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Lost Wages and Employee Negligence

Suits are often filed after the dissolution of a corporation takes place, as an attempt to recover lost wages earned and owed to employees. Cases usually begin with suits filed by the employees seeking to recover their lost wages, and can sometimes result in the filing of counter suits against employees by the managing officers or owners claiming liability for lost profits due to negligence.

Prior cases of lost wages have proven that corporations can be held jointly and severally liable for unpaid wages. In Mulford v. Computer Leasing, Inc., 334 N.J. Super. 385 (1999) the court determined that the sole shareholders of a corporation along with a director were jointly and severally liable for the unpaid wages of employees because “all directors are responsible for managing the business affairs of the corporation.” The court also held that the corporation itself was jointly and severally liable. In other similar cases it seems clear that managing officers can qualify as directors of a corporation and they can be held liable and responsible for managing the affairs of the business and its employees.

However, in most cases, employees cannot be sued for negligence if they were making a good faith, honest effort to do their jobs to the best of their ability, even if this effort caused the company to sustain a loss. However, if employees have acted in an unreasonable manner in failing to disclose relevant information and this resulted in a specific identifiable loss, it is possible for the employees to be found liable.

Full post as published by New Jersey Law Blog on June 18, 2008 (boomark / email).