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The Twisting Path of Personal Liability Under the Utah Payment of Wages Act
November 07, 2018
Parsons Behle & Latimer Legal Briefings


Historically, managers and officers of companies were personally liable for employee wage claims brought under the Utah Payment of Wages Act (“UPWA”), Utah Code §§ 34-28-1–19.

In 2015, the Utah Supreme Court in Heaps v. Nuriche, 2015 UT 26, 345 P.3d 655 concluded that agents and officers of a company may not be individually liable for employee wage claims, except where such officer or agent personally employed the employee making the wage claim.

During March 2017, in direct response to Heaps, the Utah Legislature reaffirmed that officers or agents of an entity may be individually liable for unpaid wages under the UPWA, even if such officer or agent did not personally employ the employee. The legislature viewed individual liability of officers and agents for unpaid wages to be settled law and that Heaps “created confusion” regarding the standard of liability.

Under the UPWA, “employers” are responsible for the payment of wages. The 2017 amendments to the UPWA clarify that the definition of “employer” under the UPWA “means the same as that term is defined in 29 U.S.C. Sec. 203,” a section of the federal Fair Labor Standards Act (“FLSA”). The FLSA defines “employer” to include “any person acting directly or indirectly in the interest of an employer in relation to an employee.” Thus, under the UPWA, officers or agents of an employer may be considered employers, subject to individual liability, so long as they act “directly or indirectly in the interest of an employer in relation to an employee.” The person must be (1) an officer of a company; (2) a manager of a manager-managed limited liability company; (3) a member of a member-managed limited liability company; (4) a general partner of a limited partnership; or (5) a partner of a partnership, in order to be personally liable for the payment of wages under the UPWA.

Utah appellate courts have yet to address the scope of the new definition of “employer” under the UPWA. It is likely that Utah courts will look to decisions interpreting the definition of “employer” under the FLSA when interpreting the definition of “employer,” and the scope of personal liability, under the UPWA. Courts apply an “economic realities” test to determine whether an individual officer or agent of a company is an “employer” under the FLSA. The key consideration is whether the officer or manager exerts control over relevant aspects of the company’s employment policies or practices with regard to the workers in question. Relevant factors under the “economic realities” test include whether the officer or manager (1) has the power to hire and fire the employees; (2) supervises and controls employee work schedules and conditions of employment; (3) determines the rate and method of payment; and (4) maintains employment records. The list of factors is not exhaustive, and no individual factor standing alone is dispositive. Whether an officer or manager of a company is an “employer” under the FLSA is determined by looking at all of the relevant facts. 

While the payment of wages is the responsibility of all employers in Utah, managers and officers of companies should be aware that they too can be personally liable for payment of those wages along with fines and penalties.

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