Action for Unpaid Wages Entitled to Attorney's Fees

In California, employers must pay their employees at least the state's minimum wage for all hours worked. They must also pay employees overtime compensation for hours worked beyond eight per day or 40 per workweek. If an employer fails to pay the minimum wage and/or overtime compensation, the employee can recover back pay, interest, attorney's fees, legal costs, and waiting time penalties. In Gramajo v. Joe's Pizza on Sunset, Inc., Cal. Ct. App. Case Nos. B322697, B323024, the Court of Appeal considered whether an employee who recovered a de minimus award of minimum wages after filing an unlimited action was entitled to attorney's fees and court costs when the case could have been decided as a limited action.

Elinton Gramajo was employed by Joe's Pizza on Sunset, Inc. as a delivery driver from February 2014 to June 2015. After leaving his employment, he filed a lawsuit against his former employer in Feb. 2018 for the company's failure to pay him the minimum wage, overtime pay, and his wages at termination. He also sued for the company's failure to provide compliant meal and rest breaks, unfair business practices, and failure to reimburse him for business expenses. Gramajo's case went through extensive litigation for three years before it went to trial in Oct. 2021. He sought $26,159.33 in damages for his unpaid minimum and overtime wages, missed rest and meal breaks, and penalties.

The jury returned a verdict in Gramajo's favor and found that he was owed $2.17 in minimum wage and $3,340 in unpaid overtime pay. He also received $2,115.59 in statutory interest, $100 in statutory penalties, $2.17 in liquidated damages, and $2,100 in waiting time penalties for a total of $7,659.63. Gramajo also asked for $296,920 in attorney's fees and $26,932.84 in legal costs. Joe's Pizza filed a motion in opposition to Gramajo's request for fees and asked the court to tax his costs entirely.

The trial court denied Gramajo's request for fees and granted him nothing. The court believed that Gramajo had acted in bad faith by pursuing claims in equity to bring the jurisdictional amount above the cutoff for an unlimited civil proceeding without introducing any evidence at trial that he was owed unreimbursed expenses. The court also found that Gramajo and his lawyer had over-litigated the case and that it should have been filed as a limited jurisdiction action. The court found the attorney's fees were grossly overinflated and that Gramajo should not be granted attorney's fees or legal costs. Gramajo filed an appeal.

The issue on appeal was whether the trial court abused its discretion when it relied on Cal. Code Civ. Proc. § 1033(a) to deny Gramajo's attorney's fees and legal costs instead of allowing him to recover his reasonable attorney's fees and legal costs under Cal. Lab. Code § 1194(a).

Under Cal. Lab. Code § 1194(a), workers who are not paid the minimum wage or overtime pay are allowed to sue to recover backpay, interest, court costs, and attorney's fees. However, under Cal. Code Civ. Proc. 1033(a), a court can exercise its discretion on whether to award attorney's fees and costs when a case is pursued as an unlimited civil action when it should have been filed as a limited action. On appeal, Gramajo argued the trial court abused its discretion when it relied on Sect. 1033(a) to deny his request for attorney's fees and court costs and should have instead relied on Lab. Code sect. 1194 to allow him to recover his reasonable request for fees and costs.

The Court of Appeal first noted that when it reviews two seemingly conflicting statutes, it does so to harmonize the law. The court stated that it does not rely on the literal construction of a statute but instead looks at the legislative intent behind the law. When the legislature passes a statute, it does so with the knowledge that other statutes already exist. Because of that, the court can't repeal an existing statute by implication. Instead, courts must try to maintain both statutes through their interpretation.

Next, the Court of Appeal considered Sect. 1194(a) of the Labor Code. That statute provides that any employee who is paid less than the minimum wage or does not receive overtime pay when it is owed has a right to recover unpaid wages, interest, court costs, and attorney's fees. The statute's fee-shifting provision is meant to discourage employers from violating the state's minimum wage and overtime laws.

The Court of Appeal then considered Sect. 1033(a), which provides that a trial court may exercise its discretion on whether to award attorney's fees and legal costs to a prevailing plaintiff in a case that could have been decided in a court of limited jurisdiction instead of a court of unlimited jurisdiction. The California Supreme Court has previously held that Sect. 1033(a) allows trial courts to use discretion on whether to award legal costs and attorney's fees in cases in which the judgment obtained was less than the jurisdictional threshold for unlimited cases, which Gramajo's judgment was. The purpose of this statute is to disincentivize plaintiffs from puffing up their damages claims to file actions in courts of unlimited jurisdiction when they should instead have been filed in limited jurisdiction courts.

Because of the discrepancy between the two statutes in Gramajo's case, the Court of Appeal found there is an irreconcilable difference between them. It then stated it had to decide which statute applied to the situation based on the facts of the case. Because the legislature passed Sect. 1194 after Sect. 1033 and the fact that the intent behind Sect. 1194 was to ensure workers are paid at least the minimum wage and receive overtime compensation for the hours they work beyond eight per day or 40 per week, the controlling statute in Gramajo's case should have been Sect. 1194(a) instead of Sect. 1033(a).

In a previous case, the court found that an employee who recovered $16 in minimum wages and $16 in liquidated damages was entitled to recover attorney's fees and court costs under Sect. 1194 instead of applying Sect. 1033(a) since 1194 was enacted after the other law. The court reasoned that this meant that section 1033 was a general statute, while 1194 was a specific statute for wage and hour cases. Similarly, the Court of Appeal in Gramajo's case found that Sect. 1033 is a general statute that applies to civil cases in general, but Sect. 1194 specifically applies to cases involving minimum wage and overtime claims. Since it is a more specific law, the Court of Appeal found that it applied to Gramajo's case. The trial court abused its discretion when it relied on Sect. 1033(a) to deny Gramajo's request for attorney's fees and court costs outright. The Court of Appeal did not decide whether the amount of attorney's fees and court costs claimed by Gramajo was reasonable or not, however.

The court reversed the trial court's order denying Gramajo's attorney's fees and court costs. It remanded the case back to the trial court to determine what reasonable attorney's fees and court costs should be under the circumstances.

If you believe your employer failed to pay at least the minimum wage and overtime for the hours you worked, you might be entitled to recover damages, including back pay, interest, waiting penalties, attorney's fees, and court costs. Consult an employment lawyer at the law firm of Steven M. Sweat, APC to learn about your rights and next steps by calling us at 866.966.5240.