BILL ANALYSIS Ó
-----------------------------------------------------------------
|SENATE RULES COMMITTEE | SB 462|
|Office of Senate Floor Analyses | |
|1020 N Street, Suite 524 | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
-----------------------------------------------------------------
THIRD READING
Bill No: SB 462
Author: Monning (D)
Amended: As introduced
Vote: 21
SENATE JUDICIARY COMMITTEE : 5-2, 4/23/13
AYES: Evans, Corbett, Jackson, Leno, Monning
NOES: Walters, Anderson
SENATE APPROPRIATIONS COMMITTEE : 5-2, 5/23/13
AYES: De León, Hill, Lara, Padilla, Steinberg
NOES: Walters, Gaines
SUBJECT : Employment: compensation
SOURCE : California Employment Lawyers Association
DIGEST : This bill makes the award of attorneys fees and costs
where the prevailing party is not an employee contingent on a
finding by the court that the employee brought the court action
in bad faith.
ANALYSIS :
Existing law:
1.Provides that in any action brought for the nonpayment of
wages, fringe benefits, or health and welfare or pension fund
contributions, the court awards reasonable attorney's fees and
costs to the prevailing party if any party to the action
CONTINUED
SB 462
Page
2
requests attorney's fees and costs upon the initiation of the
action. This section does not apply to an action brought by
the Labor Commissioner, to a surety issuing a bond, as
specified, or to an action to enforce a mechanics lien.
(Labor Code (LAB) Section 218.5)
2.States that provision #1 does not apply to any action for
which attorney's fees are recoverable under LAB Section 1194,
which applies to minimum wage and overtime claims.
This bill:
1.Adds, for purposes of the above attorney-fee provision, if the
prevailing party in the court action is not an employee,
attorney's fees and costs will be awarded only if the court
finds that the employee brought the court action in bad faith.
2.Clarifies that the above attorney-fee provision does not apply
to any cause of action for which attorney's fees are
recoverable under LAB Section 1194.
Background
Existing law provides that, when an employee files an action
recover minimum wages or overtime, the employee who prevails in
the action is entitled to recover reasonable attorney's fees and
costs of suit. On the other hand, if an employee files an
action to recover 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, as specified.
"Wages" under this statute are defined as straight-time wages
above the minimum wage and contractually agreed-upon or
bargained-for wages. (Earley v. Superior Court (2000) 79
Cal.App.4th 1420, 1430.)
FISCAL EFFECT : Appropriation: No Fiscal Com.: No Local:
No
According to the Senate Appropriations Committee:
To the extent the provisions of this bill remove existing
barriers for employees seeking to pursue wage claims,
potential ongoing increased costs to the courts for increased
civil filings. For every 500 additional limited civil
CONTINUED
SB 462
Page
3
filings (less than 10 filings per county annually), annual
costs to the courts are estimated at $230,000 (General
Fund*).
To the extent a state agency acts as employer, there could
be potential future lost recovery of attorneys' fees and
costs that a state agency otherwise could have been awarded.
Given the vast range of attorney's fees and costs specific to
any one case, the potential impact of a single suit in which
a state agency is the prevailing party could range from minor
to very substantial.
*Trial Court Trust Fund
SUPPORT : (Verified 5/23/13)
California Employment Lawyers Association (source)
California Conference Board of Amalgamated Transit Union
California Conference of Machinists
California Federation of Teachers, American Federation of
Teachers, AFL-CIO
California Immigrant Policy Center
California Labor Federation, AFL-CIO
California Nurses Association
California Rural Legal Assistance Foundation, Inc.
California Teamsters Public Affairs Council
Engineers and Scientists of California, International
Federation of Professional & Technical Engineers Local 20
International Longshore and Warehouse Union
Professional and Technical Engineers, International Federation
of Professional & Technical Engineers Local 21
United Food and Commercial Workers Western States Council
UNITE-HERE, AFL-CIO
Utility Workers Union of America, Local 132
Wage Justice Center
OPPOSITION : (Verified 5/23/13)
Acclamation Insurance Management Services
Air Conditioning Trade Association
Allied Managed Care
Associated Builders and Contractors of California
Associated General Contractors
Brea Chamber of Commerce
CONTINUED
SB 462
Page
4
California Apartment Association
California Chamber of Commerce
California Chapter of American Fence Association
California Fence Contractors' Association
California Framing Contractors Association
California Grocers Association
California Lodging Industry Association
California Manufacturers and Technology Association
California Retailers Association
California Special Districts Association
Camarillo Chamber of Commerce
Construction Employers' Association
CSAC Excess Insurance Authority
Culver City Chamber of Commerce
Engineering Contractors' Association
Flasher Barricade Association
Fullerton Chamber of Commerce
Grater Conejo Valley Chamber of Commerce
Greater Fresno Chamber of Commerce
Marin Builders Association
National Federation of Independent Business
Oxnard Chamber of Commerce
Plumbing-Heating-Cooling Contractors Association of California
Rancho Cordova Chamber of Commerce
Redondo Beach Chamber of Commerce
Santa Clara Chamber of Commerce and Convention-Visitors Bureau
Simi Valley Chamber of Commerce
Southwest California Legislative Council
Tahoe Chamber of Commerce
Valley Industry and Commerce Association
Western Electrical Contractors Association
ARGUMENTS IN SUPPORT : According to the author:
[The Fair] Employment and Housing Act allows for reasonable
attorney's fees to a "prevailing party," (see Cal[.] Gov[.]
Code [Sec.] 12965(b)) but this standard has been
interpreted by the courts to mean that a prevailing
defendant can be awarded attorney's fees only if the suit
is objectively "frivolous, unreasonable or without
foundation." (See Cummings v. Benco Building Services
(1992) 11 Cal.App.4th 1383 . ) No court has directly
interpreted the attorney's fees standard under [Labor Code]
Section 218.5. In fact, the question was left open,
CONTINUED
SB 462
Page
5
leading to even more confusion for courts and workers
alike, in a recent California Supreme Court decision, Kirby
v. Immoos Fire Protection, Inc. (2012) 53 Cal.4th 1244,
274.
Not only is this provision anomalous among all other state
and federal wage claim statutes, but it also is one of only
two provisions in the California Labor Code that provides
attorney's fees for a prevailing defendant. Most
provisions of the Labor Code allow only a prevailing
employee to recover attorney's fees.
SB 462 would provide clarification making the award of
attorney's fees and costs where the prevailing party is not
an employee contingent on a finding by the court that the
employee brought the court action in bad faith.
ARGUMENTS IN OPPOSITION : CSAC Excess Insurance Authority also
asserts that"[i]f an employer is successful in their efforts to
defend against an action, they should equally be entitled to
seek recovery of reasonable attorney's fees and costs without
first having to satisfy an additional burden of whether an
action was in bad faith. Not only does this take away the equal
right to employers, but it also desensitizes plaintiffs and
their counsel from adequately considering the merits of the
intended action prior to filing."
A coalition of opposition argues that this bill "undermines the
Supreme Court and the clear language of the Labor Code that has
been in place since 1986, in order to provide a one-sided
attorney fee provision that will incentivize further meritless
wage and hour litigation. [Existing law's] two-way attorney's
fee shifting provision was recently affirmed by the Supreme
Court in Kirby v. Immoos Fire Protection, 53 Cal.4th 1244
(2012). SB 462 alters [Labor Code] section 218.5 and the
Court's holding by providing that an employer may only obtain
its attorney's fees if the employer can prove the action was
brought in bad faith. 'Bad faith' is a difficult standard to
prove and will substantially limit an employer's ability to
recover its attorney's fees for defending litigation that lacked
merit. SB 462 disrupts this balance by limiting an employer's
ability to recover its attorney's fees for meritless claims,
which could create more frivolous litigation."
CONTINUED
SB 462
Page
6
AL:nk 5/23/13 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
**** END ****
CONTINUED