Another frivolous litigation deterrent bill defeated

By CMTA Staff

Capitol Update, May 9, 2014

AB 2095 (Don Wagner, R-Irvine) was defeated this week in the Assembly Judiciary Committee after having passed out of the Assembly Labor Committee last month with bipartisan support. The measure would have discouraged frivolous lawsuits pertaining to alleged technical violations of itemized wage statements by awarding attorney’s fees to employers that can prove the litigation was filed in bad faith.

California Labor Code Section 226 sets forth the information that an employer must include on an itemized wage statement. Recently, there has been a growing trend by plaintiff’s attorneys to initiate lawsuits against employers for technical violations that result in no actual harm or injury to the employee. AB 2095 sought to incentivize the enforcement of legitimate claims by allowing not only the prevailing employee to recover costs and reasonable attorney's fees from the employer, but also authorizing the employer to collect reasonable attorney's fees and costs from the employee when the employer is the prevailing party and the court subsequently determines that the claim was brought in "bad faith," a tough legal standard to prove.

According to Assembly Member Wagner, while Labor Code Section 226 was enacted in order to make sure employees were properly notified of who their employer is, their wage rates, and their total compensation for each pay period, the lawsuits being filed allege violations that have nothing to do with employer identification or the payment of wages.

AB 2095 was supported by CMTA and a large coalition of business organizations. However, having been persuaded by the opponent's concern that such a change in the law would discourage disenfranchised employees from bringing potentially valid claims, the measure was defeated on a three to four vote with three members of the committee abstaining.

Read more Labor & Employment articles

Capitol updates archive 989898989