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August 30, 2013

Helpful New Law on Attorneys’ Fees in Wage Cases

Governor Brown recently signed a law changing the circumstances in which attorneys’ fees can be awarded in lawsuits for unpaid wages, fringe benefits, or health and welfare or pension contributions. Under the previous law, the “prevailing party” was entitled to attorneys’ fees. This meant that employers, as well as employees, who won a judgment in their favor were entitled to have the other side pay for their attorney.

This created a serious risk for employees who wished to pursue claims for unpaid wages and benefits, since if they lost, they could potentially be forced to pay for the employers’ attorneys. This amount could potentially be large enough to overwhelm the amount of unpaid wages and benefits at issue.

The new law states that if the prevailing party “is not an employee, attorney’s fees and costs shall be awarded … only if the court finds that the employee brought the court action in bad faith.” The award of attorneys’ fees, then, essentially goes in one direction. Unless there is evidence that the suit was brought in bad faith, only employees can collect attorneys’ fees. This greatly reduces the downside risk to employees who wish to pursue claims for unpaid wages and benefits.

A copy of the law may be found here.