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CORPORATE SHAREHOLDERS AND OFFICERS MAY ONLY BE LIABLE FOR LABOR LAW (WAGE-PAYMENT-RELATED) VIOLATIONS IF THEY EXERCISE CONTROL OVER THE DAY-TO-DAY OPERATIONS OF THE CORPORATION, WHICH WAS ALLEGED HERE (SECOND DEPT).

The Second Department, reversing Supreme Court and reinstating defendants’ counterclaims alleging violations of the Labor Law, noted that corporate shareholders and officers can only be liable for Labor Law (wage-payment-related) violations if they exercise control of a corporation’s day-to-day operations, which was alleged here:

“[C]orporate shareholders and officers generally may not be subjected to civil liability for corporate violations of the Labor Law absent allegations that such persons exercised control of the corporation’s day-to-day operations by, for example, hiring and firing employees, supervising employee work schedules, and determining the method and rate of pay” … . Here, the defendants adequately alleged, inter alia, that the additional defendants controlled the day-to-day operations of the plaintiff, including the plaintiff’s payment practices. Interstate Home Loan Ctr., Inc. v United Mtge. Corp., 2022 NY Slip Op 03715, Second Dept 6-8-22

Practice Point: Corporate shareholders and officers may be liable for Labor Law (wage-payment-related) violations only if they exercise control over the day-to-day operations of the corporation.

 

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