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Amendment to the Labor Code Makes it Harder for Employers to Get Attorney’s Fees if They Prevail in an Unpaid Wage or Benefit Claim

Posted in Labor Law, Wage & Hour

By: Lizbeth V. West, Esq.

Governor Brown signed Senate Bill (SB) 462 which places restrictions on an employer’s ability to recoup attorney’s fees when it prevails in an unpaid wage or benefit claim.

Labor Code section 218.5 previously provided that except in certain circumstances, in an action brought for the nonpayment of wages, fringe benefits, or health and welfare or pension fund contributions, a court was to award reasonable attorney’s fees and costs to the prevailing party if any party to the action requests attorney’s fees and costs upon the initiation of the action. SB 462 amends section 218.5 to provide that where the prevailing party is the employer, attorney’s fees and costs can only be awarded if the court finds the employee brought the wage and hour action in bad faith.

Section 218.5 of the Labor Code will now read:

“218.5. (a) In any action brought for the nonpayment of wages, fringe benefits, or health and welfare or pension fund contributions, the court shall award reasonable attorney’s fees and costs to the prevailing party if any party to the action requests attorney’s fees and costs upon the initiation of the action. However, if the prevailing party in the court action is not an employee, attorney’s fees and costs shall be awarded pursuant to this section only if the court finds that the employee brought the court action in bad faith. [emphasis added] This section shall not apply to an action brought by the Labor Commissioner. This section shall not apply to a surety issuing a bond pursuant to Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code or to an action to enforce a mechanics lien brought under Chapter 4 (commencing with Section 8400) of Title 2 of Part 6 of Division 4 of the Civil Code.

(b) This section does not apply to any cause of action for which attorney’s fees are recoverable under Section 1194.”