Prevailing parties not entitled to attorney's fees in meal and rest period claims in California

Employment Alert (US)

The California Supreme Court continues to swing the pendulum back towards employers in wage and hour class actions.  

 

In an opinion filed on April 30, the California Supreme Court came out with a major meal and rest period class action decision that follows on the heels of the largely employer-friendly decision in mid-April in Brinker v Restaurant Corp v. Superior Court.  Please see our Labor and Employment Alert and our Class Action Alert companion pieces on the Brinker decision.

 

In Kirby v. Immoos Fire Protection, Inc., the Court held that prevailing parties are not entitled to attorneys fees in meal and rest period cases brought pursuant to Labor Code section 226.7. 

 

The Court made this ruling despite the fact that the case before it was limited to rest period claims only.  

 

In Kirby, plaintiffs sued IFP and multiple unidentified “Doe” defendants, alleging violations of various labor laws as well as the Unfair  Competition Law (UCL), including an alleged failure to provide rest breaks under  Labor Code section 226.7. The plaintiffs ultimately dismissed this claim with prejudice after settling with the Doe defendants. IFP then moved for attorney's fees under section 218.5. The trial court awarded fees as to the UCL and rest period claims.  The Court of Appeal affirmed the award of attorney's fees as to the rest period claims only, reversing the award of attorney's fees as to the UCL claims.

 

The California Supreme Court reversed the award of attorney's fees as to the rest period claims, finding that neither section 1194 nor section 218.5  of the Labor Code authorized an award of attorney's fees to a party that prevails on a rest period claim.  Giving the statute its "plain and common sense meaning," the  Court found that section 1194 applies to unpaid minimum wages or overtime compensation only, not claims for failure to provide meal and rest breaks.  Similarly, section 218.5 only authorizes  an award of attorney's fees to a party who prevails in an “action brought for the nonpayment of wages, fringe benefits, or health and welfare or pension fund contributions.”  Because a section 226.7 action is brought for the alleged failure to provide meal and rest periods, not for "nonpayment of wages," section 218.5 does not authorize an award for attorney fees for a party that prevails on meal or rest period violations either.

 

This decision should have a major impact on wage and hour class actions in California, because the inability to recover attorneys’ fees removes a major bargaining chip used by plaintiffs’ counsel in settlement negotiations.  This decision, especially when coupled with the Brinker decision, should also have a chilling effect on future cases alleging meal and rest break claims.  

 

While there are rumors of a legislative reaction to Brinker, recent wage and hour decisions have been surprisingly favorable to employers in California, a state with a well-earned reputation for being employee-friendly.   

 

For more information about this decision, please contact Eric S. Beane, Amy Beckstead and Hope Case.

 

Read the opinion here