196 P.3d 959 | Nev. | 2008
Lead Opinion
By the Court,
The United States Court of Appeals for the Ninth Circuit has certified, under NRAP 5, the following question to this court: “[c]an individual managers be held liable as employers for unpaid wages under Chapter 608 of the Nevada Revised Statutes?” We answer the question in the negative and conclude that individual managers cannot be held personally liable for unpaid wages under NRS Chapter 608.
FACTS AND PROCEDURAL HISTORY
Appellants Thelma Boucher, Ardith Ballard, and Joseph W. Kennedy, III, are former employees of The Castaways Hotel, Casino and Bowling Center. In June 2003, Castaways filed for Chapter 11 bankruptcy protection. Six months later, Castaways discharged appellants; it ceased its operations soon thereafter. Appellants now seek to recover unpaid wages for themselves and for a class of former Castaways employees under NRS Chapter 608.
Respondents Dan Shaw, Michael Villamor, and James Van Woerkom are former high-level managers at Castaways. Shaw was Castaways’ Chairman and CEO at the time that appellants were discharged, Villamor was responsible for handling Castaways’ labor and employment matters, and Van Woerkom was Castaways’ CFO. Both Shaw and Villamor were also members of Castways’ parent
After Castaways ceased operations, appellants filed suit in state court, alleging that respondents, as employers, were personally liable for their unpaid wages under NRS Chapter 608. Respondents removed the case to federal district court and filed a motion to dismiss. The court granted the motion, concluding that respondents were not employers under NRS Chapter 608. Appellants then appealed to the United States Court of Appeals for the Ninth Circuit. The Ninth Circuit certified to this court the question of whether individual managers, such as respondents, could be personally liable as employers under NRS Chapter 608. We accepted the Ninth Circuit’s certified question pursuant to NRAP 5.
DISCUSSION
NRS Chapter 608 governs employment compensation, wages, and hours, making “employers” responsible for paying employee wages.
“Employers” under NRS Chapter 608
Appellants contend that individual managers may be held personally liable for unpaid wages under Nevada’s wage and hour laws. Specifically, they argue that the NRS Chapter 608 definition of “employer” extends beyond common law employers to include individual managers. For the following reasons, however, we disagree.
Under NRS 608.011, an “ ‘[e]mployer’ includes every person having control or custody of any employment, place of employment
By contrast, respondents argue that holding managers personally liable for unpaid wages would amount to a radical, and unintended, departure from the common law rule that an agent cannot be held jointly and severally liable for the debts of a principal when the identity of the principal is disclosed.
NRS 608.011 offers no guidance as to who qualifies as a “person” or what constitutes “control or custody” in the employment context, and both parties offer reasonable interpretations regarding the scope of this provision. Because we conclude that NRS 608.Oil’s definition of employer is ambiguous with respect to whether it includes individual managers, below we turn to principles of statutory construction to determine its meaning.
Statutory construction
When a statute’s language is ambiguous, this court will exact the meaning of the words used in the statute by ‘ ‘ ‘examining the context and the spirit of the law or the causes which induced the [Legislature to enact it.’ ”
Legislative intent
The current NRS 608.011 definition of an employer is the product of several legislative amendments enacted in 1985. While NRS 608.011 currently describes “employer” in terms of “persons” with control or custody, before 1985, an employer was defined as “every person, firm, corporation, partnership, stock association, agent, manager, representative or other person having control or custody of any employment, place of employment or any employee.”
Generally, when the Legislature substantially amends a statute, we presume intent to change the law.
Leonard v. McMorris
Although no legislative history exists as to the Legislature’s intent in this regard,
Colorado’s wage and hour statutes define “employer” as “every person, firm, partnership, association, [or] corporation . . . and any agent or officer thereof . . . employing any person [within the state].”
In the Colorado Supreme Court’s view, had the Colorado Legislature intended to provide for the individual liability of corporate officers or agents, it would have done so explicitly. Agreeing with this view, we conclude that had the Nevada Legislature intended to
This interpretation of NRS 608.011 closely accords with longstanding principles of corporate law. Generally, a corporate officer is not considered the employer responsible for creating the contractual employment relationship and is not personally liable for a breach of that relationship.
In sum, NRS 608.011 does not contain specific language that extends personal liability to individual managers. In addition, neither before, during, nor after the 1985 revisions has the Legislature clearly provided that those revisions were intended to pierce the corporate veil and extend personal liability to individual managers.
In arguing that the Legislature intended to hold individual managers personally liable for employees’ unpaid wages, appellants direct this court to NRS Chapter 608’s administrative and criminal penalties statutes.
In Butler v. Hartford Technical Institute, the Connecticut Supreme Court concluded that corporate officers could be held individually liable for unpaid wages under Connecticut’s statutory definition of employer.
Since the Butler court did not reconcile this reasoning with the corporate veil doctrine that insulates corporate officers and agents from personal liability, we find Butler unpersuasive. In our view, absent a clear statement of legislative intent, we cannot conclude that the Legislature intended to disregard the corporate veil as to individual managers, which would be a significant departure from well-settled principles of corporate law. We therefore reject the proposition that an individual manager’s potential criminal and administrative liability necessarily means that the individual manager can be held personally liable for the unpaid wages under Nevada’s wage and hour laws.
The definition of “employer” under NRS 608.011 is ambiguous. Interpreting this provision, we conclude that NRS 608.011 was not designed to extend personal liability to individual managers of corporations in derogation of existing Nevada corporate law. Accordingly, since individual managers cannot be held liable as employers for unpaid wages under NRS Chapter 608, we answer the Ninth Circuit’s question in the negative.
Appellants also asserted Fair Labor Standards Act claims under 29 U.S.C. § 206(a) (2000); however, those federal claims are not at issue here.
Respondents acknowledged that VSS Enterprises LLC was doing business as Castaways.
See, e.g., NRS 608.016; NRS 608.018; NRS 608.040(1); NRS 608.050.
As an initial matter, respondents contend that the Ninth Circuit’s certified question is ambiguous because the term “individual manager” could relate to management-level employees or to statutory “managers” of a limited liability company, since both Shaw and Villamor serve as statutory managers of VSS Enterprises LLC. Since, however, NRS 86.371 makes clear that statutory managers of an LLC cannot be held individually liable for the debts of the LLC, the question before this court relates to management-level employees only.
See Metropolitan Water Dist. v. Superior Court, 84 P.3d 966, 971 (Cal. 2004); Seigworth v. State, 91 Nev. 536, 539, 539 P.2d 464, 466 (1975).
See Seigworth, 91 Nev. at 539, 539 P.2d at 466 (“Unless otherwise agreed, a person making or purporting to make a contract with another as agent for a disclosed principal does not become a party to the contract.”).
See Leven v. Frey, 123 Nev. 399, 404, 168 P.3d 712, 716 (2007) (explaining that a statute is ambiguous when it is capable of more than one reasonable interpretation).
Id. at 405, 168 P.3d at 716 (quoting McKay v. Bd. of Supervisors, 102 Nev. 644, 650-51, 730 P.2d 438, 443 (1986) (citation omitted)).
Id. (quoting McKay, 102 Nev. at 651, 730 P.2d at 443) (citation omitted)).
1985 Nev. Stat., ch. 152, § 10, at 578 (emphasis added).
Public Employees’ Benefits Prog. v. LVMPD, 124 Nev. 138, 156-57, 179 P.3d 542, 554 (2008).
See Hearing on A.B. 127 Before the Assembly Labor & Management Comm., 63d Leg. (Nev., Feb. 18, 1985); Hearing on A.B. 200 Before the Senate Judiciary Comm., 63d Leg. (Nev., Mar. 26, 1985).
63 P.3d 323 (2003).
Id. at 325.
See id. at 333.
Colo. Rev. Stat. § 8-4-101(5) (2008).
820 Ill. Comp. Stat. Ann. 115/13 (2008) (emphases added).
Ill. Admin. Code tit. 56, § 300.620 (2008) (emphasis added).
Kan. Stat. Ann. § 44-323(b) (2000) (statute amended in 2003 and now reads somewhat differently) (emphases added).
Leonard, 63 P.3d at 327 (explaining that, unlike the Illinois and Kansas provisions, “Colorado’s Wage Claim Act does not contain language directly addressing the issue of corporate officer and agent personal liability for paying earned but unpaid wages”).
Id.
See Matter of Estate of Prestie, 122 Nev. 807, 814, 138 P.3d 520, 524 (2006) (recognizing the general rule of statutory construction that when one thing is mentioned, the exclusion of another is implied).
See William E. Knepper & Dan A. Bailey, Liability of Corporate Officers and Directors § 6.01 (7th ed. 2006).
NRS 78.747 (emphasis added).
Leonard, 63 P.3d at 333.
Cf. id. at 327-33.
In support of their argument, appellants suggest that we utilize the “economic realities” test to determine respondents’ status as an employer. See Lambert v. Ackerley, 180 E3d 997, 1012 (9th Cir. 1999) (“where an individual exercises control over the nature and structure of the employment relationship, or economic control over the relationship, that individual is an employer within the meaning of the [Fair Labor Standards Act (FLSA)], and is subject to liability.” (quotations and citation omitted)). We decline to do so, however, since individual managers cannot be held personally liable under
NRS 608.195 (“any person who violates any provision ... is guilty of a misdemeanor” and, in addition, “the Labor Commissioner may impose against the person an administrative penalty”); NRS 608.290 (same).
704 A.2d 222, 225 (1997); see also Conn. Gen. Stat. § 31-71a (2008) (defining employer as “any individual, partnership, association, joint stock company, trust, corporation . . . employing any person”).
See Butler, 704 A.2d at 223-24.
See id. at 226-27; see also Conn. Gen. Stat. § 31-71g (2008) (stating that “any officer or agent of an employer or any other person authorized by an employer” is subject to criminal liability).
Concurrence Opinion
concurring:
I concur with the result reached by the majority.