to work. Wage claims must be taken seriously and examined thoroughly in order to avoid personal liability of the officers, vice-principals or other agents of the company who make decisions regarding who, when and how much will be paid. Employers with questions regarding wage disputes should consult counsel before making any decisions regarding non-payment of compensation.