Timing Is Everything—Pay Undisputed Amount Before The 998 Offer Or Pay Later/Issue A New 998 Offer.
Wasito v. Kazali, Case No. B308826 (2d Dist., Div. 6 Aug. 31, 2021) (published) is must reading for employers wishing to resolve unpaid wage claims through a CCP § 998 offer where undisputed wages are due.
In essence, employees filed a complaint seeking unpaid wages, including bonuses. Employers made a $300,000 section 998 offer. After that 998 offer expired, employer sent a substantial check for unpaid bonuses, interest, and penalties, a check accepted by employees. A jury found only small amounts still owed to employees, with employer arguing that the 998 offer beat the small amounts awarded by the jury. The lower court disagreed and awarded employees $66,700 in attorney’s fees for prevailing in small amounts under Labor Code section 218.5, a one-way fee shifting statute.
The 2/6 DCA affirmed. Relying on Reid v. Overland Machined Products, 55 Cal.2d 203, 206-207 (1961), which held that undisputed wages must be paid without condition, the reviewing justices found that the section 998 offer was invalid under the Labor Code provisions requiring payment of undisputed wages. Although employer did pay the undisputed wages after the 998 offer was not accepted, that was too late as to retroactively validate it. The employer had two choices, neither of which were met: pay the undisputed wages before making the 998 offer or make a new 998 offer after paying the undisputed wages.
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