Company Can’t Pay What It Owes You? When the Owner or a New Business Can Be Liable in California

Your employer’s company owes you wages or a judgment, but it has no money or has shut down. In California, you can sometimes collect from an owner, officer or a business that took over, but owning the company is not enough by itself to make someone personally liable, and each route has its own proof.

The route depends on what you are owed. For certain wage violations, the Labor Code can reach an owner, director, officer or managing agent who caused the violation, and some successor businesses. For harassment or discrimination damages under the Fair Employment and Housing Act (FEHA), you generally must prove the owner is the company’s alter ego, and a published October 26, 2026 decision held that FEHA does not make that easier.

Start With What You Are Owed: Wages or Discrimination Damages

Separate the items in your claim, award or judgment. Unpaid wages, overtime, waiting-time and wage-statement penalties, meal and rest premiums and unreimbursed expenses arise under the Labor Code. Damages for harassment, discrimination or retaliation under FEHA do not. A single total hides the difference that decides which route below is available.

Also note who is named as a defendant. In the case discussed below, the employee named the owner as alleged alter ego in her complaint, and the court decided his liability in a separate phase after the jury verdict. In our reading, identifying the people and businesses involved while the claim is prepared keeps more options open than starting after a judgment names only the company.

Unpaid Wages: The Owner or Officer Who Caused the Violation

Labor Code section 558.1 says that an employer “or other person acting on behalf of an employer” who violates, or causes to be violated, specified wage rules “may be held liable as the employer.” The covered rules are the minimum-wage and hours-and-days-of-work provisions of the Industrial Welfare Commission wage orders and Labor Code sections 203 (waiting-time penalties), 226 (wage statements), 226.7 (meal, rest and recovery-period premiums), 1193.6 and 1194 (state and employee actions to recover unpaid minimum wage and overtime) and 2802 (expense reimbursement).

The statute limits who counts. The “other person” must be “a natural person who is an owner, director, officer, or managing agent of the employer.” So the question is not just who owns the company, but whether this person violated, or caused the violation of, the listed rules.

In our reading, once the person is an owner, director, officer or managing agent, the useful evidence is about decisions: who set the pay practice, who refused final pay, who controlled payroll. An owner’s or officer’s text refusing to pay says more than a name on a state filing. “Managing agent” takes its meaning from Civil Code section 3294(b), so not every supervisor qualifies.

The Business Reopened Under a New Name

Labor Code section 200.3 makes “a successor to a judgment debtor” liable for wages, damages and penalties owed to the former workforce under a final judgment, once the time to appeal has expired with no appeal pending. Any one of four tests establishes successorship: substantially the same facilities or workforce offering substantially the same services; substantially the same owners or managers controlling labor relations; a managing agent who directly controlled the former workers’ wages, hours or working conditions; or the same industry with an owner, partner, officer or director who is an immediate family member of one at the old company. The first test does not apply to employers maintaining the same workforce under Chapter 4.5 of the Labor Code, beginning with section 1060. Other ways of proving successor liability remain available.

Labor Code section 238 adds pressure. If a final wage judgment for work performed in California stays unpaid 30 days after the time to appeal expires, with no appeal pending, the employer may not keep doing business in California without filing a surety bond with the Labor Commissioner for the benefit of unpaid employees. The employer may instead give the Labor Commissioner a notarized copy of a payment agreement with the judgment holder; a missed installment restores the bond requirement. A qualifying collective bargaining agreement can waive the bond. For this rule, a similar business that receives written notice of the judgment and meets the statute’s similarity tests is treated as the same employer.

In our reading, record the concrete facts: the address, services, familiar managers, coworkers who moved over and names on the new business’s filings, and how you know each.

FEHA Judgments: Alter Ego Is the Main Route to the Owner

FEHA has no provision on alter ego liability, so reaching an owner for harassment or discrimination damages usually means proving alter ego under the common law. In Villasenor v. Schneiter, No. B337209 (Cal. Ct. App. Oct. 26, 2026), the court restated the two requirements: a unity of interest and ownership so close that the company and owner are not really separate, and an inequitable result if the company alone were responsible. The employee must overcome a presumption that the company is separate. The court held that FEHA “does not alter” that presumption.

There, the trial court found the employee proved neither requirement against the owner and was not persuaded the judgment would go unpaid. The owner’s estimate of about $720,000 in liquid assets came when the judgment covered roughly $450,000 in damages, before about $1.05 million in fees and costs was added. The appellate court explained that the presumption still allows collection from an alter ego when an employee rebuts it. For a limited liability company, Corporations Code section 17703.04 applies the same common-law alter ego rules to members.

FEHA also makes an employee personally liable for harassment he or she commits, under Government Code section 12940(j)(3). That liability rests on the person’s harassment, rather than ownership; in Villasenor, the employee dismissed the supervisor after he obtained a bankruptcy discharge. Our case analysis of Villasenor explains the court’s reasoning.

What to Gather Before You Talk to a Lawyer

Bring the claim, award or judgment with each amount broken out; every defendant’s name; what you know about who made pay and personnel decisions; any evidence bearing on how the owner and company operated; and any signs of a successor business. If the question is how to enforce a judgment you already have against the company, our guide to collecting after an employer closes covers that next step.