The California Supreme Court has provided further guidance regarding the “Good-Faith Defense” available to an employer in lawsuits brought for wage violations. In Iloff v. LaPaille, the California Supreme Court addressed when “liquidated” or double damages may be avoided by an employer for minimum wage violations. Any employers looking for guidance as to any labor regulations should contact MNK Law at 562.362.6437 or info@mnklawyers.com.
The Court’s Findings: Under California Labor Code section 1194.2, liquidated damages in an amount equal to the amount of unpaid minimum wages are typically mandatory. However, if an employer can show that it had a good-faith and reasonable belief that it was not violating the law regarding minimum wages, then the court has the discretion to reduce the award made for liquidated damages in an amount that is less than the minimum wages actually due to the employee. The court could even award no liquidated damages whatsoever.
The California Supreme Court held that an employer “must show that it made a reasonable attempt to determine the requirements of the law governing minimum wages.” The Court advised that proof that “the employer was ignorant of the law is insufficient.” The court further explained that “a court may consider evidence of the nature of the parties’ relationship, their agreements with each other, and the legal landscape in determining whether the employer made a good faith effort to comply with those requirements.” The court noted that a determination as to the alleged good faith held by the employer will always be “context dependent.”
Employer Takeaways: Employers must remain on guard and comply with each of the ever expanding list of employment law obligations. The Iloff decision is instructive as to compliance overall, but most of all, reminds employers that they should document everything, including the grounds for their employment decisions. That documentation can help avoid double damages even if a court should ultimately disagree with the employer’s decisions. The documentation should be kept in a well-organized manner in an easy to access place known to the highest levels of management, so that the documentation can be accessed even there are changes in personnel for the human resources department.
Employers interested in further tips for compliance can contact the experienced staff and counsel at MNK Law, by e-mail at info@mnklawyers.com or 562.362.6437.
