The threat of statutory attorney fees to a prevailing plaintiff in a wage and hour lawsuit is often leveraged to force settlements from employer defendants. In a welcomed ruling for employers, a California Court of Appeal clarified that not all wage and hour claims entitle a prevailing plaintiff to recover his or her attorney fees.

In Betancourt v. OS Restaurant Services LLC et al., plaintiff Raquel Betancourt sued defendants OS Restaurant Services LLC and Bloomin’ Brands, Inc. for failing to provide uninterrupted breaks and for wrongful termination. Plaintiff’s Complaint sought to recover premium wages for alleged break violations, waiting time penalties for alleged failure to pay all wages on termination, and penalties for alleged inaccurate itemized wage statements. The prayer for relief requested attorney fees under Labor Code Sections 218.5 and 226.

The parties reached a settlement under which the defendants agreed to pay plaintiff $15,375 in full settlement of her claims for failure to provide meal and rest periods, failure to provide accurate wage statements, failure to pay wages upon termination, and “any and all wage-and-hour-related causes of action that were or could have been asserted in the complaint.” The parties agreed plaintiff could later file a motion for attorney fees on her wage and hour claims.

Betancourt filed a motion seeking $580,794 in attorney fees under Labor Code Sections 218.5 and 226. Citing the California Supreme Court’s decision in Kirby v. Immos Fire Protection, the defendants opposed the motion, contending Kirby and its progeny dictate that the Labor Code does not authorize a prevailing party to obtain attorney’s fees based on meal and rest period claims alone, as “the Legislature intended section 226.7 claims to be governed by the default American rule that each side must cover its own attorney’s fees.” Upholding Kirby, the Court agreed that a claim for meal or rest break premium pay is not an action for nonpayment of wages, and likewise, such claims do not warrant attorneys’ fees.

In reaching its decision, the Courtalso confirmed that a plaintiff is not entitled to recover penalties for waiting time and wage statement violations based only on a claim for meal or rest break premium pay.

The Betancourt decision clarifies important issues in wage and hour litigation. While aggrieved employees may no longer leverage attorneys’ fees in an action asserted under Labor Code Section 226.7 alone, meal and rest break litigation remains highly contentious. Employers are encouraged to take a proactive approach to ensure their meal and rest break policies are compliant.