Protecting Board Members from Personal Liability: A Landmark $3M Supreme Court Win

October 14, 2022
By: Christopher Davis

Chesapeake, VA — October 14, 2022 —Davis, Burch & Abrams achieved a landmark victory before the Supreme Court of Virginia, which unanimously affirmed the firm’s successful defense of a Virginia Beach business consultant in a multimillion-dollar wage dispute brought under Virginia Code § 40.1-29.

The plaintiffs sought more than $3 million in alleged unpaid wages and commissions, arguing that two former board members of Christian Psychotherapy Services should be held personally liable as “employers.” After prevailing in the circuit court, Davis, Burch & Abrams successfully defended the judgment on appeal, with the Supreme Court affirming that individual board members are not “employers” under the statute.

In its published decision, Cornell v. Benedict, the Court held that Code § 40.1-29(J) employs a narrower definition of “employer” than the federal Fair Labor Standards Act and excludes individuals from joint liability for company wage obligations. Writing for a unanimous Court, Chief Justice S. Bernard Goodwyn explained that the General Assembly’s use of the term “entity” rather than “person” reflects a deliberate legislative choice to limit liability to business organizations, not natural persons.

“This ruling represents a resounding success for our client and for the clarity of Virginia employment law,” said Christopher Davis, managing partner at Davis, Burch & Abrams, who argued the appeal before the Supreme Court. “The Court’s decision protects Virginia businesses and their leadership from overreaching interpretations that could have imposed personal liability on directors and managers for corporate payroll decisions.”

The decision in Cornell v. Benedict (VLW 022-6-046) is now the leading authority on the definition of “employer” under Virginia’s Wage Payment Act, providing important guidance for employers, boards, and legal practitioners across the Commonwealth.