A bill that would make employees liable for filing “bad faith” lawsuits passed the Assembly Labor and Employment Committee on Wednesday.
AB 2095 by Assemblyman Donald Wagner, R-Irvine, targets frivolous litigation by awarding an employer attorneys’ fees when the defendant can prove the worker filed suit in bad faith.
It would discourage litigation regarding technical violations on itemized wage statements that don’t harm the employee but end up costing employers thousands of dollars to defend in court.
The state’s labor code says eight categories of information that must appear in an itemized wage statement provided to the employee. The purpose is to notify the employee who his or her employer is and how wages were calculated.
An employer’s failure to include required data can subject the employer to an action for injunction. If an employee “suffers injury” as defined by law, the employee is entitled to statutory penalties up to $4,000.
A trend has emerged, however, in which employees file suit over “ticky tack” errors on wage statements that cause the worker no harm.
For example, in one case, an employee alleged a cause of action because the employer used a truncated name on the wage statement. The employee did not allege that this shortened version of the employer’s caused any problems. Although the court ultimately dismissed this cause of action through summary judgment, the employer incurred unnecessary legal costs and attorneys’ fees to get there.
The bill would only award attorneys’ fees to an employer if the lawsuit is proven to be frivolous, unreasonable or without foundation.
“While AB 2095 will not eliminate all cases that lack merit, it will certainly dissuade the filing of some frivolous cases,” says a letter from the California Chamber of Commerce, which sponsored the bill. “Any reduction of bad faith litigation will allow employers to devote more financial resources to growing their business and growing their workforce. It will also help reduce the overloaded dockets for courts so that legitimate cases may be resolved in a more efficient manner.”
The bill, also supported by the California Apartment Association, next goes to the Assembly Judiciary Committee.