Further Muddies the Waters as to Whether Any Party Will Receive Fees for Break Claims

On April 30, 2012, the California Supreme Court issued its ruling in Kirby v. Imroos Fire Protection, a wage and hour matter that had been making its way through the court system since 2007. In it, the Court attempted to clarify and limit a prevailing party’s entitlement to attorneys’ fees for bringing certain types of wage and hour claims; however, its failure to address a glaring inconsistency with another law essentially nullifies this holding.  

The plaintiffs in Kirby alleged, among other Labor Code violations, that Imroos Fire Protection (“IFP”) had failed to properly pay their wages and overtime, and failed to provide them rest breaks. After unsuccessfully attempting to certify a class of employees, the plaintiffs dismissed the action with prejudice in 2009, after which, IFP sought an award of prevailing party attorneys’ fees. The trial court granted IFP’s request for fees for defending against plaintiffs’ Unfair Competition Law, rest break, and violation of section 2810 claims. The Court of Appeal affirmed the award for attorneys’ fees, but on only the rest break claim.  

In reversing the holding of the Court of Appeal, the Supreme Court held that neither California Labor Code sections 218.5 nor 1194 entitles a prevailing party to fees for meal or rest break claims. The Court specifically discussed the history of and intention behind both statutes and held that because sections 218.5 and 1194 only allow prevailing party attorneys’ fees in claims for “wages, fringe benefits, or health and welfare or pension fund contributions,” or “legal minimum wage or...legal overtime compensation,” respectively, and a section 226.7 claim does not seek to obtain any of these, neither provision entitles parties to an award of fees in meal or rest break claims.

Although this holding would seem to have a major impact in wage and hour claims and curtail the number of frivolous meal and/or rest break claims that are brought, the Court neglected to address the impact of the addition of a claim under the Private Attorney General Act of 2004 (“PAGA”), codified in California Labor Code section 2698, et seq, to a meal or rest break claim. The PAGA allows a private citizen to pursue civil penalties on behalf of the State of California Labor and Workforce Development Agency (“LWDA”), provided a formal notice and waiting procedures of the law are followed. Regardless of the Court’s holding in Kirby, PAGA authorizes the recovery of attorneys’ fees and costs by prevailing employees. Because the language of the PAGA specifically includes meal and rest break violations in the “first class,” or most severe offenses, it is unlikely Kirby will be interpreted to impact a PAGA plaintiff’s entitlement to attorneys’ fees for a claim for meal and rest breaks. Thus, this inconsistency recreates an incentive for plaintiffs’ attorneys to pursue large PAGA claims on behalf of employees and employees who would not have otherwise included such a claim to do so.  

Summary Of Attorneys’ Fees In Wage And Hour Litigation

As a summary the following represents the impact of the holding in Kirby on the availability of attorneys’ fees under existing wage and hour laws:  

  • If an employee brings only a claim under section 226.7 for meal or rest breaks, neither the employer nor the employee would be entitled to prevailing party attorneys’ fees.
  • If an employee brings a claim under section 218.5 for unpaid “wages, fringe benefits, or health and welfare or pension fund contributions,” such as a claim under sections 201-203 for failure to pay wages upon termination, the prevailing party, regardless of whether it is the employer or the employee, would be entitled to fees.
  • If an employee brings a claim under section 1194 for failure to pay the “legal minimum wage or...legal overtime compensation,” only the employee can be the prevailing party and would be entitled to attorneys’ fees.
  • If an employee brings a section 226.7 claim, or any other wage and hour claim under the California Labor Code, including sections 98.6, 201, 203, 226, 510, 1194, 2802 and many others, and a PAGA claim, the employee would be entitled to prevailing party attorneys’ fees.  

In light of this complexity, employers should be aware that Kirby does not immunize them from having to pay attorneys’ fees if an employee prevails on a meal or rest break claim against them. Instead it seems to encourage employees to seek a more complicated and more expensive type of claim so they can still obtain the attorneys’ fees that incentivize their attorneys to move forward, regardless of the merits of the claim.