LLC Managers Now Liable for Wage Act Violations

Should LLC managers escape the Wage Act because they avoid the titles “President” and “Treasurer.” Definitely not.

Peter Cook filed action for unpaid wages against Patient Edu, LLC and two of its managers, Steven Graziano and Michael Schulman. The managers argued that they could not be liable for unpaid wages, because the company was an LLC and not a corporation. Seeing right through the absurdity, the Supreme Judicial Court (SJC), in Cook v. Patient Edu, LLC, found that any manager of an LLC who “controls, directs, and participates to a substantial degree in formulating and determining policy” would be in the same position as a President or Treasurer, and thus individually liable for violating the Massachusetts payment of wages act, including trebling damages and attorneys fees.

The point of dispute centered round the language in the Wage Act and whether or not managers of LLCs should be considered “a person having employees in his service” and, therefore, liable if the Wage Act is violated. Previously, employers have successfully argued that the language in the Wage Act referred only to officers of corporations and not other types of businesses. The SJC clarified that differentiating between actors would work against the intent of the statute. Further, the SJC noted that LLCs did not exist as a form of business association when the original provision to the wage act, making corporate officers individually liable, was added.

If you work at an LLC that failed to pay your full wages, call us to learn about your rights.