Governor Signs SB 462 Which Clarifies Fee Shifiting for Wage Claims

Wage list

Wage list (Photo credit: Wikipedia)

ImageSB 462 (Author: Senator Bill Monning): Conforming  Attorneys’ Fees in unpaid wage cases so the winning employer must show the losing employee’s bad faith to recover attorneys’ fees :

Monday, August 26, 2013:  Today Governor Brown signed into law this important law which clarifies fee shifting for unpaid wage claims and makes fee shifting of attorneys’ fees for wage claims brought under Labor Code §218.5 consistent with Federal law and the rest of the Labor Code. (except for one other outlier fee award statute).

This new law  fixes what was an anomaly with attorneys’ fees awards for wage and hour actions under Labor Code §218.5.  Previously, if a California employee lost  his/her action to recover unpaid wages or benefits, she or he could be out the unpaid wages and also be liable for the winning employer’s attorneys’ fees.  This is because Labor Code §218.5 provided for attorneys’ fees to the “prevailing party”, not the “prevailing employee”, so “party” included the prevailing employer.   This law ignored the reality that in many if not most cases, the wealth gap between employer and employee made the employer far more likely to be able to afford paying both sides’ attorneys fees, while this possibility, which could financially ruin an employee, was a powerful deterrent to filing many legitimate wage theft claims.

No longer can employers flaunt wage laws, essentially bully their unpaid employees and unfairly compete with their law abiding competitors–with the unintended help of Labor Code §218.5‘s former two-way fee shifting.

In my practice I have seen the chilling effect the risk of having to pay a $500+/hour attorneys’ fee bill has on a wage earner earning a fraction of that who decides the risk is too big to take, so abandons a valid wage claim.

The new law only allows a prevailing employee to recover attorneys’ fees, unless a prevailing employer can show the employee brought the action in  “bad faith”.   Since this has long been the norm with most other fee award statutes, there is lots of authority on what is “bad faith”.

The question arises: is this law retroactive?  Please feel free to comment on this, below.

You can read the bill’s full text here:

Marjorie Wallace is a California licensed employment lawyer.  The information contained in this blog is for educational purposes only and does not create an attorney-client relationship between the writer and any reader or constitute legal advice to anyone reading it. 

The Startling Facts about the Gender Wage Gap

June 10, 2013 was the 50th anniversary for the Equal Pay Act. 29 USC §206(d). 

Despite the media hype about wives making more than their husbands, 50 years after its passage, there continues to be a very significant wage gap between men and women in the same jobs.  The Institute for Women’s Policy Research (the “IWPR”) , tracks the wage gap every year and publishes annual updated fact sheets.  For 2012, the IPWR found the wage gap actually got wider from the previous year as women’s median weekly pay rate declined from 82.0 percent of men’s in 2011 to only 80.9 of men’s median weekly pay in 2012. While women: 1) make up nearly half of the workforce, 2) are the equal or main breadwinner in 4 out of 10 families and 3) have more college and graduate degrees than men, on average they earn only 77 cents for every dollar men earn.  This is a 23 cents wage gap which amounts to billions of dollars every year and hundreds of thousands, if not millions of dollars less pay over the earning life of an individual woman worker.  At the recent Equal Rights Advocates fundraiser luncheon on June 13, 2013 in San Francisco, guests were shown a dramatic movie short documenting the enormous loss of income unequal pay represents over the life of several young girls and what they could buy with all that lost income.  The Real Cost of the Wage Gap.   

The IWPR found a wage gap in virtually every occupation where earnings data is available to compare men’s and women’s earnings.    It concluded that at the current rate of slow increase in women’s pay, it will take almost another 50 years–until 2057 to reach pay equity for women.      

Women of color are even worse off: on average they earn only 62 cents for every dollar a man earns doing the same job.  The Real Cost of the Wage Gap