Employer Is Not Entitled To A Fee Award In Case Alleging Unpaid Wages

by Hinshaw & Culbertson LLP
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[author: David J. McMahon]

In Arias v. Kardoulias, 2012 DJDAR 10297 (2012), the California Court of Appeal for the Second Appellate District decided a case of first impression. 

The court was asked to determine whether the dismissal on “jurisdictional grounds” of an untimely appeal from a Commissioner’s decision on a wage claim, was equivalent to an “award of zero” for purposes of awarding fees to an employer and against an unsuccessful employee. The case was prosecuted under Labor Code Section 98.2(c). That section of the Labor Code is a “one way” fee shifting provision applicable in cases following a Commissioner’s decision on an unpaid wage claim.

In cases involving unpaid wage claims, the initial hearing is before a Commissioner. When a party timely appeals a Commissioner’s decision on wages under the Labor Code, there is a trial de novo. The purpose of the trial de novo is to discourage frivolous appeals. The right to attorney fees depends on the outcome of the trial de novo, not the underlying decision by the Commissioner.

The Arias case began when the employee filed a claim under the California Labor Code against the employer for unpaid wages. The Commissioner awarded the employee $6,319.69. The employee appealed the decision. The superior court dismissed the appeal as being untimely.

The employee then filed an appeal of the trial court’s decision with the second district court of appeal. The court of appeal also concluded that the employee’s appeal was untimely under Labor Code Section 98.2(a). While that appeal was pending, the employer filed a motion in the trial court, requesting attorney fees under the one‑way fee shifting provision in Section 98.2(c), seeking a fee award in excess of $8,000. The employee opposed the motion and argued that fees under Section 98.2(c) were only recoverable if the superior court had conducted a trial de novo.

Following a hearing, the trial court granted the employer’s fee petition, awarding approximately $6,000 in fees. The employee appealed. The court of appeal reversed the trial court’s decision, noting that a party who files a claim for unpaid wages with a Commissioner may seek review of the decision by filing an appeal to the superior court. That appeal is reviewed de novo. Where the party is unsuccessful, the court assesses fees and costs incurred by the other party and against the appellant under Section 98.2(c). An employee is successful on appeal if the court awards an amount greater than zero.

The second district determined that the term “appeal,” as used in the statute, was not used in the conventional sense. Instead it meant a “new trial” where the superior court hears the matter de novo. Further, Section 98.2(c) was only triggered on an unsuccessful appeal, which, in the statutory context, depended on the superior court making an award. Reasoning that the employee’s appeal was dismissed on jurisdictional grounds, there was no basis to award fees to the employer.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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