Who Is Responsible When A Company Can’t Make Payroll?

According to federal law and under most state law as well, employers are required to meet certain standards as to when pay is due (relative to when the work was performed) as well as  how frequently pay is due. 

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Should employers fail to meet those standards, employees are legally entitled to 100% wages owed in all cases, and in some states/cases employees are due 200% of wages owed as a punitive and compensatory measure. Importantly, lost access to payroll funds (as is the case with some Silicon Valley Bank depositors) is not an available defense for most companies under existing wage laws, even if the company is not directly at fault.

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In fact, depending on the jurisdiction and applicable law, even investors like private equity funds and in some cases individual company officers and directors can potentially be held liable for illegally withholding wages, so the reach of these legal obligations can be quite broad.

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You can read more about wage laws and this analysis here.