When a company folds without paying its employees their due wages, can managers be held personally accountable?

That’s what the courts are attempting to determine in a case involving three execs of the now-defunct Castaways Hotel, Casino and Bowling Center.

Here’s what happened:

After Castaways Hotel, Casino and Bowling Center filed for Chapter 11 bankruptcy, three former workers personally sued three Castaways managers (the chairman and CEO, the CFO and a third manager) for unpaid wages.

The three former employees filed a class action lawsuit on behalf of all Castaways’ employees who weren’t paid due wages under state and federal law.

A Federal Court of Appeals ruled that the managers did fit the FLSA definition of “employer” and, under that definition, they are required to pay the employees  their due wages.

The case has been remanded to a trial court for further proceedings. We’ll keep you posted on the outcome.

Tags: Bankruptcy, Casino and Bowling Center, Castaways Hotel, Personally Liable, unpaid wages