No Liability of Individual Corporate Officers for New Jersey Prevailing Wage Lawsuit
Typically, corporate directors and officers are not personally liable for actions undertaken by the business but courts will impose such liability when a statute provides for individual liability. A federal court however, recently ruled that New Jersey’s Prevailing Wage Act (PWA) “does not impute personal liability” to corporate officers. Palmisano, et al v. Crowdergulf, LLC, et al, No. 3:17-cv-09371, mem. order at 1 (D.N.J., May 29, 2018).
The PWA “establish[es] a prevailing wage level for workmen engaged in public works.” N.J.S.A. 34:11-56.25. Employers must pay workers the current prevailing wage, according to the New Jersey Department of Labor and Workforce Development, which is based on location, type of work, and other factors. If an employer pays a worker less than the prevailing wage rate, the worker may file a private cause of action to recover amounts owed to them. N.J.S.A. 34:11-56.40.
In this case, several workers sued the corporations and limited liability companies with contracts with the State of New Jersey for cleanup work after Hurricane Sandy. The plaintiffs alleged that they regularly worked more than forty hours per week but were not paid overtime as required by the PWA. In the complaint, plaintiffs alleged one of the defendants contracted to perform “waterway debris removal services” and other defendants performed as subcontractors. In addition to the business entities, the plaintiffs sued individual officers of the general contractor defendant. These individuals moved to dismiss the claims against them. The court agreed, noting the PWA only applies to individuals or businesses directly subject to government contracts. The court ruled liability does not extend to the corporate officers.
Senior Attorney David Cassidy, Esq.