You can sue an individual inside a corporation when that person’s own conduct, not just the company’s, gives you a legal claim against them. Suing an individual in a corporation generally works in four situations: the person personally committed a wrongful act that harmed you, an owner abused the corporate form enough to justify piercing the corporate veil, a director or officer breached a fiduciary duty, or a statute (such as federal wage law) imposes liability on individuals who control pay or operations. Each route has its own proof requirements, and the right one depends on who the person is and what they did.
When the Person Personally Caused the Harm
The corporate shield was never designed to let someone escape responsibility for their own wrongful acts. If an identifiable person committed the conduct that injured you, you can sue that person directly, whether or not they were working at the time.
Negligence and Intentional Acts
A delivery driver who runs a red light and hits your car can be sued personally for the damage, even though they were on the job. You can also sue the corporation under respondeat superior, which holds employers responsible for harm caused by employees acting within the scope of their work.1Legal Information Institute. Respondeat Superior The two claims are not mutually exclusive, and plaintiffs routinely name both the individual and the corporation as defendants so the court has flexibility when assigning damages.
Fraud
Fraud follows the same logic. If a corporate officer personally made false statements that induced you to sign a contract or hand over money, you can sue that officer individually. The corporation did not lie to you; a person did. Their title does not erase personal responsibility for their own misrepresentations.
Professional Malpractice
Licensed professionals face a clear rule: incorporating a practice does not shield them from malpractice. A doctor who commits surgical errors, a lawyer who misses a filing deadline, or an accountant who botches a tax return can all be sued personally for professional negligence, even if they practice through a professional corporation or LLC. The entity may protect them from unrelated business liabilities like vendor invoices or lease disputes, but it does not absorb responsibility for their professional conduct.
Personal Liability for Unpaid Wages Under the FLSA
Federal wage law creates an unusual form of individual liability that catches many corporate officers off guard. The Fair Labor Standards Act defines “employer” to include any person who acts directly or indirectly in the interest of an employer.2Office of the Law Revision Counsel. 29 U.S. Code 203 – Definitions Courts read this broadly. A corporate officer who controls hiring, sets schedules, or decides how employees get paid can be personally liable for unpaid wages and overtime.
The exposure is serious. An employee can recover unpaid wages plus an equal amount in liquidated damages, and the court will award reasonable attorney’s fees on top of that.3Office of the Law Revision Counsel. 29 U.S. Code 216 – Penalties A private agreement between employer and employee that ignores overtime is no defense. If wages were owed, the individuals who controlled the pay decisions can be made to pay them.
Piercing the Corporate Veil
When an owner treats the corporation as a personal piggy bank rather than a separate entity, a court can tear down the legal wall between the company and its owner and hold the owner personally liable for corporate debts. This remedy, called piercing the corporate veil, is deliberately hard to win. Courts reserve it for situations where the corporate structure was misused to commit fraud or where respecting the separation would produce a deeply unfair result.
To pierce the veil, you generally need to prove two things: that the owner and the corporation were so intertwined they were practically the same, and that enforcing the corporate separation would sanction fraud or injustice.4Legal Information Institute. Piercing the Corporate Veil Courts weigh a cluster of factors:
- Commingling of funds, such as paying personal bills from the corporate account or routing corporate revenue through personal accounts.
- Ignoring corporate formalities, including the absence of board meetings, minutes, or documentation of major decisions.
- Undercapitalization, meaning the corporation was set up without enough money to realistically cover its obligations.
- Owner dominance, where one person controlled every aspect of the corporation so completely that it had no independent existence.
No single factor usually carries the day. Courts look at the overall picture, and the combination matters more than any individual item.4Legal Information Institute. Piercing the Corporate Veil A thinly funded corporation that otherwise operated properly is harder to pierce than one where the owner ran it like a personal checking account while skipping every governance requirement.
LLCs
Veil piercing applies to LLCs as well as corporations, but the analysis is slightly different. LLCs are allowed to operate more informally, so courts do not expect the same level of governance paperwork. The core question is still whether the owner treated the entity as genuinely separate. A single-member LLC faces heightened scrutiny because there is no second owner acting as a check. A sole member who pays a mortgage directly from the business account, or draws money out in amounts timed to personal bills, gives an opposing attorney the raw material for a commingling argument.
Suing Directors and Officers for Breach of Fiduciary Duty
Directors and officers owe fiduciary duties to the corporation and its shareholders. These obligations go beyond following the law. When a director breaches them, shareholders can pursue personal liability.5Legal Information Institute. Fiduciary Duty
Duty of Care
The duty of care requires directors to make informed decisions with the diligence a reasonably careful person would use in a similar position. A director who rubber-stamps a major acquisition without reading the financials, or who skips every board meeting and later pleads ignorance, has likely breached this duty. The standard is not perfection. Directors are allowed to make bad business calls. The question is whether they did their homework first.
Duty of Loyalty
The duty of loyalty requires directors to put the corporation’s interests ahead of their own. Self-dealing is the classic violation: a director who steers a lucrative contract to a company they secretly own, or who takes a business opportunity that belonged to the corporation. When a director personally profits at the company’s expense, shareholders can sue to recover those losses. Full disclosure and board approval of any conflict is how directors stay on the right side of this duty.
Good Faith
Some courts treat good faith as its own duty; others fold it into loyalty. Either way, it prohibits directors from acting with conscious disregard for their responsibilities. A director who knowingly allows the company to violate the law, or who intentionally fails to put any compliance system in place, is not merely careless but acting in bad faith.
The Business Judgment Rule
Any lawsuit against a director will run straight into the business judgment rule, the strongest shield directors have. Under this doctrine, courts presume directors acted in good faith, with reasonable care, and in the corporation’s best interests. A court will not second-guess a business decision just because it turned out poorly.6Legal Information Institute. Business Judgment Rule
The burden is on the plaintiff to overcome that presumption. You have to show the director acted with gross negligence, in bad faith, or with a conflict of interest.6Legal Information Institute. Business Judgment Rule Many fiduciary duty claims fail here. A director who can show they reviewed relevant information, had no personal stake, and genuinely believed they were acting in the company’s best interest is protected even when the outcome was a disaster. You need evidence of either self-dealing or a decision-making process so reckless no reasonable director would have followed it.
Direct Claims vs. Derivative Claims
Before suing a director or officer, figure out whether the claim belongs to you or to the corporation. The distinction changes how the case is filed and who collects any recovery.
A direct claim is one where the misconduct injured you specifically as a shareholder, separate from any harm to the company. If the board refused to pay declared dividends to certain shareholders, those shareholders have a direct claim because the injury is personal to them.
A derivative claim is one where the corporation itself was harmed and you are stepping in on its behalf because the board will not act. If a director embezzled corporate funds, the corporation is the injured party. You bring the suit derivatively, and any recovery goes to the corporation rather than to you.
Derivative suits carry extra procedural hurdles. You must make a written demand on the board asking them to pursue the claim themselves and wait 90 days for a response. You can skip that step only if the demand would be futile, such as when the directors you would be asking to sue are the same ones you are accusing.7Legal Information Institute. Shareholder Derivative Suit Expect the board to challenge your right to bring the suit at all.
Identifying and Naming the Right Person
You need the individual’s full legal name and role, and you need to name them in their personal (or individual) capacity rather than their official capacity. Suing someone in their official capacity is really just suing the corporation through them. Suing them in their individual capacity targets their own assets.
Every state maintains a Secretary of State database where corporations and LLCs file formation documents, annual reports, and registered agent information. These records are typically searchable online for free or a nominal fee, and they list officers, directors, and the registered agent designated to accept legal papers. For deeper detail, you can request certified copies of corporate documents, which typically cost between a few dollars and around $50 depending on the state. In many cases you will not have the full picture of who controlled day-to-day operations until discovery gives you access to internal records.
Evidence You Will Need
The proof you need depends entirely on which theory you are pursuing. Lining up the right evidence before filing saves you from chasing a claim you cannot support.
For Veil Piercing
- Bank records showing personal expenses paid from corporate accounts, or corporate income deposited into personal accounts.
- Missing or nonexistent governance records: no meeting minutes, no resolutions, no documentation of corporate decisions.
- Formation and capitalization records showing the corporation was set up with little or no funding.
- Financial statements showing the entity was used to funnel money for personal benefit or shelter assets from creditors.
For Individual Tort Claims
For negligence claims like vehicle accidents: police reports, photos, medical records, and witness contact information. For fraud: the contracts or communications containing the misrepresentations, plus emails or documents that reveal deceptive intent. The key is tying the harmful conduct to the individual, not just the corporation.
For Fiduciary Duty Breaches
- Board minutes and resolutions showing what information directors reviewed and how they reached a decision.
- Internal communications, especially emails that discuss personal financial interests in a transaction.
- Financial records linking a director’s personal benefit to a corporate decision, such as payments to a director-owned company.
- The transaction documents themselves and any conflict-of-interest disclosures the director filed or failed to file.
You will not have most of these documents before filing. Formal discovery is where veil-piercing and fiduciary breach cases are often won or lost, because that is when the financial records and internal communications finally come to light.
Filing Deadlines
Every claim has a statute of limitations, and missing it kills the case no matter how strong the evidence. Deadlines vary by state and by claim type. Negligence claims typically carry a two- to three-year window from the date of injury. Fraud claims often allow four to six years, and many states apply a discovery rule that starts the clock when you discovered or reasonably should have discovered the fraud. Breach of fiduciary duty claims borrow their deadline from whatever underlying theory the claim rests on, whether fraud, breach of contract, or negligence.
For wage claims under the FLSA, the deadline is two years from the violation, or three years if the violation was willful. These timelines are unforgiving. If you suspect an individual inside a corporation may be personally liable to you, consult an attorney early rather than waiting to see whether the situation resolves itself.
Actually Collecting From an Individual
Winning a judgment against a person and collecting the money are two different problems. A judgment creditor has access to enforcement tools like wage garnishment, bank account levies, and property liens, but individuals have asset protections that vary by state. Primary residences, retirement accounts, and certain personal property may be partially or fully exempt. Post-judgment discovery lets you investigate what the defendant actually owns, but if their personal wealth is limited, even a successful lawsuit may not yield full payment.
Directors and officers of larger corporations often carry directors and officers (D&O) insurance. When it exists, this coverage may fund settlements and judgments, which can make personal liability claims against directors easier to collect than claims against uninsured individuals. D&O policies typically exclude coverage for fraud, intentional misconduct, and disgorgement of personal profits. Corporate indemnification provisions in a charter or bylaws may cover a director’s legal costs and duty-of-care liability, but indemnification is only as good as the corporation’s ability to pay. An insolvent company cannot indemnify anyone.