Successor liability for wages expanded a little based on new California law

A tip of the hat to Keith Paul Bishop and his blog, California corporate & securities law.   California just passed AB 3075 which provides that Labor Code Section 200.3 now reads:

Labor Code Section 200.3 :
(a) A successor to a judgment debtor shall be liable for any wages, damages, and penalties owed to any of the judgment debtor’s former workforce pursuant to a final judgment, after the time to appeal therefrom has expired and for which no appeal therefrom is pending.  Successorship is established upon meeting any of the following criteria:
(1) Uses substantially the same facilities or substantially the same workforce to offer substantially the same services as the judgment debtor.  This factor does not apply to employers who maintain the same workforce pursuant to Chapter 4.5 (commencing with Section 1060) of Part 3.
(2) Has substantially the same owners or managers that control the labor relations as the judgment debtor.
(3) Employs as a managing agent any person who directly controlled the wages, hours, or working conditions of the affected workforce of the judgment debtor. The term managing agent has the same meaning as in subdivision (b) of Section 3294 of the Civil Code.
(4) Operates a business in the same industry and the business has an owner, partner, officer, or director who is an immediate family member of any owner, partner, officer, or director of the judgment debtor.
(b) This section shall not be construed to limit other means of establishing successor liability for wages, damages, and penalties.

So the employee has to first get a judgment against his employer.  Then he can execute the judgment against a successor entity if the above is met.

Keith Bishop’s comment was aimed at part (4) above, saying that an entity with a lot of shareholders could be liable for back wages if any shareholder of the entity is a family member of any “owner, partner, officer, or director of the judgment debtor.”

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