In many, if not most, wage and hour cases (e.g., unpaid overtime, minimum wage, commissions, bonuses, etc.), the employer can pay more in attorneys’ fees than what is allegedly owed in unpaid wages. Under the “American System,” each side bears the cost of their own attorneys unless the contract or statute under which the lawsuit proceeds provides for recovery of attorneys’ fees. In the employment law field, some statutes allow the prevailing party to recover their attorneys fees. Other statutes only allow the prevailing employee to recover attorneys’ fees.
The legislature uses one-sided attorneys’ fee provisions (i.e., only the employe can recover attorneys’ fees) to make it easier for employees to hire attorneys because the employee typically has less money than the employer, and the employee will need to hire an attorney on a contingency-fee basis. By allowing the employee to recover attorneys’ fees, an attorney may be willing to handle “lower value” cases knowing she or he will recover her or his attorneys’ fees at the end of the litigation. This creates an incentive for attorneys to take cases that are otherwise not economically feasible to prosecute.
In an unpaid wage claim there are two different statutes that apply depending on whether the claim is for overtime/minimum or wages other than overtime/minimum wage. Under Labor Code section 1194.2, in any claim for the recovery of unpaid minimum wage or overtime, only the employee can recover his/her attorneys’ fees. The employer cannot recover its attorneys’ fees even if it proves it paid the employee correctly.
Under Labor Code section 218.5, in any other claim for wages or benefits not covered by Labor Code section 1194.2 (e.g., non-overtime/minimum wage claims), the prevailing party is entitled to attorneys’ fees. This means that if an employee sues the employer for unpaid commissions or bonuses and loses, the employee is responsible for the employer’s attorneys’ fees.
Thanks to a new law signed by Governor Brown, the employer will soon be able to recover its attorneys’ fees under Labor Code section 218.5 “only if the court finds that the employee brought the court action in bad faith.” Proving “bad faith” is a very high standard.
There is no exigency clause, so the amendment will take effect January 1, 2014.
If you have a question about payroll practices, contact an attorney familiar with California’s wage and hour laws.The Law Office of Phillip J. Griego 95 South Market Street, Suite 520 San Jose, CA 95113 Tel. 408-293-6341 Original article by Robert E. Nuddleman, former associate of The Law Office of Phillip J. Griego. Feel free to suggest topics for the blog. We are happy to consider topics pertaining to general points of Labor and Employment Law, but we cannot answer questions about specific situations or provide legal advice. If you desire legal advice, you should contact an attorney. Your use of this blog does not create an attorney-client relationship between you and the Law Office of Phillip J. Griego. The use of the Internet or this blog for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be posted in this blog and the Law Office of Phillip J. Griego cannot guarantee the confidentiality of anything posted to this blog.Phillip J. Griego represents employees and businesses throughout Silicon Valley and the greater San Francisco Bay Area including Palo Alto, Menlo Park, Mountain View, Los Altos, San Jose, the South Bay Area, Campbell, Los Gatos, Cupertino, Morgan Hill, Gilroy, Sunnyvale, Santa Cruz, Saratoga, and Alameda, San Mateo, Santa Clara, San Benito, Mendocino, and Calaveras counties.
San Mateo, Santa Clara, San Benito, Mendocino, and Calaveras counties.
In a somewhat surprising decision, the United States Supreme Court held that an employee who does not file an EEOC charge within the 300 or 180 required by Title VII may still assert a disparate-impact claim challenging the employer’s later application of previously time-barred practice as long as he alleges every element of disparate-impact claim.
You may recall that in 2007 the U.S. Supreme Court decided Ledbetter v. Goodyear Tire & Rubber Co, Inc. 550 U.,S. 618. In Ledbetter the Supreme Court held that an employer’s decision with respect to setting pay is a discrete act of discrimination, and that the relevant period of limitations begins to run when the act first occurs. After several attempts at modifying the law through legislation, in 2009 President Obama signed the “Lilly Ledbetter Fair Pay Act of 2009” which added the following provisions to Title VII:
(3)(A) . . .[A]n unlawful employment practice occurs, with respect to discrimination in compensation in violation of this title, when a discriminatory compensation decision or other practice is adopted, when an individual becomes subject to a discriminatory compensation decision or other practice, or when an individual is affected by application of a discriminatory compensation decision or other practice, including each time wages, benefits, or other compensation is paid, resulting in whole or in part from such a decision or other practice.
(B) In addition to any relief authorized by . . .42 U.S.C. 1981a, liability may accrue and an aggrieved person may obtain relief as provided in subsection (g)(1), including recovery of back pay for up to two years preceding the filing of the charge, where the unlawful employment practices that have occurred during the charge filing period are similar or related to unlawful employment practices with regard to discrimination in compensation that occurred outside the time for filing a charge.
The Ledbetter Act deems each paycheck issued pursuant to a discriminatory compensation decision or pay structure an independent, actionable act. It applies retroactively “to all claims of discrimination in compensation under Title VII . . . that are pending on or after [May 28, 2007].”
In a case that did not deal with “discrimination in compensation” the Supreme Court carved out an exception to the strict filing deadlines by deciding when the statute of limitations begins to run on a disparate impact claim. In Lewis v. City of Chicago, Illinois, the court held that
What that requires depends on the claim asserted. For disparate-treatment claims — and others for which discriminatory intent is required — that means the plaintiff must demonstrate deliberate discrimination within the limitations period. See Ledbetter, supra, at 624–629; Lorance, supra, at 904–905; Ricks, supra, at 256–258; Evans, supra, at 557–560; see also Chardon v. Fernandez, 454 U. S. 6, 8 (1981) (per curiam). But for claims that do not require discriminatory intent, no such demonstration is needed. Cf. Ledbetter, supra, at 640; Lorance, supra, at 904, 908–909. Our opinions, it is true, described the harms of which the unsuccessful plaintiffs in those cases complained as “present effect[s]” of past discrimination. Ledbetter, supra, at 628;see also Lorance, supra, at 907; Chardon, supra, at 8; Ricks, supra, at 258; Evans, supra, at 558. But the reason they could not be the present effects of present discrimination was that the charged discrimination required proof of discriminatory intent, which had not even been alleged. That reasoning has no application when, as here, the charge is disparate impact, which does not require discriminatory intent. [emphasis added]
The court was not swayed by the City’s argument that the Court’s holding “will result in a host of practical problems for employers and employees alike.” Under the Court’s ruling employers may face new disparate-impact suits for practices they have used regularly for years, thereby depriving the employer of evidence essential to their case. According to the Court:
Truth to tell, however, both readings of the statute produce puzzling results. Under the City’s reading, if an employer adopts an unlawful practice and no timely charge is brought, it can continue using the practice indefinitely, with impunity, despite ongoing disparate impact. Equitable tolling or estoppel may allow some affected employees or applicants to sue, but many others will be left out in the cold. Moreover, the City’s reading may induce plaintiffs aware of the danger of delay to file charges upon the announcement of a hiring practice, before they have any basis for believing it will produce a disparate impact.
The court ultimately concluded that it was not their “task to assess the consequences of each approach and adopt the one that produces the least mischief. [Their] charge is to give effect to the law Congress enacted. By enacting §2000e–2(k)(1)(A)(i), Congress allowed claims to be brought against an employer who uses a practice that causes disparate impact, whatever the employer’s motives and whether or not he has employed the same practice in the past. If that effect was unintended, it is a problem for Congress, not one that federal courts can fix.”
Lewis v. City of Chicago, Illinois will likely be seen as a victory for employees, as many plaintiffs’ counsel will creatively plead their time-barred disparate treatment case as a disparate impact case. This may cause significant problems for employers who adopted facially neutral policies that have lasting effects on employees because evidence regarding the basis for the initial decision may no longer be available.The Law Office of Phillip J. Griego 95 South Market Street, Suite 520 San Jose, CA 95113 Tel. 408-293-6341 Original article by Robert E. Nuddleman, former associate of The Law Office of Phillip J. Griego.
Feel free to suggest topics for the blog. We are happy to consider topics pertaining to general points of Labor and Employment Law, but we cannot answer questions about specific situations or provide legal advice. If you desire legal advice, you should contact an attorney.
Your use of this blog does not create an attorney-client relationship between you and the Law Office of Phillip J. Griego. The use of the Internet or this blog for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be posted in this blog and the Law Office of Phillip J. Griego cannot guarantee the confidentiality of anything posted to this blog.
Phillip J. Griego represents employees and businesses throughout Silicon Valley and the greater San Francisco Bay Area including Palo Alto, Menlo Park, Mountain View, Los Altos, San Jose, the South Bay Area, Campbell, Los Gatos, Cupertino, Morgan Hill, Gilroy, Sunnyvale, Santa Cruz, Saratoga, and Alameda, San Mateo, Santa Clara, San Benito, Mendocino, and Calaveras counties.
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