Labor Code Section 218.5 Is a “Two-Way Street” No Longer!

Plaintiffs’ attorneys pursuing claims on behalf of their clients for the nonpayment of wages have long been compelled to abstain from basing any of their clients’ claims on Labor Code § 218.5. This is because the language of the statute awards the “prevailing party” their reasonable attorneys’ fees and could potentially expose an employee-plaintiff to financial liability should their employer succeed in the litigation. Not anymore.

In order to save the employee-plaintiff from this type of exposure, the California Legislature introduced Senate Bill 462 which sought to amend Labor Code § 218.5 and limited an employer’s recovery of attorneys’ fees only where the court finds the employee pursued the action in bad faith. With a fresh signature from California Governor Jerry Brown, this bill is now State law and has drastically increased an employers’ difficulty in recording attorneys’ fees in wage and hour cases brought by aggrieved employees. The resultant effect of this action, among other things, will incentivize employees to seek counsel if they feel they have been underpaid by their employer.