Berman Hearing Defense for Employers Facing a Labor Commissioner Claim
Treat the Berman hearing as the trial, because for many employers it is the only one they get. A wage claim filed with the California Labor Commissioner can end in an informal hearing under Labor Code section 98, and the award becomes a court judgment unless someone appeals quickly. An employer that appeals has to post a bond for the full award first, and if the employee is awarded anything at all in court, the employer pays the employee’s attorney’s fees.
What is a Berman hearing, and is the decision binding?
It’s the Labor Commissioner’s hearing on an employee’s claim for unpaid wages and penalties, and its decision becomes binding unless someone appeals on time. The Supreme Court of California described the procedure in OTO, L.L.C. v. Kho (2019) 8 Cal.5th 111 as one “designed to provide a speedy, informal, and affordable method of resolving wage claims,” quoting an earlier decision. The name comes from the legislator who sponsored the 1976 law.
The process runs on short deadlines. Under section 98(a), within 30 days after the claim is filed the Labor Commissioner tells the parties whether it will hold a hearing, file suit for the employee under section 98.3, or take no further action. A hearing, if one is set, is generally held within 90 days of that decision. Section 98(c) gives the employer 10 days after service of the notice and complaint to file an answer, and section 98(e) says evidence on matters not pleaded in the answer comes in “only on terms and conditions the Labor Commissioner shall impose.”
Many claims go to a settlement conference first. The Labor Commissioner’s Policies and Procedures for Wage Claim Processing say the conference “will be conducted informally and the parties will not be under oath,” and that its purpose “is to determine if the claim can be resolved without a hearing.” The hearing is different. The same guide says that at the hearing “the parties and witnesses testify under oath, and the proceedings are recorded.”
The hearing has few of the protections of a lawsuit. The OTO opinion notes that pleadings are limited to a complaint and answer and that “There is no discovery process.” Evidence is admitted “if it is the sort of evidence on which responsible persons are accustomed to rely in the conduct of serious affairs.” Within 15 days after the hearing, section 98.1 requires the Labor Commissioner to file an order, decision, or award (the agency calls it an ODA), and unpaid wages in an award accrue interest.
What should an employer bring to the hearing?
Everything it would bring to a trial, plus a witness who can explain the payroll records. The Labor Commissioner’s procedures guide says, “An employer who intends to introduce business records into evidence should also bring a person to the hearing who can explain how such records were prepared.” It also asks for originals plus two sets of copies, and says subpoena requests should be made “at least fifteen (15) business days prior to the date of the hearing.”
Don’t count on a postponement. The guide says date changes “will not be granted except upon the showing of extraordinary circumstances.”
Skipping the hearing doesn’t make it go away. Section 98(f) says no default is taken, “but the Labor Commissioner shall hear the evidence offered and shall issue an order, decision, or award in accordance with the evidence.” In practice the only evidence is usually what the employee offers.
I think employers lose more Berman hearings on preparation than on the law. California puts the record-keeping burden on the employer, and the agency’s guide says so plainly: “It is the employer’s legal responsibility to keep accurate employee time and payroll records.” An employer that shows up with a summary spreadsheet instead of the time punches and wage statements is arguing against its own missing records.
How does an employer appeal a Labor Commissioner award?
By filing a notice of appeal in superior court within the statutory deadline and posting an undertaking for the full amount of the award before or with the notice. Section 98.2(a) allows an appeal “Within 10 days after service of notice of an order, decision, or award,” and makes Code of Civil Procedure section 1013 apply in computing that period. Section 1013 generally extends a response period by five calendar days when the document was mailed from and to addresses in California. Count the days from the ODA’s proof of service, not from the day it arrived. If nobody appeals, section 98.2(d) makes the award the final order, and the Labor Commissioner files it with the court as a judgment.
The appeal is a new trial, not a review of the hearing officer’s work. Section 98.2(a) says the appeal “shall be heard de novo.” The OTO court put it this way: “the results of a Berman hearing are nonbinding,” in the sense that either side can get a new trial.
The bond is the part employers miss. Section 98.2(b) says “As a condition to filing an appeal pursuant to this section, an employer shall first post an undertaking with the reviewing court in the amount of the order, decision, or award.” It has to be an appeal bond from a licensed surety or a cash deposit with the court. In Adanna Car Wash Corp. v. Gomez, a published 2023 opinion, the employer pointed to a car wash bond it had already posted with the Labor Commissioner under a different statute. The court affirmed dismissal of the appeal, repeating an earlier holding that the undertaking requirement “is mandatory and jurisdictional.” A missing or defective bond can end the appeal before it starts.
One open question affects owners and officers. When the Labor Commissioner holds an individual personally liable alongside the company, does that person need to post an undertaking too? Two divisions of the First District have split. In Lorenzo v. San Francisco Zen Center (2025), the court held that individuals found liable as the employer “should logically be deemed ‘an employer’” for the bond requirement. In Ehrenkranz v. San Francisco Zen Center (2026), the court disagreed, observing that “Section 98.2(b) does not state that ‘each employer’ shall post the undertaking.” Both cases are now under review in the Supreme Court of California, so neither opinion is settled precedent. But the court limited review in Lorenzo to a First Amendment question and is holding Ehrenkranz for it, so it may never decide the bond issue. My advice is to make sure the undertaking covers each appealing defendant for the full award, and to confirm in writing with the surety that it does.
When does the employer pay the employee’s attorney’s fees on appeal?
Whenever the employer appeals and the employee ends up with any amount above zero. Section 98.2(c) says that if the party who appealed “is unsuccessful in the appeal, the court shall determine the costs and reasonable attorney’s fees incurred by the other parties to the appeal, and assess that amount as a cost upon the party filing the appeal.” The next sentence is the one that matters: “An employee is successful if the court awards an amount greater than zero.”
So cutting a $40,000 award to $6,000 isn’t a win under section 98.2(c). The employer still pays the employee’s fees for the whole appeal. The employee may not be paying a lawyer at all, and that doesn’t reduce the fee exposure. Under section 98.4, the Labor Commissioner may represent a claimant who can’t afford counsel in the de novo proceeding, and it “shall represent the claimant” when the claimant is defending the award without objecting to any part of it. The OTO opinion notes that “Claimants represented by the commissioner may still recover fees.”
My view is that an employer should appeal a Berman award only when it can realistically get the number to zero, or when the award rests on a legal question (exempt status, independent contractor status, a release) that will affect other employees. Everything else is usually cheaper to pay or settle.
What happens if a final award isn’t paid?
The costs climb fast, and a 2026 law added a large new penalty. Once a final award is entered as a judgment, section 98.2(e) gives it “the same force and effect as” any civil judgment, and section 98.2(g) lets the Labor Commissioner record a lien on the employer’s real property.
Labor Code section 238 says an employer with a final wage judgment unpaid 30 days after the time to appeal has expired, with no appeal pending, “shall not continue to conduct business in this state” unless it posts a surety bond with the Labor Commissioner. The bond must be at least $50,000, $100,000, or $150,000, depending on the unpaid amount. Giving the Labor Commissioner a notarized copy of a payment accord with the employee can substitute for the bond.
Senate Bill 261 (Stats. 2025, ch. 747) took effect January 1, 2026. It added Labor Code section 238.05, under which a wage judgment that “remains unsatisfied after a period of 180 days after the time to appeal therefrom has expired,” with no appeal pending, exposes the employer to “a civil penalty not to exceed three times the outstanding judgment amount, including postjudgment interest then due.” The court must assess the full requested penalty unless the employer shows “by clear and convincing evidence good cause to reduce the amount.” An accord reached before the 180th day, and kept, avoids the penalty. SB 261 also added section 238.10, which awards a prevailing plaintiff “all reasonable attorney’s fees and costs” in an action to enforce the judgment.
How do the stages and deadlines fit together?
| Stage | Statute | What happens | The employer’s move |
|---|---|---|---|
| Claim filed | Lab. Code § 98(a) | Within 30 days, notice of a hearing, a lawsuit by the agency, or no action | Pull the time and pay records and calendar every date on the notice |
| Settlement conference | DLSE procedures | Informal, not under oath | Decide whether the claim is worth paying before hearing costs start |
| Answer | Lab. Code § 98(c), (e) | Due 10 days after service of the notice and complaint | Plead every defense, or risk having the evidence limited |
| Hearing and ODA | Lab. Code §§ 98, 98.1 | Testimony under oath, decision within 15 days, interest on unpaid wages | Bring the records, a records witness, and the managers involved |
| Appeal | Lab. Code § 98.2(a)-(c) | A de novo trial, an appeal bond for the full award, and fees to the employee unless the award is cut to zero | Appeal only with a real path to zero or a legal issue that matters beyond this claim |
| Unpaid judgment | Lab. Code §§ 238, 238.05, 238.10 | A bond to keep doing business after 30 days, and a penalty up to three times the judgment after 180 days | Pay, or reach a notarized accord with the employee, before the deadlines run |
Can an arbitration agreement keep a wage claim out of the Berman process?
Sometimes, but the agreement has to hold up on its own terms. In OTO, the Supreme Court refused to enforce an arbitration agreement that a car dealership’s service technician was handed at his workstation by a low-level employee who waited while he signed it. The court found the agreement unconscionable. The court didn’t hold that every Berman waiver fails. It looked at whether the arbitration the agreement offered was accessible and affordable compared with what the employee gave up.
Procedure matters here too. Section 98.4(c) requires that a petition to compel arbitration of a claim pending before the Labor Commissioner “be served on the Labor Commissioner,” who may represent the employee in the fight over enforceability. An employer that wants arbitration should raise it early and serve the agency, not file on the eve of the hearing.
Steps for an employer that has received a wage claim notice
Most of the work happens in the first few weeks:
- Preserve the claimant’s time punches, payroll registers, wage statements, schedules, commission or bonus plans, and any texts or emails about hours or pay, along with the handbook and pay policies in effect during the claim period.
- Calendar the conference or hearing date, the 10-day answer deadline, and the appeal deadline that will run from service of any award, and check for an arbitration agreement and an employment practices liability (EPLI) policy with notice requirements.
- Identify who kept the records and who supervised the employee, confirm they can attend the hearing, and make sure no one takes action against the employee that could be read as retaliation for filing.
- Rebuild the pay calculation for the claim period from the original records, including any meal or rest period premiums and any final pay timing.
- Talk to a lawyer before filing the answer, before the settlement conference, and before offering the employee anything to settle.
The firm’s page on California wage and hour defense explains how wage claims and Labor Commissioner proceedings are defended.
Berman hearing questions from California employers
Can a company bring a lawyer to a Berman hearing?
Yes. The Labor Commissioner’s procedures guide lists each party’s right “To be represented by an attorney or other party of his or her choosing.” Whether it’s worth the cost depends on the size of the claim and whether it raises an issue (an exemption, a commission plan, contractor status) that other employees could raise next. The hearing officer may also question witnesses and help with cross-examination, so a party without counsel still gets some help at the hearing.
What if we missed the hearing?
Act quickly. Section 98(f) lets a defendant who failed to appear apply to the Labor Commissioner for relief under Code of Civil Procedure section 473, and it says no right to relief accrues in court “unless prior application is made to the Labor Commissioner.” Go to the agency first, explain why the company missed the hearing, and keep the appeal deadline in view at the same time.
Can we settle after the hearing but before paying?
Yes, and it can matter a great deal. Section 98.2(e) says the Labor Commissioner files the final order with the court unless a settlement has been reached and approved by the Labor Commissioner. After judgment, a notarized copy of an accord with the employee, given to the Labor Commissioner, can substitute for the section 238 bond, and an accord reached before the 180th day avoids the new section 238.05 penalty if the company keeps its terms.
Does the hearing officer’s decision count against us if we appeal?
The superior court hears the case fresh. The Labor Commissioner’s guide describes the appeal as one where “a judge will hear the case again with each party having the opportunity to present evidence and witnesses.” That’s the reason to treat the hearing record as preparation for a possible trial: the hearing is recorded, and what your managers say under oath there can come up again when they testify in court.
If a former employee has filed a wage claim against your company
If your company has received a Labor Commissioner notice or an award it disagrees with, the payroll records and the appeal deadline usually decide what happens next. Rosenberger + Kawabata represents employers defending employment lawsuits and claims through its business litigation practice, including claims involving unpaid wages and Labor Commissioner awards. Contact Rosenberger + Kawabata online for a confidential consultation, or call (310) 894-6921.
Sources
The statutes are Labor Code sections 98, 98.1, 98.2, 98.4, 238, 238.05, and 238.10, and Code of Civil Procedure section 1013. The 2025 amendment is Senate Bill 261. The agency’s process is in the Labor Commissioner’s Policies and Procedures for Wage Claim Processing. The decisions discussed are OTO, L.L.C. v. Kho (2019) 8 Cal.5th 111, Adanna Car Wash Corp. v. Gomez (2023, B313649). The first of the two First District opinions on the bond question is Lorenzo v. San Francisco Zen Center (2025) 116 Cal.App.5th 258, review granted February 11, 2026 (S294565). The second is Ehrenkranz v. San Francisco Zen Center (2026, A171527), review granted and held May 27, 2026, S296143, as shown in the Supreme Court’s conference results.
This post is general information about California and federal employment law as of November 5, 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.