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Employers Catch a Break on Attorneys’ Fees

Author: Orlando Arellano

June 9, 2020 9:00am

One characteristic of employment law that employers understandably feel is unfair are one-way attorney’s fees provisions.  They only allow a Plaintiff to recover his or her attorney’s fees should they prevail on certain claims.  Although there are some two-way attorney’s fees provisions, they often require more than just prevailing against a Plaintiff, but showing that Plaintiff acted in “bad faith” or that Plaintiff’s claim was “frivolous.”  Those are very difficult standards to meet.

Another attorney’s fee problem for employers is that even small Labor Code violations, some of which don’t even result in actual damages, can potentially be used to generate tens of thousands of dollars (or more) in attorney’s fees.

The result is that attorney’s fees are often the bane of employment law for employers – the tail wagging the dog.

However, case law has recently clarified, and thereby limited, the claims for which a plaintiff can obtain attorney’s fees.  Just recently, the Second Appellate District certified for publication Betancourt v. OS Restaurant Services, LLC (Cal. Ct. App., Apr. 30, 2020, No. B293625.  In Betancourt, the court held that although Labor Code section 218.5 permits a prevailing Plaintiff to recover his/her attorney’s fees if he prevails on a “wage claim,” that claims for meal and rest breaks are not “wage claims.”  The appellate court relied on the California Supreme Court’s decision in Kirby v. Immoos Fire Protection, Inc. (2012) 53 Cal.4th 1244, 1254, which held that neither Labor Code section 1194 (permitting a plaintiff to recover attorney’s fees for failure to pay minimum wage) or Labor Code section 226.7 permitted the recovery of attorney’s fees because meal and rest claims are not claims for minimum wages and are not claims for the nonpayment of wages.

Betancourt represents a growing body of caselaw that properly interprets these fee shifting statutes based on their own terms.  For example, in Ling v. P.F. Chang’s Bistro, Inc. (2016), the Sixth District Court of Appeal held that the failure to pay premium wages for meal and rest breaks not provided cannot establish a claim for “waiting time penalties” under Labor Code section 203 because meal and rest break claims are not “wage claims.”

Subsequently, in Naranjo v. Spectrum Security Services, Inc. (2019) 40 Cal.App.5th 444, the Second District Court of Appeal, agreeing with Ling, held that meal and rest break claims cannot establish a claim for “waiting time penalties.”  Naranjo also held that not providing meal and rest breaks claims cannot establish a derivative wage statement violation.  In rejecting the Plaintiff’s derivative wage statement theory based on the failure to pay premium wages for not providing breaks, the Naranjo court opined that “Section 226.7’s premium wage is a statutory remedy for an employer’s conduct, not an amount “earned” for “labor, work, or service … performed personally by the [employee].” (§ 200, subd. (b).).” Naranjo 40 Cal.App.5th at 474.

The takeaway for employers is that meal and rest break violations, while often costly on their own, are not a basis to recover attorney’s fees under Labor Code sections 218.5 or 1194, and do not create derivative violations for “waiting time penalties” under Labor Code section 203, or wage statements under Labor Code section 226.

Tyson & Mendes LLP has attorneys specializing in labor and employment law, including class action and PAGA litigation.  Please contact us if your company has questions about meal and rest break issues or any other employment related matter.

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