Looks like the Fair Labor Standards Act at the federal level and there are also state-by-state statutes which add variety.

With the disclaimer that I am not the expert we all hoped would show up to explain, I think the intent is to provide statutes to back up the social contract around wages. Any inkling of the possibility that an employer can wiggle out of paying wages it promised to pay is going to have an outsized effect on an employee’s trust. And businesses do not want (and in the case of a small business or startup cannot) to pay wages up front. Incentivizing a business to lay people off rather than promising them wages that may or may actually appear actually seems like an okay outcome in the degenerate case since the employee has various rights and protections that are triggered by a layoff while unpaid wages could pile up endlessly until the employee initiates action themselves.

Atempa v. Pedrazzani is what you want to Google for.

"Rejecting Pedrazzani’s argument, the Court of Appeal relied on language of the applicable California statutes: Cal. Labor Code § 558 (West 2018) and Cal. Labor Code § 1197.1 (West 2018). Section 558(a) subjects “[a]ny employer or other person acting on behalf of an employer” to civil penalties for overtime violations. Similarly, section 1197.1(a) subjects “[a]ny employer or other person acting either individually or as an officer, agent, or employee of another person” to civil penalties for minimum wage violations. The Court of Appeal held that Pedrazzani was responsible as an “other person” who caused the overtime pay and minimum wage violations."

An interesting writeup of a case related to this has some info [1]. Key points are the quotes about half-way through the article.

[1] https://www.severino-law.com/blog/oqz4dx2ivdnzt7aqqrvbk9et11...

ianal but this is pretty well known in my experience. If you are the management of an employer and you mess around with wages owed (payroll for work done in the past) and taxes (including payroll tax withheld) then you are personally in deep shit. Here's an article on the subject in the context of California: https://www.melmedlaw.com/guide-on-unpaid-wages-in-californi...

I had to look into it as well, believe it falls under [1] "undercapitalization"

More specifically [2]

EDIT: I am not a lawyer not legal advice

[1]: https://www.law.cornell.edu/wex/piercing_the_corporate_veil [2]: https://www.investopedia.com/terms/u/undercapitalization.asp

Also curious hearing from an expert on this one way or the other. Took the Tweet at face value without actually being able to confirm under what circumstances that would be true.