In a case with potentially significant ramifications, the California Supreme Court has ruled that employees were not entitled to attorney’s fees when prevailing on a claim for meal or rest breaks. Combined with an earlier case (Brinker) that makes it more difficult for employees to win suits over meal and rest breaks, this case gives plaintiffs’ attorneys less incentive to file these types of cases.
The case is Anthony Kirby et al. v. Immoos Fire Protection, Inc.
In general, a prevailing party may recover attorney’s fees only when a statute or an agreement of the parties provides for fee shifting. California Labor Code section 218.5 requires the awarding of attorney’s fees to the prevailing party “[i]n any action brought for the nonpayment of wages, fringe benefits, or health and welfare or pension fund contributions.” This provision awards fees to the prevailing party whether it is the employee or the employer; it is a two-way fee-shifting provision. However, Labor Code section 218.5 “does not apply to any action for which attorney’s fees are recoverable under [Labor Code] Section 1194.” Labor Code section 1194 provides that employees who prevail in an action for any unpaid “legal minimum wage or . . . legal overtime compensation” are entitled to recover attorney’s fees. It is a one-way fee-shifting provision.
In this case, plaintiffs Anthony Kirby and Rick Leech, Jr., sued defendant Immoos Fire Protection, Inc. (IFP) and multiple Doe defendants for violating various labor laws as well as the unfair competition law. The amended complaint stated seven claims, the sixth of which alleged the failure to provide rest breaks as required by section 226.7. The remedy for such a violation is “one additional hour of pay . . . for each work day that the . . . rest period is not provided.” Plaintiffs ultimately dismissed this claim with prejudice after settling with the Doe defendants. IFP subsequently moved for attorney’s fees. The trial court awarded fees, and the Court of Appeal affirmed.
The California Supreme Court granted review to consider when, if ever, a party who prevails on a section 226.7 action for an alleged failure to provide rest breaks may be awarded attorney’s fees. The court concluded, in light of the relevant statutory language and legislative history, that neither section 1194 nor section 218.5 authorizes an award of attorney’s fees to a party that prevails on a section 226.7 claim. The Supreme Court accordingly reversed the judgment of the Court of Appeal on this claim and affirmed the judgment on plaintiffs’ other claims.
In April 2009, IFP moved to recover attorney’s fees from plaintiffs. The trial court ordered plaintiffs to pay $49,846.05 in fees. The Court of Appeal affirmed the award of fees as to the rest period claim, but reversed as to the other claims. Regarding the rest period claim, the Court of Appeal concluded that an award of fees was proper under section 218.5 because plaintiffs were seeking payment of “additional wages” for missed rest periods.
Section 1194, subdivision (a) provides: “Notwithstanding any agreement to work for a lesser wage, any employee receiving less than the legal minimum wage or the legal overtime compensation applicable to the employee is entitled to recover in a civil action the unpaid balance of the full amount of this minimum wage or overtime compensation, including interest thereon, reasonable attorney’s fees, and costs of suit.” Section 218.5 provides: “In any action brought for the nonpayment of wages, fringe benefits, or health and welfare or pension fund contributions, 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 section does not apply to any action for which attorney’s fees are recoverable under Section 1194.”
Section 1194 entitles “any employee receiving less than the legal minimum wage or the legal overtime compensation . . . to recover in a civil action the unpaid balance of the full amount of this minimum wage or overtime compensation . . . [and] reasonable attorney’s fees . . . .” By its terms, section 1194 applies to claims for unpaid minimum wages or overtime compensation. Plaintiffs argued section 1194 should be construed to also include section 226.7 claims for failure to provide statutorily mandated meal and rest breaks. Section 226.7, subdivision (a) prohibits employers from requiring employees to work during a mandated rest or meal period. If an employer violates subdivision (a), subdivision (b) provides the remedy: “the employer shall pay the employee one additional hour of pay at the employee’s regular rate of compensation for each work day that the meal or rest period is not provided.”
Plaintiffs first contended that the required payment for missed meal or rest periods is tantamount to a statutorily prescribed minimum wage. Like minimum wage provisions that set a floor for employee wages, plaintiffs argue, section 226.7 establishes a minimum payment amount, imposes an obligation upon employers, and is based on an important public policy. Second, pointing to the term “legal” in section 1194′s reference to “legal minimum wage” and “legal overtime compensation,” plaintiffs contended that use of the modifier is evidence that the Legislature intended a broader meaning. The Supreme Court found neither contention persuasive.
Another question here was whether a section 226.7 claim, which concerns an employer’s alleged failure to provide statutorily mandated meal and rest periods, constitutes an “action brought for the nonpayment of wages” within the meaning of section 218.5. The California Supreme Court concluded it did not.
In light of the statutory text and the legislative history of section 218.5 and section 226.7, the Supreme Court concluded that section 218.5′s two-way fee-shifting provision does not apply to section 226.7 claims alleging the failure to provide statutorily mandated meal and rest periods.