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Appeal at Your Peril: It’s Not the Back Pay that Might Get You, It’s the Attorney’s Fees

October 25, 2018

Posted in Business Start Ups, Employment Law

Disputes over back pay can snow ball if you’re not careful. If not properly handled a relatively small amount of pay that’s being disputed can become an award of thousands of dollars of attorney’s fees. Wage and hour claims, even those over relatively small amounts, could come back to bite an employer hard.

A recent case involves, ironically enough, a law firm, according to The Reporter. It all started with a paralegal’s unused vacation pay that wasn’t paid quickly enough after she quit. Taryn Nishiki left the firm Danko Meredith, sending an email to the firm’s partners on November 14, 2014. In the email she stated that under state law her unpaid vacation must be paid to her within 72 hours of her notice of resignation.

Under California law an employer needs to pay all wages owed (including unused vacation pay) within 72 hours of getting notice an employee is leaving. If the employer willfully fails to do so, the wages continue as a penalty from that due date until the wages are paid, for up to thirty days.

Nishiki was owed $2,880.31 in unused vacation time when she resigned. She received a handwritten check from the firm before the deadline. The check had the right amount number in the numeral box but the amount written was $80 less than that. Nishiki informed her former employer her bank refused to accept the check. A new one wasn’t issued until December 5.

Nishiki filed a complaint with the California Labor Commissioner. She sought unpaid vacation wages, rest period premiums ($23,718.75) and waiting time penalties for the delay in receiving the proper check ($7,500, or $250 per day for 30 days). The hearing officer assigned the case issued a mixed decision. The state agreed with the firm on the first two claims but found that Nishiki was due waiting penalties for 17 days, awarding her $4,250.

The firm appealed Nishiki’s award to the Alameda County Superior Court, which turned out to be a mistake. Instead of licking their wounds, holding their nose and cutting another check, they fought on. Judge Joseph Bergeron sided with Nishiki in the next round, upheld the $4,250 award and awarded Nishiki $86,160 in attorney fees.

The firm appealed that decision to the First District Court of Appeal, claiming the trial court was wrong to award Nishiki all of her alleged attorneys’ because two of her claims failed. The First District in August ruled the fee-shifting provision in Nishiki’s case was “a one-way provision allowing attorney fees only against a party who appeals an administrative award, in order to discourage such trial court actions.”

The court pointed out it was the firm, not Nishiki, that appealed the state’s decision. It’s the firm that wanted a trial “…after suffering only a relatively modest loss before the commissioner, having defeated two other claims for which Nishiki sought considerably higher damages…” The court ruled that since Nishiki had to incur “substantial” attorney fees to retry her entire case, including issues that she lost before the commissioner, “defendant has only itself to blame.”

Whether or not to pay an award or a penalty or go forward with an appeal needs to be decided in a cold, hard, calculating manner. What is there to gain? What could be lost? Ego and feelings need to be put aside. It may be an injustice to pay someone a certain amount of money, but what’s the possible cost of not paying it?

If you have concerns about wage and hour issues or appealing a legal decision, contact my office so we can discuss your concerns, what you can do and how I can help.