Attorney's fees will be more difficult to recover in California wage disputes

By CMTA Staff

Capitol Update, Aug. 29, 2013

This week, Governor Brown signed SB 462 (William Monning, D-Carmel) making it more difficult for a prevailing employer to recover attorney's fees for certain wage and benefit claims. 

Currently, attorney's fees may be provided to the prevailing party in any wage or benefit actions, except for minimum wage and overtime claims, whether that party is the employer or the employee.  This two-way attorney's fee shifting provision has been in statute since 1986 and was recently affirmed by the state Supreme Court in Kirby v. Immoos Fire Protection, 53 Cal.4th 1244 (2012).

With the adoption of SB 462, an employer may only obtain its attorney's fees if he or she can prove that the action was brought in bad faith by the employee.  "Bad faith" is a difficult standard to prove and will substantially limit an employer’s ability to recover these costs when defending meritless litigation.  Consequently, this retreat from the current standard could incentivize more frivolous wage and hour litigation.

SB 462 was opposed by a large, diverse group of business organizations, including CMTA, and was supported by organized labor and sponsored by the California Employment Lawyers Association.

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