Employment, Section 1717: Labor Code § 218.5(a), Requiring Bad Faith For Losing Plaintiff In Wage Nonpayment Case To Face Fee Exposure, Prevails In Wage Claim Case Inextricably Intertwined With Contract Fees Clause Allowing Fees to Prevailing Employer

Section 218.5(a)’s Policy Prevailed Over Section 1717 In This Instance.

            Dane-Elec Corp. v. Bodokh, Case No. G055312 (4^th Dist., Div. 3 May 24, 2019) (partially published; fee discussion published) involved the collision between two fee entitlement provisions—Labor Code section 218.5(a) and Civil Code section 1717.

            Labor Code section 218.5(a) is a unilateral-fee shifting provision in wage nonpayment cases prohibiting prevailing employers from recovering fees unless the trial court finds the employee brought the wage claim in bad faith.  (However, the prevailing plaintiff would be entitled to fee recovery.)  So, what happens in the context of where this provision comes into “collision” with a prevailing employer’s right to recover contract-based fees from the employee where the wage claim was inextricably intertwined with the contract claim?  Answer:  Unless a bad faith wage claims is involved (which would trigger fee entitlement to the prevailing employer), section 218.5(a)’s prohibition controls over the contractual fee provision where no bad faith is shown on the Labor Code front.

            Acting Justice Fybel authored the 3-0 decision on behalf of our local 4/3 DCA.