October 5, 2022
On September 12, 2022, the California Court of Appeal held that employees bringing successful rest break and meal period claims are entitled to recover attorneys’ fees under California Labor Code section 218.5. The decision reversed a prior denial of attorneys’ fees by the appellate court following the Supreme Court of California’s May 2022 decision in Naranjo v. Spectrum Security Services, Inc.
In the case, Betancourt v. OS Restaurant Services, LLC, a former employee of a Los Angeles restaurant settled claims for rest break and meal period violations under California Labor Code section 226 and for penalties for waiting time and wage statement violations under section 203 based on the meal and rest break claims.
As part of the settlement, the restaurant owners agreed to pay the employee $15,375. The employee dismissed other claims for retaliation and wrongful termination but was allowed to file a motion for attorneys’ fees. The trial court awarded more than $280,000 in attorneys’ fees under section 218.5, which mandates that reasonable attorneys’ fees be awarded to an employee who prevails on claims for the nonpayment of wages, so long as the employee requests attorneys’ fees from the start.
In May 2020, the appellate court reversed the attorneys’ fees award based on the 2012 California Supreme Court decision in Kirby v. Immoos Fire Protection, Inc., which held that an action for failure to provide rest breaks or meal periods is not an action for the “nonpayment of wages.” The appellate court further held that an employee could not recover attorneys’ fees for the waiting time and wage statement violations because they were based on the meal and rest break claims.
Since the appellate court’s 2020 decision, the California Supreme Court issued its decision in Naranjo in May 2022. In Naranjo, the high court held that premium pay for missed meal and rest periods constitutes “wages” under California labor law and that employers may be held liable for the failure to properly report and timely pay out such wages. Following the ruling, the high court transferred the Betancourt case back to the appellate court for reconsideration.
The appellate court then reversed its prior denial of attorneys’ fees, stating that “Naranjo establishes a clear legal basis for the award.” In doing so, the appellate court rejected the restaurant owners’ new arguments that there was a lack of evidence for the wage statement claims and that the employee had abandoned the wage statement claims. Thus, the court affirmed the $280,000 attorneys’ fees award.
The appellate court decision in Betancourt illustrates how the California high court’s holding in Naranjo can potentially increase liability to employers for meal and rest break violations. Indeed, the $280,000 attorneys’ fees award in the case far exceeded the settlement amount of $15,375 for the meal and rest break claims. Before Naranjo, California court, had held that attorneys’ fees were not recoverable in wage and hour actions based solely on meal and rest break claims because such claims were not considered claims for the nonpayment of wages.
California employers may want to consider updating their policies and procedures to ensure premium wages for missed rest and meal breaks are paid accurately and timely and recorded correctly on wage statements.