Employment Damages and Remedies

Chapter Outlines

1 2 3 4 5 6 7 8 9 10

1

Approaching Employment Remedies

Honorable Alexander H. Williams III (Ret.)

I.  EMPLOYMENT MATTERS  §1.1

A.  Thinking Broadly

1.  Employment Remedies Are Broad  §1.2

2.  Remedies Discussed in This Book  §1.3

B.  Most Cases Settle  §1.4

1.  Settlement as Choice  §1.5

2.  Settlement as Process  §1.6

3.  Trial Preparation as Settlement Preparation  §1.7

C.  Planning the Work, Working the Plan  §1.8

II.  COMMENCEMENT OF EMPLOYMENT ACTION  §1.9

A.  Assessing the Case  §1.10

B.  Determining Client’s Position

1.  What Does Client Want?  §1.11

2.  Understanding Reasons Underlying Goals  §1.12

C.  Determining Available Remedy or Result  §1.13

D.  What Does Client Need?  §1.14

E.  Attorney Fees and Costs  §1.15

III.  PREPARING CASE FOR ALL AUDIENCES  §1.16

A.  Judge  §1.17

B.  Jury  §1.18

C.  Appellate Court  §1.19

D.  Arbitrator  §1.20

E.  Mediator or Settlement Judge  §1.21

F.  Opposing Counsel  §1.22

G.  Opposing Party  §1.23

H.  Insurer or Risk Manager  §1.24

IV.  DON’T TELL THEM, SHOW THEM  §1.25

V.  TEN STEPS TO SUCCESSFUL MEDIATION  §1.26

A.  Timing  §1.27

B.  Premediation Communication  §1.28

C.  Brief  §1.29

D.  Chronology  §1.30

E.  Causes of Action  §1.31

F.  Copying Opposing Counsel  §1.32

G.  Personal Attendance  §1.33

H.  Draft Settlement Agreements  §1.34

I.  Preparing Client  §1.35

J.  Following Up  §1.36

Back to Top

2

Breach of Contract Remedies

Cara Panebianco

I.  AVAILABILITY OF DAMAGES

A.  Existence of Employment Contract Must Be Shown  §2.1

B.  No Contract Claims for Public Employees  §2.2

II.  MEASURE OF DAMAGES

A.  Benefit of the Bargain  §2.3

1.  Application in Employment Cases  §2.4

2.  Damages Must Be Proximately Caused or Reasonably Foreseeable  §2.5

3.  Damages Must Be Clearly Ascertainable  §2.6

B.  Liquidated Damages

1.  Validity  §2.7

2.  Factors Considered  §2.8

III.  LIMITATIONS ON CONTRACT DAMAGES

A.  Emotional Distress Damages Generally Not Available  §2.9

B.  Punitive Damages Not Available  §2.10

C.  Plaintiff’s Duty to Mitigate Damages  §2.11

IV.  ITEMS OF RECOVERY  §2.12

A.  Back Pay

1.  Nature of Relief  §2.13

2.  Time Period

a.  Generally  §2.14

b.  Events Terminating Back Pay Liability

(1)  Expiration of Contract  §2.15

(2)  Unconditional Reinstatement Offer  §2.16

3.  Components of Back Pay  §2.17

B.  Front Pay (Lost Future Earnings)  §2.18

1.  Availability  §2.19

2.  Time Period

a.  Fixed-Term Contract  §2.20

b.  Indefinite-Term Contract  §2.21

3.  Employee’s Duty to Mitigate  §2.22

4.  Reduction to Present Value  §2.23

C.  Reliance Damages  §2.24

D.  Prejudgment Interest  §2.25

1.  When Damages Are Certain (Civil Code §3287(a))  §2.26

2.  When Damages Are Unliquidated (Civil Code §3287(b))  §2.27

E.  Specific Performance  §2.28

F.  Litigation Costs  §2.29

V.  DEFENSES

A.  Unconditional Reinstatement Offer  §2.30

B.  Good Cause for Termination

1.  Known at Time of Termination  §2.31

2.  Learned After Termination (“After-Acquired Evidence”)  §2.32

Back to Top

3

Damages for Wrongful Termination and Other Tort Claims

Hillary Jo Benham-Baker

I.  ITEMS OF RECOVERY  §3.1

A.  General Damages  §3.2

B.  Special Damages

1.  Lost Wages/Back Pay  §3.3

2.  Health Insurance and Other Benefits  §3.4

3.  Medical Expenses  §3.5

C.  Future Wages/Front Pay  §3.6

D.  Prejudgment Interest  §3.7

E.  Punitive Damages  §3.8

F.  Tax Consequences  §3.9

G.  Attorney Fees and Costs  §3.10

II.  PRELIMINARY CONSIDERATIONS

A.  Limitations

1.  Exclusivity of Statutory Remedies  §3.11

2.  Employee Retirement Income Security Act of 1974 (ERISA) and Other Preemption Issues  §3.12

3.  Government Claims Exhaustion Issues  §3.13

B.  Employee’s Duty to Mitigate Damages  §3.14

C.  Employee Conduct That May Limit Damages  §3.15

III.  PROVING DAMAGES

A.  Witnesses

1.  Plaintiff  §3.16

2.  Family, Friends, and Coworkers  §3.17

3.  Medical Professionals and Other Expert Witnesses  §3.18

B.  Documentary Evidence  §3.19

IV.  CAUSES OF ACTION SOUNDING IN TORT

A.  Wrongful Termination in Violation of Public Policy

1.  Overview of the Tort  §3.20

2.  Specific Items of Recovery  §3.21

B.  Infliction of Emotional Distress (Intentional and Negligent)

1.  Overview of the Tort  §3.22

2.  Specific Items of Recovery  §3.23

C.  Misrepresentation and Fraud

1.  Overview of the Tort

a.  Misrepresentation and Fraud Under CC §1710  §3.24

b.  Misrepresentation of Employment Conditions Under Lab Code §970  §3.25

2.  Specific Items of Recovery  §3.26

D.  False Imprisonment

1.  Overview of the Tort  §3.27

2.  Specific Items of Recovery  §3.28

E.  Defamation

1.  Overview of the Tort

a.  Elements of Tort  §3.29

b.  Employment-Related Issues  §3.30

2.  Specific Items of Recovery  §3.31

F.  Invasion of Privacy

1.  Overview of the Tort  §3.32

2.  Specific Items of Recovery  §3.33

G.  Intentional Interference With Contract or Prospective Economic Advantage

1.  Overview of the Tort of Intentional Interference With Prospective Economic Advantage  §3.34

2.  Overview of the Tort of Intentional Interference With Contract  §3.35

3.  Specific Items of Recovery for Interference With Contract or Prospective Economic Advantage  §3.36

Back to Top

4

Remedies Under Antidiscrimination and Other Employee Rights Statutes

Pamela M. Sayad
Brenda F. Biren

I.  SCOPE OF CHAPTER  §4.1

II.  TITLE VII

A.  Prohibited Acts  §4.2

B.  Exhaustion of Administrative Remedies Required  §4.3

C.  Title VII Remedies  §4.4

1.  Back Pay  §4.5

a.  Accrual of Back Pay  §4.6

b.  Components of Back Pay  §4.7

(1)  Wages and Salary  §4.8

(2)  Missed Promotions or Raises  §4.9

(3)  Bonuses and Commissions  §4.10

(4)  Tips  §4.11

(5)  Overtime Pay  §4.12

(6)  Pension and Retirement  §4.13

(7)  Health Insurance  §4.14

(8)  Life Insurance  §4.15

(9)  Vacation  §4.16

(10)  Stock Options  §4.17

(11)  Other Nonmonetary Benefits  §4.18

c.  Deductions From Back Pay Award  §4.19

(1)  Duty to Mitigate  §4.20

(a)  Reasonable Steps  §4.21

(b)  Comparable Employment  §4.22

(2)  Severance Pay  §4.23

(3)  Government and Other Benefits

(a)  Collateral Source Rule  §4.24

(b)  Unemployment Insurance  §4.25

(c)  Social Security and Medicare Benefits  §4.26

(d)  Workers’ Compensation  §4.27

(e)  Disability Benefits  §4.28

(4)  Inability to Work  §4.29

d.  Adjustment for Tax Effects  §4.30

e.  Unconditional Offer of Reinstatement  §4.31

f.  After-Acquired Evidence  §4.32

2.  Front Pay (Lost Future Earnings)  §4.33

a.  Monetary Equivalent of Reinstatement  §4.34

b.  Availability  §4.35

3.  Compensatory Damages

a.  When Available  §4.36

b.  Compensatory Damage Ceilings  §4.37

4.  Punitive Damages

a.  When Available  §4.38

b.  Vicarious Liability for Manager’s Actions  §4.39

c.  Punitive Damage Ceilings  §4.40

5.  Special Damage Limitation in Mixed Motive Cases  §4.41

6.  Injunctive Relief  §4.42

7.  Reinstatement  §4.43

8.  Purging Personnel File  §4.44

9.  Attorney Fees  §4.45

D.  Considerations in Deciding to Bring Title VII Suit  §4.46

III.  CALIFORNIA FAIR EMPLOYMENT AND HOUSING ACT (FEHA)

A.  Protected Categories  §4.47

B.  Prohibited Acts  §4.48

C.  Administrative Remedies

1.  Exhaustion of Administrative Remedies  §4.49

2.  Administrative Adjudication Under FEHA Eliminated  §4.50

D.  Remedies in Civil Action Under FEHA  §4.51

1.  Back Pay  §4.52

a.  Components of Back Pay  §4.53

b.  Duty to Mitigate  §4.54

c.  Avoidable Consequences Doctrine  §4.55

d.  Deductions From Back Pay Award  §4.56

2.  Front Pay  §4.57

3.  Compensatory Damages  §4.58

4.  Punitive Damages  §4.59

5.  Attorney Fees  §4.60

6.  Injunctive Relief and Reinstatement  §4.61

IV.  AGE DISCRIMINATION IN EMPLOYMENT ACT (ADEA)

A.  Prohibited Acts  §4.62

B.  Exhaustion of Administrative Remedies  §4.63

C.  Remedies Under ADEA  §4.64

1.  Back Pay

a.  Components of Back Pay  §4.65

b.  Duty to Mitigate  §4.66

c.  Deductions From Back Pay Award  §4.67

2.  Front Pay  §4.68

3.  Liquidated Damages  §4.69

4.  Punitive Damages Not Available  §4.70

5.  Equitable Relief  §4.71

6.  Emotional Distress Damages Not Available  §4.72

7.  Attorney Fees  §4.73

8.  Costs and Expert Witness Fees  §4.74

9.  Prejudgment Interest  §4.75

10.  Older Workers Benefit Protection Act (OWBPA)  §4.76

D.  Age Discrimination Under FEHA  §4.77

V.  AMERICANS WITH DISABILITIES ACT (ADA)

A.  Prohibited Acts  §4.78

B.  Reasonable Accommodation

1.  Employer Required to Provide “Reasonable Accommodation” at Its Expense  §4.79

2.  Determining What Constitutes Reasonable Accommodation  §4.80

C.  Exhaustion of Administrative Remedies  §4.81

D.  Remedies Under the ADA  §4.82

1.  Back Pay  §4.83

2.  Front Pay  §4.84

3.  Compensatory and Punitive Damages  §4.85

a.  Not Available if Employer Shows Good Faith Effort to Accommodate  §4.86

b.  Not Available in Retaliation Claims  §4.87

4.  Special Damage Limitation in Mixed Motive Cases  §4.88

5.  Injunctive Relief  §4.89

6.  Attorney Fees  §4.90

E.  Disability Discrimination Under FEHA  §4.91

VI.  REHABILITATION ACT OF 1973

A.  Prohibited Acts  §4.92

B.  Remedies Under the Rehabilitation Act

1.  Remedies Under Section 501  §4.93

2.  Remedies Under Section 503  §4.94

3.  Remedies Under Section 504  §4.95

VII.  FEDERAL EQUAL PAY ACT (29 USC §206(d)) AND CALIFORNIA EQUAL PAY ACT (Lab C §1197.5)

A.  Prohibited Acts  §4.96

B.  Administrative Remedies  §4.97

C.  Remedies Under the Federal and State Equal Pay Acts  §4.98

VIII.  FEDERAL FAMILY AND MEDICAL LEAVE ACT (FMLA)

A.  Applicability  §4.99

B.  Administrative Remedies  §4.100

C.  Remedies Under the FMLA

1.  Economic Damages  §4.101

2.  Liquidated Damages  §4.102

3.  Equitable Relief  §4.103

4.  Attorney Fees, Costs, and Interest  §4.104

IX.  CIVIL RIGHTS ACT of 1866 (42 USC §1981)

A.  Scope of Act  §4.105

B.  Remedies Under §1981  §4.106

X.  CIVIL RIGHTS ACT of 1871 (42 USC §1983)

A.  Applicability  §4.107

B.  Remedies Under §1983  §4.108

1.  Compensatory Damages  §4.109

2.  Punitive Damages  §4.110

3.  Equitable Relief  §4.111

4.  Attorney Fees  §4.112

XI.  OTHER FEDERAL EMPLOYEE RIGHTS STATUTES

A.  Genetic Information Nondiscrimination Act (GINA)  §4.113

B.  Occupational Safety and Health Act (OSHA)  §4.114

C.  Fair Labor Standards Act (FLSA)

1.  Minimum Standards Established  §4.115

2.  Remedies  §4.116

D.  False Claims Act (FCA)  §4.117

E.  Sarbanes-Oxley Act (SOX)  §4.118

F.  Worker Adjustment and Retraining Notification Act (WARN Act)  §4.119

G.  Racketeer Influenced and Corrupt Organizations Act (RICO)  §4.120

H.  Protection for Employee Privacy

1.  Employee Polygraph Protection Act  §4.121

2.  Consumer Credit Protection Act  §4.122

3.  Bankruptcy Reform Act  §4.123

4.  National Labor Relations Act (NLRA)  §4.124

I.  Uniformed Services Employment and Reemployment Rights Act (USERRA)  §4.125

J.  Immigration Reform and Control Act of 1986 (IRCA)

1.  Applicability  §4.126

2.  Enforcement and Remedies  §4.127

K.  Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010  §4.127A

XII.  OTHER CALIFORNIA ANTIDISCRIMINATION STATUTES

A.  Unruh Civil Rights Act; Ralph Civil Rights Act  §4.128

B.  Bane Act  §4.129

XIII.  OTHER CALIFORNIA EMPLOYEE RIGHTS STATUTES

A.  California Occupational Safety and Health Act of 1973 (Cal/OSHA)

1.  Applicability  §4.130

2.  Enforcement and Remedies  §4.131

B.  California Family Rights Act (CFRA)

1.  Applicability  §4.132

2.  Administrative Remedies  §4.133

3.  Remedies Under the CFRA  §4.134

C.  California False Claims Act  §4.135

D.  Inducing Employee to Move (Lab C §970)  §4.136

E.  Protection for Refusal to Commit Illegal Act (Lab C §2856)  §4.137

F.  Protection for Whistleblowing to Government or Law Enforcement Agency (Lab C §1102.5)  §4.138

G.  California Whistleblower Protection Act (Govt C §§8547–8547.13)  §4.139

H.  Protection for Exercising Labor Code Rights (Lab C §98.6)  §4.140

I.  Indemnity for Work-Related Expenses or Losses (Lab C §2802; Govt C §§995–996.6)  §4.141

J.  Unfair Competition Law (Bus & P C §§17200–17210)  §4.142

K.  Blacklisting (Lab C §1050)  §4.143

L.  Discrimination Against Injured Workers (Lab C §132a)  §4.144

M.  California WARN Act (Lab C §§1400–1408)

1.  Applicability  §4.145

2.  Enforcement and Remedies  §4.146

N.  Prohibition of Retaliation Against Suspected Undocumented Workers (Lab C §§1019 and 1024.6)  §4.146A

O.  Employment Protections for Victims of Domestic Violence, Sexual Assault, or Stalking (Lab C §§230 and 230.1)  §4.146B

XIV.  LOCAL ORDINANCES  §4.147

Back to Top

5

Equitable Remedies

Julia Campins

I.  SCOPE OF CHAPTER  §5.1

II.  AVAILABILITY OF EQUITABLE RELIEF

A.  No Specific Performance of Personal Services Contract  §5.2

1.  Suit for Declaratory Relief Permissible  §5.3

2.  Employee Who Has Performed May Seek Compensation  §5.4

B.  Injunctive Relief to Prevent Breach of Contract

1.  Personal Service Contracts  §5.5

2.  Covenants Not to Compete  §5.6

3.  Collective Bargaining Agreement  §5.7

C.  Equitable Relief Provided in Statutes  §5.8

1.  Major Antidiscrimination Statutes Authorizing Equitable Relief  §5.9

2.  Equitable Relief Under Other Employee Rights Statutes

a.  Labor Code §1194.5 (Wage and Hour Laws)  §5.10

b.  Other Relevant Code Provisions  §5.11

c.  Anti-Retaliation Provisions  §5.12

d.  No Injunctive Relief Under Private Attorneys General Act (PAGA)  §5.13

e.  Unfair Competition Law (UCL)

(1)  Injunctive Relief  §5.14

(2)  Back Pay  §5.15

f.  Whistleblower Protection Statutes  §5.16

g.  Uniformed Services Employment and Reemployment Rights Act (USERRA)  §5.17

h.  Fair Labor Standards Act (FLSA)  §5.18

i.  National Labor Relations Act (NLRA)

(1)  Sanctions Available for Unfair Labor Practices  §5.19

(2)  Employees’ Immigration Status  §5.20

j.  Other Federal Statutes  §5.21

III.  FORMS OF EQUITABLE RELIEF TO REMEDY PAST ILLEGAL PRACTICES

A.  Reinstatement  §5.22

1.  No Reinstatement for Breach of Contract  §5.23

2.  Reinstatement May Be Impracticable or Inappropriate  §5.24

3.  Deciding Between Reinstatement and Front Pay  §5.25

4.  Effect of After-Acquired Evidence of Employee Wrongdoing  §5.26

B.  Back Pay

1.  Entitlement to Back Pay  §5.27

2.  Equitable Nature of Back Pay

a.  Back Pay as Equitable Remedy  §5.28

b.  Effect on Right to Jury Trial  §5.29

3.  Calculating the Back Pay Award  §5.30

a.  Time Period  §5.31

b.  Unconditional Reinstatement Offer  §5.32

c.  Components of Back Pay Award  §5.33

d.  Reductions in Back Pay  §5.34

(1)  Duty to Mitigate  §5.35

(2)  Effect of After-Acquired Evidence of Employee Wrongdoing  §5.36

(3)  Effect of Employee Resignation  §5.37

(4)  Collateral Source Rule  §5.38

(5)  Severance or Separation Pay  §5.39

(6)  Reinstatement Offer  §5.40

C.  Front Pay

1.  Entitlement to Front Pay  §5.41

2.  Equitable Nature of Front Pay  §5.42

3.  Calculation of Front Pay

a.  Duration  §5.43

b.  Duty to Mitigate  §5.44

c.  Collateral Source Rule  §5.45

d.  After-Acquired Evidence  §5.46

4.  Future Pecuniary Losses  §5.47

D.  Expungement or Modification of Personnel Records  §5.48

E.  Promotion or Hiring  §5.49

F.  Employee’s Duty to Mitigate  §5.50

IV.  EQUITABLE REMEDIES FOR ONGOING UNLAWFUL PRACTICES

A.  Availability of Relief; Cease and Desist Orders  §5.51

B.  Employer’s Voluntary Cessation of Unlawful Practices  §5.52

C.  Prior Restraint  §5.53

V.  PLEADING AND PROOF ISSUES INVOLVING EQUITABLE RELIEF  §5.54

Back to Top

6

Punitive Damages

Brian J. Mills
Mary-Christine (M.C.) Sungaila

I.  PURPOSE OF PUNITIVE DAMAGES  §6.1

II.  AVAILABILITY OF PUNITIVE DAMAGES IN EMPLOYMENT CASES

A.  Claims for Which Punitive Damages Are Available

1.  State Claims

a.  Tort Claims  §6.2

b.  Fair Employment and Housing Act (FEHA)  §6.3

c.  California Labor Code Violations

(1)  Punitive Damages Recoverable  §6.4

(2)  Liquidated and Treble Damages Recoverable  §6.5

d.  California Family Rights Act of 1993 (CFRA)  §6.6

2.  Federal Claims

a.  Title VII of the Civil Rights Act of 1964  §6.7

(1)  Cap on Title VII Awards  §6.8

(2)  Applicability of Caps  §6.9

b.  Civil Rights Act of 1866 (42 USC §1981)  §6.10

c.  Americans with Disabilities Act (ADA)  §6.11

d.  Age Discrimination in Employment Act (ADEA)  §6.12

e.  Fair Labor Standards Act of 1938 (FLSA)  §6.13

f.  Family and Medical Leave Act of 1993 (FMLA)  §6.14

g.  Rehabilitation Act of 1973  §6.15

h.  Additional Acts Providing Liquidated Damages  §6.16

3.  No Punitive Damages in Contract Actions  §6.17

B.  Prerequisites for Obtaining Punitive Damages Awards  §6.18

1.  Intent

a.  Malice, Oppression, or Fraud Under CC §3294

(1)  Definitions  §6.19

(2)  Conduct That Is Despicable  §6.20

(3)  Conduct That Is Not Despicable  §6.21

b.  Intentional or Reckless Behavior  §6.22

2.  Employer Knowledge/Ratification

a.  Liable Under Respondeat Superior  §6.23

b.  Knowledge of Employee Unfitness  §6.24

c.  Corporation Ratifies Employee’s Improper Act  §6.25

d.  Improper Act by Officer, Director, or Managing Agent  §6.26

3.  Compensatory Damages Award or Constitutional Violation as Prerequisite

a.  California Courts  §6.27

b.  Federal Courts  §6.28

C.  Standard of Proof  §6.29

III.  LIMITS ON AMOUNT OF PUNITIVE DAMAGE AWARDS

A.  Federal Constitutional Limits  §6.30

1.  Excessive Fines  §6.31

2.  Procedural Due Process  §6.32

3.  Substantive Due Process  §6.33

4.  The Guideposts for Determining Constitutional Excessiveness

a.  Reprehensibility  §6.34

b.  Ratio Between Compensatory and Punitive Damages  §6.35

(1)  Ratios Upheld in Employment Cases  §6.36

(2)  Factors to Be Analyzed in Determining Reasonableness of Ratio  §6.37

(3)  What Constitutes “Compensatory Damages”?  §6.38

(a)  Designation by Legislature  §6.39

(b)  Function Served by the Award  §6.40

(c)  What Sums Are Considered to Be Compensatory Damages?  §6.41

(i)  Prejudgment Interest on Compensatory Damages  §6.42

(ii)  Statutory Treble Damages  §6.43

(iii)  Attorney Fees  §6.44

(iv)  Disgorged Profits  §6.45

(v)  Prejudgment Interest on Punitive Damages  §6.46

c.  Statutory Penalties  §6.47

d.  Defendant’s Wealth Not a Factor in Due Process Analysis  §6.48

B.  State Limitations on Amount of Punitive Damages Award  §6.49

1.  Reprehensibility  §6.50

2.  Ratio

a.  Approved Limits  §6.51

b.  Defining “Compensatory Damages”  §6.52

(1)  Prejudgment Interest  §6.53

(2)  Potential Harm Damages  §6.54

c.  Effect of Reduction of Compensatory Damage Award  §6.55

3.  Role of Defendant’s Wealth  §6.56

C.  Interplay Between State and Federal Analyses  §6.57

Back to Top

7

Civil Penalties Under the Private Attorneys General Act (PAGA)

Catha Worthman

I.  INTRODUCTION  §7.1

A.  Action Brought in Representative Capacity  §7.2

B.  Elements of PAGA Claim  §7.3

II.  AVAILABILITY OF RELIEF

A.  Actions Covered

1.  Actions for Civil Penalties for Labor Code Violations  §7.4

2.  Common PAGA Claims  §7.5

B.  Actions Excluded  §7.6

1.  Claims for Damages or Injunctive Relief  §7.7

2.  Claims for Statutory Penalties  §7.8

3.  Explicit Exclusions  §7.9

C.  Nonexclusive Remedy  §7.10

III.  PEOPLE COVERED  §7.11

A.  Aggrieved Employees

1.  Definition  §7.12

2.  Former Employee  §7.13

3.  No Economic Injury Requirement  §7.14

4.  If Court Finds No Underlying Labor Code Violation  §7.15

B.  Action Representing Others  §7.16

1.  Class Action Not Required  §7.17

2.  Article III Standing to Proceed on Representational Basis  §7.18

3.  Action Cannot Be Assigned  §7.19

4.  No Associational Standing  §7.20

5.  Possible Unavailability of Individual Actions  §7.21

IV.  PREREQUISITES BEFORE FILING CIVIL ACTION

A.  Exhaustion Required  §7.22

B.  Effect of Citation by State Agency  §7.23

C.  Exhaustion Procedures  §7.24

1.  Exhaustion Requirements for Serious Violations

a.  Actions Covered  §7.25

b.  Written Notice to Labor and Workforce Development Agency  §7.26

c.  Agency Action  §7.27

2.  Exhaustion Requirements for Occupational Safety and Health Violations  §7.28

3.  Exhaustion Requirements for Other Violations; Employer’s Opportunity to Cure  §7.29

a.  Time Limit for Curing and Required Notice  §7.30

b.  Limit on Curing Violations  §7.31

c.  Employee’s Right to Dispute Cure  §7.32

4.  Contents of Notice to Labor and Workforce Development Agency  §7.33

V.  PLEADING ISSUES

A.  Pleading Basics  §7.34

B.  Right to Amend

1.  PAGA’s Amendment Provision  §7.35

2.  Application in Federal Court  §7.36

3.  Relation Back  §7.37

C.  Naming Corporate Officers  §7.38

VI.  PENALTIES RECOVERABLE  §7.39

A.  Amount of Penalties

1.  If Specified by Labor Code  §7.40

2.  If Not Specified by Labor Code  §7.41

B.  Court’s Discretion  §7.42

C.  Distribution of Penalties Recovered  §7.43

VII.  ATTORNEY FEES AWARD  §7.44

VIII.  EMPLOYER DEFENSES

A.  Duplication  §7.45

B.  Statute of Limitations  §7.46

C.  Res Judicata/Collateral Estoppel

1.  Use of Collateral Estoppel by Employer  §7.47

2.  Use of Collateral Estoppel by Plaintiff Employees  §7.48

3.  Settlement in Earlier Class Action  §7.49

D.  Arbitration Waivers  §7.50

E.  Failure to Comply With Exhaustion Requirements  §7.51

IX.  OTHER LITIGATION ISSUES

A.  Federal Court Jurisdiction

1.  Class Action Fairness Act

a.  Basis for Jurisdiction  §7.52

b.  Amount in Controversy Under Class Action Fairness Act  §7.53

2.  Traditional Diversity Jurisdiction

a.  Aggregation of Penalties  §7.54

b.  Amount Recoverable by Labor and Workforce Development Agency  §7.55

B.  Discovery  §7.56

C.  Proof  §7.57

D.  Trial  §7.58

E.  Settlements

1.  Approval of Settlements  §7.59

2.  Allocation of Penalties in Settlement  §7.60

Back to Top

8

Attorney Fees, Costs, and Interest

Sanford Jay Rosen
Michael Freedman

I.  INTRODUCTION  §8.1

A.  Distinctions Between California and Federal Approaches  §8.2

B.  Planning Considerations for Attorney Fees in Employment Cases  §8.3

II.  AVAILABILITY OF ATTORNEY FEES

A.  The American Rule  §8.4

B.  Fee-Shifting Statutes

1.  Principal California Employment Law Fee-Shifting Statutes  §8.5

2.  Principal Federal Employment Law Fee-Shifting Statutes  §8.6

3.  Availability of Attorney Fees to Prevailing Plaintiffs Under Fee-Shifting Statutes

a.  Prevailing Party  §8.7

b.  Limitations on Prevailing Party  §8.8

(1)  Interim Success  §8.9

(2)  Favorable Statement of Law  §8.10

(3)  Remand to Administrative Body  §8.11

(4)  Injunctive Relief  §8.12

(5)  Success on Fee Motion Only  §8.13

c.  Differences Between Federal and California Law Concerning Whether a Plaintiff Is Prevailing Party  §8.14

(1)  Catalyst Theory  §8.15

(a)  Requirements for Catalyst Theory  §8.16

(b)  Catalyst Theory Generally Unavailable in Federal Cases  §8.17

(2)  Public Interest or Benefit (CCP §1021.5)  §8.18

(a)  Requirements for Obtaining Fees Under CCP §1021.5  §8.19

(b)  Relationship of CCP §1021.5 to Other Fee-Shifting Statutes  §8.20

4.  Parties From Whom Prevailing Plaintiff Can Seek to Recover Attorney Fees Under Fee-Shifting Statutes

a.  Any Liable Party  §8.21

b.  Intervenors  §8.22

c.  Real Parties in Interest  §8.23

d.  Amici Curiae  §8.24

e.  Apportionment Among Liable Parties  §8.25

5.  When Attorney Fees Are Available to Prevailing Defendants Under Fee-Shifting Statutes  §8.26

a.  Two-Way Fee-Shifting Statutes  §8.27

b.  Frivolous Suit  §8.28

C.  Contractual Fee-Shifting Under CC §1717  §8.29

1.  All Contractual Attorney Fee-Shifting Provisions Are Reciprocal  §8.30

2.  Fee Provision Applies to Entire Contract  §8.31

3.  For Attorney Fees to Be Available, Action Must Be on a Contract  §8.32

4.  Party Prevailing on the Contract  §8.33

a.  Only One Prevailing Party Per Contract  §8.34

b.  Settlement Offers  §8.35

c.  No Prevailing Party in Case of Voluntary Dismissal  §8.36

5.  Contractual Fee Shifting of Noncontract Claims  §8.37

D.  Special Issues in Arbitration  §8.38

E.  Attorney-Client Relationships Eligible for Attorney Fees Recovery

1.  Pro Se Attorneys  §8.39

2.  Other Fee Agreements  §8.40

III.  CALCULATING ATTORNEY FEES

A.  The Lodestar  §8.41

1.  Reasonable Hourly Rate  §8.42

a.  Relevant Legal Community  §8.43

b.  Market Rate in Relevant Legal Community  §8.44

(1)  Market Rate Generally Applicable  §8.45

(2)  Exception to Market Rate  §8.46

(3)  Work Performed by Nonattorneys  §8.47

2.  Reasonable Hours

a.  Compensable Activities  §8.48

b.  Duplicative Tasks  §8.49

c.  Partial Success  §8.50

d.  When Different Fee-Shifting Statutes Apply  §8.51

B.  Upward and Downward Adjustments to the Lodestar  §8.52

1.  Upward Adjustment  §8.53

a.  Federal Law on Upward Adjustments  §8.54

b.  California Law on Upward Adjustments  §8.55

2.  Downward Adjustment  §8.56

a.  Limited Success  §8.57

b.  Rejection of Settlement Offer That Exceeded Recovery  §8.58

c.  Recovery of Only Nominal Damages  §8.59

d.  Special Circumstances Would Make Full Award Unjust  §8.60

e.  Unreasonably Protracted Litigation  §8.61

f.  Factors May Not Be Double Counted  §8.62

g.  Effect of Defendant’s Status as Public Entity  §8.63

C.  Fees in Common Fund Cases  §8.64

1.  Federal Approach  §8.65

2.  California Approach  §8.66

D.  Settlement Issues

1.  Limitations on Recovery Related to Fed R Civ P 68 and CCP §998 Settlement Offers  §8.67

a.  Ambiguity of Settlement Offer as to Fees and Costs Is Held Against Drafter  §8.68

b.  Effect of Informal Settlement Offer  §8.69

2.  Other Settlement Issues

a.  Fee Waivers Must Be Explicit  §8.70

b.  Agreement Not to Oppose Plaintiff’s Fee Petition  §8.71

IV.  TAX ISSUES  §8.72

V.  TIMING OF FEE APPLICATION  §8.73

A.  Fee Application in Federal Court  §8.74

B.  Fee Application in California Court  §8.75

C.  Effect of Appeal of Merits  §8.76

D.  Fee Motion Does Not Toll Time to Appeal  §8.77

VI.  APPELLATE REVIEW OF FEE AWARDS

A.  Standard of Review  §8.78

B.  Attorney Fee Order Must Be Expressly and Separately Appealed  §8.79

C.  Finality of Fee Order  §8.80

D.  Fees for Work on Appeal  §8.81

VII.  ISSUES OF PROOF

A.  Burden of Proof on Fee Motion  §8.82

B.  Billing Records

1.  Contemporaneous Billing Records Are Best  §8.83

2.  Use of Reconstructed Billing Records  §8.84

3.  Contents of Billing Records  §8.85

4.  Exercising Billing Judgment  §8.86

5.  Establishing Reasonable Rates  §8.87

VIII.  TO WHOM DOES THE STATUTORY ATTORNEY FEE BELONG?

A.  Ownership of Attorney Fees Award Under Federal Law  §8.88

B.  Ownership of Attorney Fees Award Under California Law  §8.89

IX.  COSTS AND EXPENSES  §8.90

A.  Costs and Expenses Under Federal Law  §8.91

B.  Costs and Expenses Under California Law

1.  Statutory and Nonstatutory Costs  §8.92

2.  Contracts Providing for Costs  §8.93

C.  Expert Witness Fees  §8.94

X.  POSTJUDGMENT INTEREST

A.  Interest Under Federal Law  §8.95

1.  Date Interest Begins to Accrue  §8.96

2.  Interest Rate  §8.97

B.  Interest Under California Law

1.  Date Interest Begins to Accrue  §8.98

2.  Interest Rate  §8.99

C.  Interest and Public Entities  §8.100

XI.  RETAINER AGREEMENTS BETWEEN PLAINTIFFS AND THEIR LAWYERS

A.  Drafting Fee Agreements  §8.101

B.  Particular Provisions Included in Contingent Fee Agreements

1.  Treatment of Attorney Fee Awards  §8.102

2.  Fee Work  §8.103

3.  If Counterclaim Likely  §8.104

4.  Payment of Attorney Fees Under Fee-Shifting Provision  §8.105

5.  Attorney’s Charging Lien  §8.106

6.  Attorney’s Discharge or Withdrawal for Cause  §8.107

Back to Top

9

Taxation of Judgments and Settlements

Robert W. Wood

I.  INTRODUCTION

A.  Recoveries Taxed Based on Nature of Underlying Claim  §9.1

B.  Significant Developments Affecting Employment Recoveries  §9.2

1.  End of Tax-Free Treatment of Emotional Distress Damages  §9.3

2.  Attorney Fees Taxation  §9.4

3.  Tort or Tort-Type Rights Requirement Deleted  §9.5

II.  DETERMINING WHAT IS TAXABLE  §9.6

A.  Character of the Payment  §9.7

B.  Nature of the Claim  §9.8

C.  General Rule: Gross Income  §9.9

D.  Damages on Account of Physical Injuries or Physical Sickness  §9.10

1.  What Constitutes Personal Physical Injuries?  §9.11

2.  Definition of Physical Injury or Sickness  §9.12

3.  Redress for Tort or Tort-Type Right Not Required  §9.13

4.  Emotional Distress Damages Are Taxable Income  §9.14

5.  Medical Expenses Remain Deductible  §9.15

III.  TAX TREATMENT OF SPECIFIC RECOVERIES  §9.16

A.  Wages and Wagelike Recoveries  §9.17

1.  Unpaid Wages  §9.18

2.  Back Pay  §9.19

3.  Front Pay  §9.20

4.  Severance Pay  §9.21

B.  Nonwage Recoveries  §9.22

1.  Reimbursement for Medical Expenses  §9.23

2.  Emotional Distress  §9.24

3.  Wrongful Termination  §9.25

4.  Sexual Harassment  §9.26

5.  Fraud  §9.27

6.  Punitive Damages  §9.28

7.  Interest on Award  §9.29

C.  Discrimination Actions  §9.30

D.  Award of Attorney Fees  §9.31

1.  Issues Raised by Award of Attorney Fees and Costs  §9.32

2.  Commissioner v Banks Decision  §9.33

3.  Attorney Fee Awards Under Fee-Shifting Statutes  §9.34

4.  Deduction for Attorney Fees in Unlawful Discrimination Cases

a.  Above-the-Line Deduction  §9.35

b.  Actions in Which Deduction Is Permitted  §9.36

5.  Determining Person Entitled to Attorney Fees (for Taxation Purposes)  §9.37

IV.  WITHHOLDING AND REPORTING REQUIREMENTS

A.  Tax Withholding

1.  Withholding Requirements Apply to All Wage Income  §9.38

2.  Failure to Withhold and Pay Taxes  §9.39

B.  Tax Reporting  §9.40

1.  Wages or Wagelike Compensation  §9.41

2.  Special Rules for Back Pay Reporting  §9.42

3.  Nonwage Compensation  §9.43

4.  Attorney Fee Awards  §9.44

5.  Punitive Damages  §9.45

V.  ADDRESSING AND PLANNING FOR TAXATION ISSUES  §9.46

A.  Deciding Whether to Allocate Settlement Amounts  §9.47

B.  Allocating Among Claims  §9.48

C.  IRS Not Bound by Parties’ Allocation  §9.49

D.  Using a Tax Advisor  §9.50

E.  Disclosure on Plaintiff’s Tax Return  §9.51

Back to Top

10

Additional Statutory Remedies

I.  SCOPE OF CHAPTER  §10.1

II.  DISCRIMINATION CLAIMS BASED ON APPLICANT/EMPLOYEE’S PERSONAL CHARACTERISTICS  §10.2

A.  Acts That Pertain to Multiple Characteristics

1.  Fair Employment and Housing Act (FEHA) (Govt C §§12900–12996)  §10.3

2.  Title VII of the Civil Rights Act of 1964, as Amended (42 USC §§2000e—2000e–17) (Title VII)  §10.4

3.  Civil Rights Act of 1871 (42 USC §1983)  §10.5

4.  Ralph Civil Rights Act (CC §51.7)  §10.6

5.  Bane Act (CC §52.1)  §10.7

B.  Race

1.  Civil Rights Act of 1866 (42 USC §1981)  §10.8

2.  Additional Acts to Consider  §10.9

C.  Religion  §10.10

D.  National Origin, Ancestry, Citizenship

1.  Immigration Reform and Control Act of 1986 (IRCA)  §10.11

2.  Limitation on “English Only” Rules (Gov C §12951)  §10.12

3.  Additional Acts to Consider  §10.13

E.  Physical Disability

1.  Americans with Disabilities Act of 1990 (ADA) (42 USC §§12101–12213)  §10.14

2.  Rehabilitation Act of 1973 (29 USC §§701–796l)  §10.15

3.  Additional Act to Consider  §10.16

F.  Mental Disability  §10.17

G.  Medical Condition  §10.18

H.  Marital Status  §10.19

I.  Gender

1.  Equal Pay Act

a.  State Equal Pay Act (Lab C §1197.5)  §10.20

b.  Federal Equal Pay Act of 1963 (29 USC §206(d))  §10.21

2.  Additional Acts to Consider  §10.22

J.  Age

1.  Age Discrimination in Employment Act (ADEA)  §10.23

2.  Older Workers Benefit Protection Act (OWBPA)  §10.24

3.  Additional Act to Consider  §10.25

K.  Sexual Orientation  §10.26

L.  Pregnancy, Childbirth, or Related Medical Conditions  §10.27

M.  Gender Identity  §10.28

N.  Genetic Information

1.  Genetic Information Nondiscrimination Act of 2008 (GINA)  §10.29

2.  Protection for Genetic Information (Govt C §12940)  §10.30

III.  CLAIMS BASED ON HIRING PROCESS

A.  Psychological Exam  §10.31

B.  Lie Detector Test

1.  Prohibition Against Applicant Lie Detector Tests (Lab C §432.2)  §10.32

2.  Employee Polygraph Protection Act of 1988 (EPPA)  §10.33

C.  Fingerprints and Photos (Lab C §1051)  §10.34

D.  HIV/AIDS Testing

1.  Prohibition Against HIV/AIDS Test for Employment (Health & S C §§120975–121023)  §10.35

2.  Additional Laws to Consider  §10.36

E.  Medical Exam  §10.37

F.  Previous Arrests

1.  Criminal Record (Lab C §432.7)  §10.38

2.  Specified Marijuana Arrests (Lab C §432.8)  §10.39

G.  False Representations Inducing Employee to Move (Lab C §§970–977)  §10.40

H.  Unauthorized Access to Applicant’s Credit History

1.  Consumer Credit Reporting Agencies Act (CCRAA) (CC §§1785.1–1785.36)  §10.41

2.  Investigative Consumer Reporting Agencies Act (ICRAA) (CC §§1786–1786.60)  §10.42

3.  Fair Credit Reporting Act (FCRA) (15 USC §§1681–1681x)  §10.43

4.  Limitation on Background Credit Checks (Lab C §1024.5)  §10.44

I.  Prohibition Against Illegal Terms (Lab C §432.5)  §10.45

IV.  SEXUAL HARASSMENT  §10.46

V.  ADVERSE EMPLOYMENT ACTION BASED ON EMPLOYEE’S EXERCISE OF RIGHTS UNDER ANTIDISCRIMINATION STATUTES  §10.47

VI.  ADVERSE EMPLOYMENT ACTION BASED ON EMPLOYEE’S EXERCISE OF RIGHTS UNDER OTHER EMPLOYEE RIGHTS STATUTES

A.  Exercising Rights Under Labor Code (Lab C §98.6)  §10.48

B.  Filing Workers’ Compensation Claim (Lab C §132a)  §10.49

C.  Exercising Rights Under Worker Safety Statutes

1.  State Law (Lab C §6310)  §10.50

2.  Federal Law (29 USC §660)  §10.51

D.  Refusing to Work in Unsafe Conditions (Lab C §6311)  §10.52

VII.  ADVERSE EMPLOYMENT ACTION BASED ON PARTICULAR EMPLOYEE CONDUCT

A.  Jury Duty

1.  State Law (Lab C §230(a))  §10.53

2.  Federal Law (Protection of Juror’s Employment Act (28 USC §1875))  §10.54

B.  Serving as Witness (Lab C §230(b))  §10.55

C.  Domestic Violence, Sexual Assault, or Stalking

1.  Seeking Relief (Lab C §230(c))  §10.56

2.  Seeking Medical/Psychological Help (Lab C §230.1)  §10.57

D.  Crime Victim Attendance at Judicial Proceedings (Lab C §230.2)  §10.58

E.  Public Safety Activities

1.  Emergency Duty as Safety Personnel (Lab C §230.3)  §10.59

2.  Volunteer Firefighter Training (Lab C §230.4)  §10.60

3.  Civil Air Patrol Employment Protection Act (Lab C §§1500–1507)  §10.61

F.  Visiting Child’s School

1.  Required Appearance After Suspension (Lab C §230.7)  §10.62

2.  Participation in School Activities (Lab C §230.8)  §10.63

G.  Organ and Bone Marrow Donation (Lab C §§1508–1513)  §10.64

H.  Financial Condition

1.  Prohibition of Discharge for Wage Garnishment

a.  State Law (Lab C §2929)  §10.65

b.  Federal Law (15 USC §1674)  §10.66

2.  Protection for Debtor in Bankruptcy (11 USC §525)  §10.67

I.  Leave for Military Service

1.  State Law (Mil & V C §394)  §10.68

2.  Federal Law (Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA) (38 USC §§4301–4335))  §10.69

J.  Discussion of Wages or Working Conditions (Lab C §§232–232.5)  §10.70

K.  Conduct During Nonworking Hours  §10.71

L.  Employee’s Political Views  §10.72

VIII.  WHISTLEBLOWER PROTECTIONS  §10.73

A.  State Law

1.  Whistleblower Protection Acts; Labor Code §§1101–1106  §10.74

2.  Additional Acts to Consider  §10.75

B.  Federal Law

1.  Sarbanes-Oxley Act  §10.76

2.  Additional Acts to Consider+  §10.77

IX.  WAGES AND HOURS

A.  Acts That Pertain to Employee Wages and Hours

1.  California Labor Code (§§200–856)

a.  Conduct Regulated  §10.78

b.  Chart of Sample Labor Code Sections Covering Wages and Hours of Specific Employees  §10.79

c.  Remedies  §10.80

d.  Chart of Examples of Remedies for Violation of Wages and Hours Statutes  §10.81

2.  Private Attorneys General Act of 2004 (PAGA) (Lab C §§2698–2699.5)  §10.82

3.  Unfair Competition Law (UCL) (Bus & P C §§17200–17210)  §10.83

4.  Fair Labor Standards Act (FLSA) (29 USC §§201–219)  §10.84

B.  Required Notices  §10.85

C.  Failure to Pay Wages on Time  §10.86

D.  Chart of Labor Code Provisions Setting Time or Place of Payment  §10.87

E.  Method of Payment (Lab C §212)  §10.88

F.  Wage Statements and Records (Lab C §226)  §10.89

G.  Compensation

1.  Minimum Wage (Lab C §1197)  §10.90

2.  Overtime (Lab C §510; 29 USC §207)  §10.91

Back to Top

Continuing Education of the Bar - California

ceb.com