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Employer Responsible for Attorneys’ Fees After Labor Commissioner Appeal

A California appellate court held an employer responsible for attorneys’ fees after Labor Commissioner appeal.

In Royal Pacific Funding Corporation v. Arneson, the employer appealed a $29,500.00 Labor Commissioner award.  After the employee retained an attorney for the appeal who notified the employer of the employee’s intent to add additional claims to the appeal, the employer dismissed the appeal.

The employee’s attorney filed a motion for attorneys’ fees, which the employer opposed.  The trial court denied all attorneys’ fees “on the theory that there must be a court award under Labor Code section 98.2 before a party can collect its fees.”  The appellate court reversed the decision and ordered the trial court to determine the employee’s reasonable attorneys’ fees.

Attorneys’ Fees After Labor Commissioner Appeal

Attorneys’ fees on appeal from a Labor Commissioner Order, Decision or Award are governed by Labor Code section 98.2, which provides:

If the party seeking review by filing an appeal to the municipal or superior court is unsuccessful in the appeal, the court shall determine the costs and reasonable attorney’s fees incurred by the other parties to the appeal, and assess that amount as a cost upon the party filing the appeal.

In 2003, the legislature amended Labor Code section 98.2 to include the statement, ” An employee is successful if the court awards an amount greater than zero.”

Royal Pacific Funding argued that under Arias v. Kardoulias (2012) 207 Cal.App.4th 1429, the employee cannot recover attorneys’ fees because the court never determined the case on the merits, and therefore the employee was not “successful” on the appeal.  In Arias, the court denied an employer’s attorneys fees when the employer got an appeal dismissed on procedural grounds, because such a procedural dismissal could not be equated with a superior court determination of the merits. According to the appellate court, interpreting 98.2 to require a decision on the merits “turns the basic purpose of the 2003 amendment on its head.”

Employees and employers must think carefully before appealing a California Labor Commissioner decision.  Employees may be allowed to add additional claims on appeal, and the non-successful appellant may be obligated to pay the other side’s attorneys’ fees.  Before you appeal you Labor Commissioner case, contact an experienced attorney familiar with wage and hour claims.

Original article by Robert E. Nuddleman of Nuddleman Law Firm, P.C.

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