Prevailing Employers Are Entitled To Attorneys’ Fees

That’s what the California anti-discrimination statute says.  But California courts have interpreted “prevailing” employer to mean “but only if” the employee’s discrimination lawsuit was “unreasonable, frivolous, meritless, or vexatious.”

So it’s not enough for the employer to win the case.  Employer still losses on attorneys’ fees if the employee’s lawsuit is deemed to be “reasonable” or have some, however slight, legal and/or factual basis.

An employee on the other hand is considered the prevailing party if she/he is awarded any money or even without any money so long as there is a finding of discrimination.

One-Sided Attorney’s Fees

Thus, this is essentially a one sided-attorney’s fees provision.  Is this fair?  In the author’s views it is not.  But those are the rules and they are not going to change.

But hey, try to look on the bright side.  At least there’s a shot at proving the employee’s discrimination claim is “unreasonable, frivolous, meritless, or vexatious.”  Many California laws, namely wage and hour laws, are strictly “one-way” attorneys’ fees statutes.  Only the employee can get their attorneys’ fees.  The employer can never get theirs period.

So what does it mean the employee’s lawsuit was “unreasonable, frivolous, meritless, or vexatious?”

Unreasonable, Frivolous, Meritless, Or Vexatious

The employee’s entire lawsuit has to be groundless or without foundation, rather than simply they lost.  The losing employee’s ability to pay also must be considered, i.e. even if the lawsuit was groundless and without foundation, their ability to pay must still be considered.  Note, an employer’s ability to pay is not a factor when the tables are turned.  The court also must make express findings showing it applied the proper standards.  This of course is all to protect the employee notwithstanding they lost.

A recent case illustrates the rare circumstance where the “unreasonable, frivolous, meritless, or vexatious” standard is met.

In Robert v. Stanford University, the employer Stanford University terminated a male employee after 11 years of employment.  The employer’s reason: employee was harassing a female coworker.  Female coworker had obtained a restraining order against employee.  Employer had warned employee several times before finally terminating him.

Employee filed a discrimination lawsuit against the employer claiming the reason for his termination was his race, native American, not because of his harassment of the coworker.  Employee represented himself at trial.  Employee admitted he had no evidence of race discrimination other than his own speculative testimony.   Employer filed a motion to toss the discrimination claim.  The trial judge did.

Meanwhile, employer spent $235,000 paying its attorneys to defend the case.

Lessons Learned

Based on the “unreasonable, frivolous, meritless, or vexatious” standard it is extremely rare for an employer to win any attorneys’ fee award against an employee.

A unique confluence of facts allowed the employer above to obtain its attorney’s fees: 1) employer terminated employee for harassment of a coworker, 2) coworker had a restraining order against the terminated employee, 3) restraining order was issued by the same court that found employee’s discrimination lawsuit to be unreasonable, frivolous, meritless, or vexatious, 4) employee admitted he had no evidence of race discrimination, and 5) it appears employee represented himself.

Such facts illustrate the rare instance where an employer may meet the “prevailing party” status to obtain its attorneys’ fees against a losing employee.  And note employer was awarded $100,000 in attorneys’ fees, $135,000 less than total attorneys’ fees incurred of $235,000.

So for all you small/medium business out there, can you get your attorneys’ fees?

Yes, but now you know what it takes.