Court Grants Only "Reasonable" Fees for Wage Claim
Posted by Jeremy T. Naftel
California employers are very familiar with the negotiating leverage afforded to employees by the state's wage and hour laws. Last week, a California Court of Appeal took a step towards leveling the playing field in Harrington v. Payroll Entertainment Services, Inc.
In that case, the plaintiff -- who had admittedly been underpaid $44.63 in overtime -- filed a lawsuit on behalf of himself and all similarly situated employees. The court denied class certification and the case ultimately settled for $10,500. The parties agreed that plaintiff was the “prevailing party” for purposes of an attorney fee award, and agreed that the trial court would determine the reasonableness of the fee claimed by plaintiff’s lawyers.
The fee request submitted by the plaintiff’s lawyers totaled $46,277. Defendant opposed the application, and the trial court denied it in its entirety. On appeal, the court agreed with plaintiff that “reasonable” attorneys fees were mandated by statute. However, the court characterized the $10,500 settlement of a $44.63 claim as a “windfall” and refused to work a still greater injustice by awarding tens of thousands of dollars in attorney's fees. The court reasoned that such an award would not meet the “reasonableness” standard of the statute. Instead, the court awarded a total of $500 in fees, and encouraged the plaintiff to share his windfall with his attorneys.
This ruling recognizes that California’s strict wage and hour laws can result in injustice if applied blindly, and may be helpful in injecting an element of reasonableness into future employee-employer negotiations. Please contact us directly to discuss any questions you may have relating to the impact of this decision as it relates to your business.