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Court Denies Recovery of Attorneys’ Fees for Employer in Wage and Hour Lawsuit

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In yet another unfavorable decision in yet another wage and hour lawsuit, the Court recently decided that an employer who prevailed in a wage and hour case is not entitled to recover its attorneys’ fees under Labor Code Section 218.5, even though Section 218.5 expressly provides that the “prevailing party” is entitled to recover such fees.

In McGann v. UPS, the Plaintiff sued UPS for unpaid overtime, missed meal and rest period pay, and alleged that the wage statements were not in compliance with the requirements of the Labor Code (See prior article). UPS was successful at trial and then sought to recover their attorneys fees paid to defend the claims (except on a claim for overtime, since fees are not recoverable on that claim).

UPS asserted that they were entitled to recover their attorneys fees because Labor Code Section 218.5 expressly provides for the recovery of attorneys’ fees by “the prevailing party”(regardless of whether the prevailing party is the employee or the employer). However, the court rejected this argument holding that because the Plaintiff alleged an overtime claim, the entire action was governed by a different section of the Labor Code which only provides for the recovery of fees by the “prevailing employee.” The Court found that the fee provision in Labor Code Section 218.5 simply did not apply.

The consequence of this ruling is that every lawsuit claiming some type of wage and hour violation will now likely include an allegation of failure to pay overtime to defeat any attempt for the recovery of attorneys fees if the employer wins.