The California Court of Appeal’s decision in Chavez v. California Collision, 2024 WL5064368, has significant implications for wage and hour claims, particularly in the context of settlement offers and attorney’s fees. While Code of Civil Procedure § 998 typically allows cost recovery if a settlement offer is rejected and a worse judgment is obtained, this case clarifies that the Labor Code supersedes Section 998 in prescribing the only way for an employer to be entitled to costs and highlights the strong public policy interest in supporting an employee’s pursuit of wage claims without fearing significant costs.
Factual and Procedural Background
Plaintiff Jorge Chavez sued California Collision for wage violations, including unpaid overtime. California Collision made a settlement offer under Section 998, which Chavez rejected. Although Chavez won at trial, the award was less than the offer, leading the trial court to award costs to the employer, California Collision.
Appeal Outcome
The case was appealed, with one of the primary issues being the interpretation and application of Code of Civil Procedure § 998 in the context of wage and hour claims. The appellate court reversed the trial court’s award of costs, emphasizing that penalizing employees for pursuing legitimate claims contradicts wage and hour laws’ public policy. The court clarified that Section 998 should not deter employees from asserting their rights and outlined that, for an employer to be entitled to costs or fees, the employer must be the prevailing party and the employee must have acted in bad faith.
Conclusion
This case highlights the complexities of wage litigation and the importance of understanding settlement dynamics in the narrow context of employment cases. This decision reinforces California’s continued protection of employee rights while ensuring procedural fairness.
RPNA’s business and employment attorneys have significant experience assisting employers in navigating these difficult strategic decisions. So, please contact the attorneys below should you have any concerns about the impact of this decision, labor code violations in general, or other strategic litigation considerations:
- Nicholas P. Roxborough: npr@rpnalaw.com
- W. Brad Barbagallo: wbb@rpnalaw.com
- Phone:📞 818-992-9999
