On Monday, April 30, 2012, the California Supreme Court issued a ruling in Kirby v. Immoos Fire Protection, Inc., holding that the prevailing party on claims of meal and rest break violations is not entitled to an award of attorney fees. While employers must be vigilant to ensure that their meal and rest break policies, procedures, and actual practices are in compliance with applicable laws, this ruling may help to curtail the practice of bringing these claims as a matter of course, as a basis for a class action, or when the allegations are tenuous at best.
The plaintiffs in Kirby alleged various labor law violations against Immoos First Protection, Inc., including failure to provide breaks as required under California Labor Code section 226.7. After reaching a settlement, the plaintiffs moved to dismiss this claim, and the defendant employer moved for an award of attorney fees under Labor Code section 218.5. The trial court awarded fees to the employer, and this award was affirmed by the Court of Appeals. The plaintiffs then appealed this award to the California Supreme Court.
Labor Code section 218.5 is a two-way fee-shifting provision, providing attorney fees to the prevailing party in any action involving the nonpayment of wages or benefits. Similarly, section 1194 of the Labor Code provides attorney fees in actions for unpaid minimum wage or overtime compensation. However, unlike section 218.5, section 1194 is a one-way fee-shifting provision, available only to prevailing employees. The plaintiffs thus argued that a claim for attorney fees based on their section 226.7 meal and rest break period denial claims should fall under section 1194, thereby precluding an award of such fees to a prevailing employer.
Interestingly, the California Supreme Court held that neither section 218.5 nor section 1194 of the Labor Code authorizes an award of attorney fees for a claim regarding the denial of meal and rest breaks under section 226.7.
While this was not good news for the employer in the Kirby case, since it resulted in its “prevailing party” attorney fee award being overturned, it is good news for employers generally, as it will (hopefully!) discourage plaintiffs’ attorneys from filing suit based on “any” meal and rest break period denial claim by removing the “award of attorney fees incentive” which until now was presumed to exist for the same. Attorneys who seek to represent employees in pursuing such claims will now have to more carefully consider their chances of recovery, and whether it will be sufficient to cover the fees they will invest in doing so, before taking a case.
Some California legal commentators are quick to point out, however, that such fees may still be recoverable as part of a Private Attorney General Act (PAGA) claim (a claim asserted under Labor Code section 2698, et seq., which allows an individual to stand in the place of the California State Department of Labor by pursuing a civil claim where a California labor law has been violated).
Others remain optimistic that this decision, coupled with the long-awaited Brinker decision, which was issued by the California Supreme Court in mid-April (clarifying that while employers are required to permit hourly employees to take 30-minute meal periods, they are not required to “ensure” that employees take such meal periods) [see April 13 alert] will make plaintiffs’ attorneys more wary about taking meal and rest break period denial cases, thereby decreasing the number of employers who find themselves having to shell out six if not seven figures to defend themselves against such claims.
For more information about this or other Labor & Employment law matters, please feel free to contact Sara Anne Thomas or any other member of our Labor & Employment Practice Group.