Attorney Fees in California Wage Cases: Sections 218.5 and 1194

Usually not. An employer that wins a California wage lawsuit can recover its attorney fees only in narrow cases. For minimum wage and overtime claims, Labor Code section 1194 lets only the employee recover fees. For other unpaid wages, section 218.5 lets a winning employer recover them “only if the court finds that the employee brought the court action in bad faith.” The employee’s fees are often the largest part of the exposure.

Why can only employees recover fees on overtime claims?

Because section 1194 is written that way. It gives an employee who received “less than the legal minimum wage or the legal overtime compensation” the right to recover the unpaid amount, “including interest thereon, reasonable attorney’s fees, and costs of suit,” under section 1194(a). It says nothing about employers.

The Supreme Court of California described it as “a one-way fee-shifting provision” in Kirby v. Immoos Fire Protection, Inc. (2012) 53 Cal.4th 1244. The court added that “Prevailing employers cannot obtain attorney’s fees under section 218.5, however, if the employees could have obtained such fees under section 1194 had they prevailed.”

The statute now says the same thing. Section 218.5(b) provides that it “does not apply to any cause of action for which attorney’s fees are recoverable under Section 1194.” An employer that defeats an overtime claim at trial pays its own lawyers.

When can an employer recover fees under section 218.5?

When the employee sued in bad faith over wages not covered by section 1194. Section 218.5(a) applies to “any action brought for the nonpayment of wages, fringe benefits, or health and welfare or pension fund contributions.” That covers claims such as unpaid commissions, final pay, and earned vacation.

The statute was once more balanced. When Kirby was decided, the court called section 218.5 “a two-way fee-shifting statute, permitting an award of fees to either employees or employers who” prevail. The Legislature amended it in 2013, effective January 1, 2014, to add the bad-faith requirement for any prevailing party that “is not an employee.”

There’s also a procedural trigger. Fees go to the prevailing party “if any party to the action requests attorney’s fees and costs upon the initiation of the action,” under section 218.5(a). Employers that want to keep the bad-faith option open should make that request in their first filing.

Bad-faith awards are rare. The realistic value of section 218.5 for an employer is as a deterrent to baseless claims, not as a way to recover fees in an ordinary loss.

Are attorney fees available on meal and rest break claims?

Not under either statute. In Kirby, the trial court had awarded fees to an employer that won a rest break claim. The Supreme Court reversed, concluding “that neither section 1194 nor section 218.5 authorizes an award of attorney’s fees to a party that prevails on a section 226.7 claim,” according to the opinion.

The court’s reasoning was about what the claim is for. In Naranjo v. Spectrum Security Services, Inc. (2022) 13 Cal.5th 93, the Supreme Court restated Kirby‘s conclusion that “a section 226.7 action is brought for the nonprovision of meal and rest periods, not for the ‘nonpayment of wages.’” Naranjo held that missed-break premiums are wages for other purposes, but it left Kirby‘s fee holding in place.

Break claims can still raise the fee stakes. Break claims usually travel with overtime, wage statement, and PAGA claims that do carry employee fee rights, and the fees in those cases are often litigated across all the claims together.

Does a section 998 offer shift costs to the employee?

Often not in wage cases. Under Code of Civil Procedure section 998, a plaintiff who rejects a settlement offer and does worse at trial ordinarily pays the defendant’s post-offer costs. Courts have held that the Labor Code’s fee provisions override that rule for wage claims.

In Cruz v. Fusion Buffet, Inc. (2020) 57 Cal.App.5th 221, the court concluded “that where section 1194 applies, it displaces any application of Code of Civil Procedure section 1032, subdivision (b), thereby rendering Code of Civil Procedure section 998 also inapplicable.” An earlier decision had reached the opposite result, so courts were split.

The First District sided with Cruz in Chavez v. California Collision, LLC (2024) 107 Cal.App.5th 298. It held “that, where the one-way cost shifting provisions of Labor Code sections 1194 and 218.5 apply, they serve to override the more general cost-shifting provisions of sections 998 and 1032,” according to the opinion, limiting its section 218.5 holding to cases with no bad-faith finding.

A 998 offer still has value in a wage case. It sets a public number, forces the plaintiff’s lawyer to evaluate the case, and can affect how a court views later fee requests. But employers shouldn’t make one expecting to recover costs if the employee loses.

Steps when a wage lawsuit includes a fee claim

Plaintiff fees grow every month a case stays open, so the early decisions matter most. More on these cases is on the firm’s California wage and hour defense page.

1. Preserve payroll and timekeeping records, wage statements, pay plans, and the emails and texts of the managers who set schedules or approved pay.
2. Calendar the response deadline on the complaint or demand, and check for an arbitration agreement and an EPLI policy that may require prompt notice.
3. Identify the people who handled payroll and supervised the plaintiff, and avoid any change in treatment of the employee who sued.
4. Sort each claim by its fee statute, because the fee exposure on an overtime claim is very different from a break claim.
5. Get legal advice before making a settlement or 998 offer, so the offer accounts for fees accrued to date and the fees still to come.

Wage claim attorney fee questions

Why are plaintiff fees sometimes larger than the wages?

Fee awards are based on the reasonable hours the employee’s lawyers worked, not on the size of the recovery. A small overtime claim that goes through years of discovery and a trial can produce a fee award many times the unpaid wages. That’s why early evaluation of the fee risk often matters more than the damages calculation.

Does section 218.5 apply to claims brought by the Labor Commissioner?

No. Section 218.5 says it “shall not apply to an action brought by the Labor Commissioner.” Appeals from Labor Commissioner awards have their own fee rule under section 98.2, which can require an employer that appeals unsuccessfully to pay the employee’s fees.

Can an employer recover fees on a frivolous overtime claim?

Not under section 1194, which has no provision for employers. An employer facing a claim that has no legal or factual basis may have other options, such as sanctions motions, but those are separate from the Labor Code’s fee statutes and are rarely granted.

Does an arbitration agreement change the fee rules?

Not on the statutory fee rights. A California arbitration agreement generally can’t take away an employee’s right to recover fees under the Labor Code or make the employee pay the employer’s fees on a claim where the statute wouldn’t allow it.

If your company faces a wage lawsuit with a fee claim

If your company has been sued over unpaid overtime, final pay, or other wages, the fee statutes that apply to each claim often shape the settlement value more than the wages themselves. Rosenberger + Kawabata represents employers defending employment lawsuits and claims through its business litigation practice, including claims involving unpaid wages and attorney fee demands. Contact Rosenberger + Kawabata online for a confidential consultation, or call (310) 894-6921.

Sources

The statutes are Labor Code section 218.5 and section 1194. The decisions are Kirby v. Immoos Fire Protection, Inc. (2012) 53 Cal.4th 1244, Naranjo v. Spectrum Security Services, Inc. (2022) 13 Cal.5th 93, Cruz v. Fusion Buffet, Inc. (2020) 57 Cal.App.5th 221, and Chavez v. California Collision, LLC (2024) 107 Cal.App.5th 298.

This post is general information about California and federal employment law as of November 7, 2026. It is not legal advice, and reading it does not create an attorney-client relationship. Employment statutes, regulations, and court decisions change often, and the outcome of any claim depends on its facts. Past results do not guarantee future outcomes.