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California law will require showing of bad faith for fee awards against employees in wage and benefits nonpayment suits

By Pamela Wolf, J.D.

California Governor Edmund G. Brown Jr. on August 26 signed a new law under which nonemployee prevailing parties in suits for nonpayment of wages, fringe benefits, or health and welfare or pension fund contributions will be required to show that the employee brought the court action in bad faith before they can be awarded attorneys’ fees and costs.

The bill, introduced on February 21 by State Senator William W. Monning (D-Carmel), passed the State Assembly on August 12 by an unofficial vote of 49-26. It previously cleared the State Senate on May 29 by an unofficial ballot of 26-9.

Under Sec. 218.5 of the California Labor Code, except for certain specified exceptions, courts are required to award reasonable attorneys’ fees and costs to the prevailing party, if so requested. However, S.B. 462 amends Sec. 218.5 to provide that when the prevailing party “is not an employee, attorney’s fees and costs shall be awarded pursuant to this section only if the court finds that the employee brought the court action in bad faith.”

The new law does not apply to an action brought by the Labor Commissioner, certain sureties issuing bonds under the Business and Professions Code, or to certain actions to enforce a mechanics lien. The provision also is inapplicable to any cause of action for which attorney’s fees are recoverable under Sec. 1194.