Management and shareholders would not be personally on the hook for missed payroll in the event of insolvency.
If all the cash evaporated from my company's account, we were forced to declare bankruptcy, that's pretty much game over. The employees would be among other creditors figuring out their turn to pick over the remains. The employees may end up near the top of the list, but they wouldn't get to hold the C-Suite or shareholders accountable on a personal level.
They're contractually obligated to pay their employees, but that contractual obligation rolls up to the company level, not the people who run or own it.
I don't which other states may do this, but in Cali Labor Code Section 558.1 - company managers and owners are personally liable for missed wages. It is a codified approach to piercing the corporate veil. I learned this well when we had a single digit bank account and were waiting on funding to get wired in as payroll was coming due.
Ahh I wasn't aware of this - wow. Thanks for informing me. Can't imagine the stress some of these depositors must be under with that added personal liability on top.
If all the cash evaporated from my company's account, we were forced to declare bankruptcy, that's pretty much game over. The employees would be among other creditors figuring out their turn to pick over the remains. The employees may end up near the top of the list, but they wouldn't get to hold the C-Suite or shareholders accountable on a personal level.
They're contractually obligated to pay their employees, but that contractual obligation rolls up to the company level, not the people who run or own it.