The tort of “conversion” is in essence a civil claim for “stealing.” Over the years, many a plaintiff’s counsel has tried to claim that unpaid wages are “converted” – stolen – by the employer, so that the tort of conversion is available. But why, Greggy, why? After all, there’s the Labor Code, and PAGA, and all those other penalties! Sure, but if the plaintiff can prove “conversion,” she can pursue compensatory damages, like for emotional distress, and maybe even punitive damages. Oh, that’s why!
Well, the California Supreme Court finally has weighed in on the subject, in a 5-2 ruling, styled Voris v. Lampert, opinion (here). The Court decided that there is no tort of conversion available for unpaid wage claims, for which there are many other available remedies, as everyone knows.
As background, Voris worked on a number of start-up businesses with Lampert. But Voris claimed many of the new businesses did not pay him, and sued a number of the entities for breach of contract, and statutory unpaid wages claims. But Voris had trouble collecting from the employers themselves, because these companies had gone out of business. So, Voris sued Lampert, personally, hoping to recover damages for conversion. I have spared you a long procedural and appellate history, which you can review in the opinion.
Some of you may wonder, hey, why isn’t an employer’s failure to pay an employee’s wages the same as stealing or conversion? Well, the Court explained that in some detail. Mainly, the employment relationship is contractual, and the obligation to pay wages is a debt. The employer’s failure to pay the wages is a breach of the contractual relationship, for which contract remedies are available, as well as the Labor Code’s many statutory remedies. In addition, the Court explained what the tort of “conversion” is about and how it originated. It usually means that a party has a specific item or sum that it refuses to give to the rightful owner. Wages are not really in that category, as the court explained.
The employee’s claim is not that the employer has wrongfully exercised dominion over a specifically identifiable pot of money that already belongs to the employee—in other words, the sort of wrong that conversion is designed to remedy. ***
the employee’s claim is that the employer failed to reach into its own funds to satisfy its debt. Indeed, in some cases of wage nonpayment, the monies out of which employees would be paid may never have existed in the first place. Take, for example, a failed start-up that generates no income and thus finds itself unable to pay its employees. Because the business accounts are empty, there would not be any identifiable monies for the employer to convert.
Besides shutting the door on conversion claims, this case is an excellent resource for those of you needing a list of all the various ways that employees may enforce their right to unpaid wages. Discussing why a conversion claim is completely unnecessary, the Court goes on for pages explaining the many causes of action, civil and criminal remedies, expanded liability theories, and forums employees have to assert wage and hour claims.
Again, this is Voris v. Lampert and the opinion is here.