No Attorney’s Fees for Employer That Prevails on Wage Claim, Even When Authorized in Contract

No Attorney’s Fees for Employer That Prevails on Wage Claim, Even When Authorized in Contract

On May 24, 2019, a California court of appeal in Dane-Elec Corp. v. Bodokh reversed an award of attorney’s fees to an employer that prevailed on its complaint against its former chief executive officer to recover on a promissory note, and on the cross-complaint brought against it alleging a failure to pay wages. The trial court granted the employer’s motion to recover attorney fees of $50,959.50 based on an attorney fees provision in the promissory note, but disallowed $8,677.50 in attorney fees it incurred in defending against the wage claim in the cross-complaint because the judge found such was “not brought in bad faith.”

The Dane-Elec court noted that Labor Code section 218.5 permits an award of attorney’s fees and costs to an employer “only if the court finds that the employee brought the court action in bad faith.” It found that the wage claim and the breach of contract claim presented in the case were “inextricably intertwined,” and held that “section 218.5(a)’s prohibition on recovering attorney fees controls over the contractual attorney fees provision.”