Wage & Hour Claims: Prevailing Employers Must Prove Bad Faith to Recover Fees
California Senate Bill 462, providing a prevailing employer may only recover attorneys’ fees if the court finds the wage claim was brought in bad faith, was recently signed into law.
But what does this mean for California employers?
The new bill is an amendment to California Labor Code Section 218.5, which generally states the prevailing party in a wage and hour claim may recover attorneys’ fees and costs, if requested on initiation of the action. Under the former code, an employer who prevailed in a claim for unpaid overtime, wages, meal and rest break penalties, etc. could request the recovery of attorneys’ fees and court costs against the employee.
But under SB 462, it will no longer be enough for an employer to be the “prevailing party” (i.e., win the case). If a company wants to recover its defense costs, the employer must prove the employee or agency making a wage and hour claim did so in bad faith – proving an intention to defraud or deceive.
Lessons for Employers
As we’ve long been telling our employer clients: An ounce of prevention is worth a pound of cure.
- Minimize Employee Claims – Properly pay all wages, overtime, commissions and benefits on a timely basis, and provide all required meal and rest breaks, in compliance with California Labor Code.
- Document – Keep accurate records. If an employee complains of short pay, missed breaks or makes another wage and hour claim, you should have complete and accurate records confirming whether the claim has merit or not.
- Communicate with Employees – Because of SB 462, it is now more important than ever to ensure your employees understand how and when they are to be paid earned wages and other amounts.
If you have any questions, please feel free to contact me. I highly recommend all employers to take proactive steps to minimize the risk of wage and hour claims before they occur.