by Reyna Macias (Orange Office)

CaliforniaWage and hour lawsuits can be very costly to employers.  Employees generally had nothing to lose by filing questionable overtime compensation claims - that is until the recent decision of Plancich v. United Parcel Service, Inc., in which the California Court of Appeal for the Fourth Appellate District held that an employer that prevails in an overtime compensation claim can recover its costs from the employee.  Plancich was employed by UPS as an onroad supervisor.  He sued UPS based upon a variety of claimed statutory violations, including failing to pay overtime compensation and unfair competition.  He alleged that UPS erroneously classified him as an exempt employee, and that he worked more than eight hours per day, and more than 40 hours per week. 

Plancich claimed that he was not allowed to regularly exercise discretion or independent judgment when performing his duties, and that therefore his position did not fall within the criteria for an executive, administrative, or professional exemption.  The jury found that UPS correctly classified Plancich as an exempt employee.  The trial court found in favor of UPS on the unfair competition cause of action, and the jury found in favor of UPS on all the other causes of action, including the overtime compensation claim.  Therefore, UPS was the prevailing party.  Consequently, the trial court ordered that UPS recover its costs from Plancich.

ups_logo-webUPS filed a memorandum of costs in the amount of $38,387.20.  Plancich filed a motion to strike to prevent UPS from recovering its costs.  Plancich argued that the overtime compensation statute did not allow a winning employer to recover its costs.  The trial court agreed with Plancich and granted the motion to strike, stating that it would defeat the legislative intent and create a chilling effect on workers to award a winning employer costs.  UPS appealed.

The Court of Appeal held that the overtime compensation statute had no express exception to the general rule that as a matter of right the prevailing party is entitled to recover costs in any action.  Further, the Court of Appeal stated that the argument that a possible chilling effect could result from prevailing employers recovering their costs is more properly addressed to the Legislature.

It will be interesting to see whether this decision has any chilling effect on employees bringing suits for unpaid overtime compensation.  Facing the likelihood of having to pay their employer's reasonable costs, should the employee not prevail, the employee may certainly have to think twice now about pursuing questthink_twice_wood_blocks-webionable overtime compensation claims.  An employer's best defense remains to implement good human resources practices and policies in an effort to avoid litigation.

Employers should audit their own practices to ensure compliance with the wage and hour laws.  To avoid misclassification, employers should know what jobs are exempt and review job descriptions and how each job is actually performed.  Nonexempt employees must be paid for all time worked, even if it is not approved.  It is a good practice to check to see that employees are performing their jobs as assigned and working the hours Reyna-M-headshot-web-namedesignated by management.  If they are not, the employer should insist that they start doing so.  Further, employers should ensure that they are correctly calculating overtime pay.  Finally, employers should review their policy manual to make sure it is complete and in line with the law.

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