New Law 2014 – Labor Code 218.5 Is Now Effectively A One Way Attorney’s Fees Statute (SB 462)

Employee sues employer and wins.  Employee gets their attorneys’ fees in nearly all cases.

Employee sues employer and loses, i.e. gets zero.  Employer doesn’t get their attorney’s fees in nearly all cases.

One of lone exceptions to this uneven rule (as of 12/31/2013) used to be Labor Code section 218.5.  Labor Code section 218.5 used to say in actions for nonpayment of wages “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.”  This had been interpreted to mean that if the employer defended the action for nonpayment of wages (including for penalties for rest/meal period violations under Labor Code 226.7) that the employer could recovery its reasonable attorney’s fees.  This seems fair enough.

But as of January 1, 2014, the attorney’s fees provision under Labor Code section 218.5 is in line with the uneven rule stated above by adding the following sentence: “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.”  “Not an employee” . . . hmmm let us see . . . you mean employer?  Indeed, employers can be the “prevailing party” and yet not be awarded their attorney’s fees and costs unless they prove “bad faith” by the employee.

But then again, that’s how attorney’s fees works for virtually all, if not all, other employee related lawsuits in sunny California.