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Is an Executive Protected by a Corporate Veil?

Is an Executive Protected by a Corporate Veil?

People think they are protected personally by the corporate veil when it comes to anything they do on the job, but that's not the case.

The corporate veil does not shield an individual from personal liability for actions based on their own conduct while performing their job.

For instance, unhappy employees have a long list of possible claims against an employer. Depending upon the state law involved or the federal law they may choose, employees can bring claims that an employer discriminated based on age, race, national origin, sex, sexual orientation, or other listed factors. Executives, supervisors and human resource employees have been held personally liable on theories like failure to pay wages or overtime, failure to allow unpaid leave, failure to make pension contributions, wrongful termination, wrongful hiring, infliction of emotional distress, defamation, failure to deposit withholding taxes, and it is very worrisome to realize that certain individuals can be held personally liable on many of these and other types of potential claims.

The company may provide indemnity to its employees and agents.

If indemnity is not maximal, the executive could be left bearing substantial unindemnified costs and risks of loss.

The company may provide insurance of officers.

An executive should be familiar with the company's insurance coverage, and the Employment Practices Liability (EPL) Insurance may be more important than the Directors' and Officers' (D&O) insurance.

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