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.