New Attorneys Fees Provision Should Apply Retroactively to Pending Whistleblower Cases

California’s whistleblower law, Labor Code section 1102.5, helps discourage employers from retaliating against employees who report unlawful activity in the workplace. It’s an important law because it safeguards other rights and privileges afforded to employees.

Last fall, Governor Gavin Newsom signed into law AB 1947, an amendment to Section 1102.5. The new Labor Code Section 1102.5(j) authorizes a court to award reasonable attorneys fees to a plaintiff who brings a successful action under Section 1102.5. This is an important addition to the law because it will help future whistleblowers find legal representation for their claims.

However, practitioners who filed whistleblower claims before Section 1102.5(j) became effective on January 1, 2021 might find themselves wondering if the new attorneys fee provision applies retroactively to their pending claims…

Retroactivity of Statutes, Generally

“As a general rule, statutes do not operate retroactively unless the Legislature plainly intended them to do so.” (Scott v. City of San Diego (2019) 38 Cal.App.5th 228, 236.) However, a statute that merely clarifies, rather than changes, existing law is properly applied to transactions predating its enactment. This is because “it is merely a statement of what the law has always been.” (Id.)

In determining whether a statute “clarifies” or “changes” existing law, courts consider the following factors: (1) What actions courts have previously taken in interpreting the law; (2) Whether the law was interpreted by the high or intermediate courts (once the Supreme Court “finally and definitively” interprets a statute, an amendment can’t merely clarify existing law; it necessarily changes it); (3) the Legislature’s intent as illustrated by legislative history; and (4) how quickly the Legislature acts.

As applied to AB 1947, these factors weigh against finding that Labor Code 1102.5(j) should apply retroactively. This is because the legislative history clearly shows that the purpose of AB 1947 was to change existing law:

Under existing law, workers who prevail in lawsuits alleging that their employer violated these protections … will still be stuck paying their own attorneys’ fees, unless they can find another way to convince the judge to make the employer pay those fees. This bill would alter that dynamic by authorizing courts to award reasonable attorneys’ fees to a worker that prevails on a claim of retaliation for blowing the whistle on legal misconduct at their workplace.

(California Committee Report, 2019 California Assembly Bill No. 1947, California 2019-2020 Regular Session.)

One might assume, then, that practitioners with pending whistleblower actions are flat out of luck when it comes to recovering fees for a successful claim. However, despair not…

Attorneys Fees Provisions as a Special Category

California courts treat fee statutes as a special category within the prospective/retrospective application doctrine. (See USS-Posco Industries v. Case (2016) 244 Cal.App.4th 197, 221 (“In sum, the California Supreme Court and many, many Courts of Appeal have treated legislation affecting the recovery of costs, including attorney fees, as addressing a “procedural” matter that is “prospective” in character and thus not at odds with the general presumption against retroactivity.”).)

Under this line of cases, fee statutes are procedural rules that apply to actions pending at the time of enactment.

Thus, a plaintiff who brought a whistleblower action prior to January 1, 2021 should still be awarded attorneys fees pursuant to Section 1102.5(j), so long as the case was still pending on that enactment date.

Takeaway

Although it is too early to know how courts will apply 1102.5 (j), there is a strong legal argument to be made that its attorney fee provision should apply retroactively to cases filed prior to its effective date that are still pending.

This is a good thing for California workers since, as the Legislature noted in its committee reports, it will help a greater number of whistleblowing employees find legal representation. Section 1102.5(j) should also, therefore, aid enforcement of California’s labor laws and support justice in the workplace.

Disabled Prison Guard Wins his Third Appeal Against the California Department of Corrections and Rehabilitation

Courts can award attorneys’ fees to the prevailing plaintiff in a discrimination or harassment claim brought under the Fair Employment and Housing Act (FEHA).  These attorney fee awards are designed to incentivize and reward a plaintiff’s counsel for litigating a civil rights case that is generally taken on a contingency fee basis and therefore has inherent risks.  Trial courts first calculate the lodestar amount, which is the product of the hours spent and the prevailing hourly rate of attorneys in the community conducting similar non-contingent litigation.  Then courts can increase this amount by adding a multiplier or increasing the lodestar amount by looking at various factors, such as the risk of non-payment, the public interest in advancing civil rights cases, the complexity of the issues involved, and the skill of the attorneys.  (more…)

Can I Be Fired for My Political Beliefs or Activities in California?

In this time of political turbulence, many people wonder if they can be fired for their political beliefs or activities.  In California, the answer to that question is no, thanks to the provisions of California Labor Code sections 1101 and 1102.

Section 1101, which has been on the books since 1937, provides as follows:

No employer shall make, adopt, or enforce any rule, regulation, or policy:

(a) Forbidding or preventing employees from engaging or participating in politics or from becoming candidates for public office.

(b) Controlling or directing, or tending to control or direct the political activities or affiliations of employees.

Note that section 1101 is broad, and includes rules, regulations or policies that tend to control or direct the political activities or affiliations of employees.  This would include terminating an employee for his or her beliefs, because doing so would tend to control his or her activities or affiliations.

Section 1102, also enacted in 1937, provides as follows:

No employer shall coerce or influence or attempt to coerce or influence his employees through or by means of threat of discharge or loss of employment to adopt or follow or refrain from adopting or following any particular course or line of political action or political activity.

The California Supreme Court has interpreted these laws favorably for employees in a pair of cases.  First, in Lockheed Aircraft Corp. v. Superior Court of Los Angeles County (1946) 28 Cal.2d 481, a group of employees had sued claiming that Lockheed fired them because of their political activities.  In response, Lockheed raised a series of challenges to section 1101.

The Court rejected each of Lockheed’s challenges.  The Court held first that section 1101 is not so uncertain or ambiguous as to be unconstitutional.  The Court further held that section 1101 was not an arbitrary or unreasonable limitation on the right to contract.

Perhaps most importantly, the Court recognized that an employee who suffers a violation of section 1101 can bring a private right of action for damages resulting from a breach of his or her employment contract.  In reaching this holding, the Court noted that Labor Code section 1105 provides that “Nothing in this chapter shall prevent the injured employee from recovering damages from his employer for injury suffered through a violation of this chapter.”

The Court then reasoned that, “a contract of employment must be held to have been made in the light of, and to have incorporated, the provisions of existing law.  Hence, upon violation of the section, an employee has a right of action for damages for breach of his employment contract.”  Lockheed Aircraft Corp., 28 Cal.2d at 486.  (citations omitted)

Three decades later, the Court revisited sections 1101 and 1102 in Gay Law Students Assn. v. Pacific Tel. & Tel. Co. (1979) 24 Cal.3d 458.  In that case, a group of students claimed that the defendant was discriminating against gays and lesbians by refusing to hire them, and that such conduct violated sections 1101 and 1102.[1]

The Court held that sections 1101 and 1102 “serve to protect ‘the fundamental right of employees in general to engage in political activity without interference by employers.’”  24 Cal.3d at 487.  For this reason, the statutes should not be narrowly confined to partisan activity.  Furthermore, “[t]he term ‘political activity’ connotes the espousal of a candidate or a cause, and some degree of action to promote the acceptance thereof by other persons.”  (emphasis in original)

The Court then reiterated its holding in Lockheed that employees who are fired in violation of sections 1101 and 1102 can bring claims for damages.

If you are fired for your political beliefs or activities in California, you may be able to bring several different types of claims.  First, you can sue under sections 1101 and 1102 directly.  You may also be able to sue for wrongful termination in violation of public policy.  See, e.g., Stevenson v. Superior Court (1997) 16 Cal.4th 880, 889–890.  Third, you may be able to sue for breach of the covenant of good faith and fair dealing.   See, e.g., Comunale v. Traders & General Ins. Co. (1958) 50 Cal.2d 654, 658.

It is not clear whether an employee who prevails under section 1101 or 1102 will be entitled to his or her attorneys’ fees.  Therefore, you may also wish to explore bringing a claim under the Private Attorneys General Act of 2004 (PAGA) (Lab. Code, § 2698 et seq.), which provides for reasonable attorneys’ fees and costs.  See Cal. Lab. Code section 2699(g)(1).

If you have questions about your rights in the workplace, please feel free to contact Hunter Pyle Law for a free and confidential initial intake.  We can be reached by phone or by text at (510) 444-4400 or at inquire@hunterpylelaw.com.

[1] At that time, sexual orientation was not a protected category under the Fair Employment and Housing Act.  It is now.  See Cal. Govt. Code section 12940(a)(1).

Plaintiff Denied Attorneys’ Fees even though his Physical Disability was a Substantial Motivating Reason Behind his Termination

William Bustos brought several disability discrimination-related claims against his employer Global P.E.T., Inc.  Mr. Bustos was fired just a day before he was scheduled to have carpal tunnel surgery.  The case went to trial and resulted in a defense verdict.  Despite the defense verdict, the jury found that Mr. Bustos’s disability was a substantial motivating reason for Global P.E.T., Inc.’s decision to terminate him.  However, the jury also found that Global P.E.T., Inc.’s conduct was not a substantial factor in causing harm to Mr. Bustos.   Bustos v. Global P.E.T., Inc., et al., Fourth Appellate Court of Appeal, No. E065869 (published Jan. 16, 2018). (more…)

Suing for Unpaid Wages in California: Recovering Attorney’s Fees

If I lose my wage and hour claim, will I have to pay my employer’s attorney’s fees?

California law provides many different ways for workers to recover attorney’s fees in wage and hour claims. Options for employees who wish to sue for unpaid wages may include:

• prevailing on a claim for failure to pay the minimum wage (see Labor Code section 1194)
• prevailing on a claim for unreimbursed business expenses (see Labor Code 2802)
• prevailing under California’s Equal Pay Act

These fee-shifting statutes are incredibly important in wage and hour cases (among others). This is because the damages in such cases, while often significant to the worker, are often not enough for an attorney to take the case on a contingency fee basis (whereby the attorney gets a percentage of the amount recovered). Absent the possibility of a fee shift, many workers who have not been paid the wages they are owed would be unable to find an attorney to help them recover those wages.

Recovering Attorneys Fees through California Labor Code Section 218.5(a)

One commonly used avenue to recover attorney’s fees in wage and hour actions is California Labor Code section 218.5(a), which provides in part as follows:

In any action brought for the nonpayment of wages…the court shall award reasonable attorney’s fees and costs to the prevailing party if any party to the action requests attorney’s
fees and costs upon the initiation of the action.

Significantly, the language quoted above is mandatory (“shall”) as opposed to permissive (“may”). As a result, attorney’s fee awards in unpaid wages claims often dwarf the plaintiff’s actual recovery.

Prior to 2014, section 218.5(a) was a completely two-way statute, meaning that it did not distinguish between prevailing employers and prevailing employees. As a result, if a worker brought a claim for unpaid wages and lost, the employer could recover its attorney’s fees. This threat was a strong disincentive for workers to sue, because if they lost they would be facing a judgment against them of tens if not hundreds of thousands of dollars.

Fortunately, an amendment to section 218.5, effective January 1, 2014, provides as follows:

[I]f the prevailing party in the court action is not an employee, attorney’s fees and costs shall be awarded pursuant to [section 218.5] only if the court finds that the employee brought the court action in bad faith.

This amendment was hugely beneficial to workers. As long as their claims for unpaid wages are not brought in bad faith (meaning that there is a reasonable, good faith dispute regarding their claims), they do not have to worry about getting hit with the employer’s attorney’s fees if they lose.

Recent Clarifications of Labor Code section 218.5

Two recent appellate decisions have resolved some of the lingering questions regarding section 218.

First, in USS-POSCO Industries v. Case (2016) 244 Cal.App.4th 19, the court addressed the question of whether the amendment to section 218.5 applied to actions that were pending before January 1, 2014. The court held that California courts have long treated legislation affecting the recovery of attorney’s fees as applying to actions pending at the time of
enactment. (This is different than federal courts, which have refused to apply the new version of section 218.5 to cases pending as of January 1, 2014.) Thus, in California state courts, the new version of section 218.5 applies to actions that were pending at the time of enactment. In other words, to recover attorneys’ fees in actions for unpaid wages, employers will need to show that the claims are brought in bad faith.

At the same time, employers that prevail on claims for unpaid wages may be able to recover their court costs, even if the plaintiff prevailed on other claims. See Sharif v. Mehusa, Inc. (2015) 241 Cal.App.4th 185. To unpack this a bit, under California Code of Civil Procedure section 1032(4), which provides for the recovery of court costs by a prevailing party, there is normally only one prevailing party. Thus, if the plaintiff wins on only one of his or her claims, the plaintiff is still likely to recover his or her costs and the defendant is unlikely to be able to do so.

However, section 218.5 provides a separate avenue to recover costs. Thus, if an employer prevails on a claim for unpaid wages, but loses on other claims, the employer can still recover costs if it can show that the employee filed its claim for unpaid wages in bad faith.

For these reasons, the news for workers on section 218.5 is mixed. But the recent amendments allowing employers to recover their attorney’s fees only in the case of bad faith will protect workers in the event that they sue and lose.

If you have questions about suing for unpaid wages, feel free to contact Hunter Pyle Law for a free initial intake. We can be reached at (510) 444-4400, or at inquire@hunterpylelaw.com.

“I want to sue my California employer for harassment and discrimination? But what happens if I lose my case?”

One important question that people often ask (and should ask) when thinking about suing their employer is, “What happens if I lose?  Do I have to pay the defendant any money?”

In answering this question, it is critical to understand the difference between attorneys’ fees and costs.  “Attorneys’ fees,” as the name indicates, are the actual fees that a defendant has paid to its attorneys to represent it in a lawsuit.  “Costs” refers to the various expenditures that are made during the course of litigation, and can include things such as filing fees and court reporter fees.

In Williams v. Chino Valley Independent Fire District S213100 (May 4, 2015) the California Supreme Court recently clarified the circumstances in which a plaintiff who files a case under the Fair Employment and Housing Act (FEHA) and loses must pay the defendant’s case costs.  The FEHA governs claims under California law for discrimination, harassment, and retaliation for complaining about discrimination and harassment, among other things.  The Williams opinion will therefore impact all cases involving such claims. (more…)