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Existing California law (Labor Code §218.5), provides that in any action brought to recover unpaid wages, fringe benefits, or pension fund contributions, the prevailing party (employer or employee) “shall be awarded” (must) reasonable costs and attorneys’ fees.
Effective January 1, 2014, SB 462 amends California Labor Code §218.5 to provide that an employer will only be entitled to an award of attorneys fees and costs in an unpaid wage claim if the Court finds the employee brought the action “in bad faith”– that the employee’s claims were frivolous, or brought solely for an improper purpose (e.g. to embarrass or harass the employer). Thus, if an employee files a lawsuit to recover unpaid wages, and the Court rules in favor of the employee, the employee will be entitled to an award not only of the back owed wages, but also his or her attorneys fees and costs if requested in the initial pleadings. Conversely, if the Court finds in favor of the employer, the employee will not be required to pay the employer’s attorneys fees and costs, unless the Court finds that the employee’s claims were made in “bad faith.”
It should be noted that California Labor Code §218.5 does not apply to either minimum wage, or overtime, claims which are governed by California Labor Code §1194. California Labor Code §1194, already provides that an award of attorney’s fees and costs can only be granted if the employee is the prevailing party on a minimum wage, and/or overtime claim. Existing law already prohibits the court from awarding attorney’s fees and costs to a prevailing employer on minimum wage and overtime claims.
Practically speaking, the new law will make it extremely difficult for a California employer to recover attorney’s fees even if they prevail at trial.
Posted In: Employment Law News
Blog Categories:Business Law Bulletin
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Disclaimer: The information presented on this web site was prepared by Melissa C. Marsh for general informational purposes only and does not constitute legal advice. The information provided in my articles and alerts should not be relied upon, or used as a substitute for professional legal advice from an attorney you retain to advise or represent you. Your use of this Internet site does not create an attorney- client relationship. Transmission of this article is not intended to create, and receipt of it does not constitute, an attorney-client relationship. All uses of the contents of this site, other than personal uses, are prohibited. You may print or email a copy of any information posted on this web site for your own personal, non-commercial, use, but you may not publish any of the articles or posts on this web site without the Express Written Permission of Melissa C. Marsh.
Located in Los Angeles, California, the Law Office of Melissa C. Marsh handles business law and corporation law matters as a lawyer for clients throughout Los Angeles including Burbank, Sherman Oaks, Studio City, Valley Village, North Hollywood, Woodland Hills, Hollywood, West LA as well as Riverside County, San Fernando, Ventura County, and Santa Clarita. Attorney Melissa C. Marsh has considerable experience handling business matters both nationally and internationally. We routinely assist our clients with incorporation, forming a California corporation, forming a California llc, partnership, annual minutes, shareholder meetings, director meetings, getting a taxpayer ID number (EIN), buying a business, selling a business, commercial lease review, employee disputes, independent contractors, construction, and personal matters such as preparing a will, living trust, power of attorney, health care directive, and more.