California’s Fifth Circuit Court of Appeals (CA5) has recently made a decision that will have a huge impact on California business owners. The decision on the Moreno v. Bassi case has given the following awards to the plaintiff:

• $16 an hour in unpaid minimum wages
• $16 an hour in liquidated damages
• Totaling $19,523 under Code of Civil Procedure
• $3.20 in attorney fees associated with this case

These awards were issued after it was determined that the plaintiff lost all of her Fair Employment and Housing Act (FEHA), lost some of her non-FEHA claims, and won the rest of her non-FEHA claims. The court determined that the plaintiff is barred from obtaining costs incurred merely as a result of including FEHA in this litigation. All of the other costs expended in this action are recoverable, after being subjected to discretionary exclusion.

On top of all this, both the plaintiff and defendant issued a dispute over court fees. As you can see in bullet point four, the plaintiff was awarded $3.20 in attorney fees based on a predetermined formula. Because there were two overlapping issues in this case (Mixed Minimum Wage-FEHA and Attorney Fees), the court went with the following formula to determine the award:

Notwithstanding any agreement to work for a lesser wage, any employee receiving less than the legal minimum wage or the legal overtime compensation applicable to the employee is entitled to recover in a civil action the unpaid balance of the full amount of this minimum wage or overtime compensation, including interest thereon, reasonable attorney’s fees, and costs of suit.

Because the plaintiff was not awarded her full claim, she was not entitled to being fully compensated for her attorney fees. The defendant (the business owner) was also not entitled to their legal fees. So the courts ruled that the plaintiff will receive legal fee compensation up to the rest of the funds that she was not awarded for her FEHA claim.

So what should you take out of this?

First, work with your HR department to make sure you keep track of everything that is going on. While the situation that led to this case is sad, that does not mean you should not protect your business and profits. The work of a good HR department can help your attorney in a case like this. And in this case, being able to track everything that employee did helped the business save a lot of money.

Second, it never hurts to pursue everything you can. If the defendant did not pursue attorney fees, the plaintiff might have walked away with a larger sum in her pocket. This would have cost the defendant thousands of dollars that the plaintiff was not legally obligated to. As the business owner, it is your legal responsibility to cover anything that will help your business stay above ground. In this case, that meant pursuing legal fee payment. Just because they lost money in this pursuit does not mean they completely lost.

As always, we’re here to help.

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