In Reid Lester v. Career Bldg. Academy, the Colorado Court of Appeals adopted a legal standard that will virtually assure that a prevailing employee in a statutory wage claim will be awarded attorney’s fees.
Reid Lester (Lester) was the chief operating officer of The Career Building Academy (TCBA), a non-profit corporation. The founder of TCBA promised to pay Lester a salary of $150,000, with half to be paid by TCBA and the other half to be paid by second entity, JHP. TCBA paid him less than $8,000 during his first six months of employment. Lester resigned and filed suit, claiming he had an implied contract with TCBA and JHP and seeking unpaid wages, penalties, and attorney’s fees under the Colorado Wage Claim Act (CWCA).
Lester Wins his Wage Claim, But the Court Rejects his Request for Attorney’s Fees
Lester convinced a jury that he had an implied contract with TCBA and awarded him unpaid wages. Addressing the question of whether to award him attorney’s fees, the trial court considered ten factors set forth in a 2010 Court of Appeals case:
(1) the scope and history of the litigation; (2) the ability of the employee to pay an award of fees; (3) the relative hardship to the employee of an award of fees; (4) the ability of the employer to absorb the fees it incurred; (5) whether an award of fees will deter others from acting in similar circumstances; (6) the relative merits of the parties’ respective positions in the litigation; (7) whether the employee’s claim was frivolous, objectively unreasonable, or groundless; (8) whether the employee acted in bad faith; (9) whether the unsuccessful claim was based on a good faith attempt to resolve a significant legal question under the CWCA; and (10) the significance of the claim under the CWCA in relation to the entire litigation.
Based on these factors, the trial court denied Lester’s request for attorney’s fees.
The Court Reverses & Establishes a New Standard for Awarding Attorney’s Fees to Prevailing Plaintiffs
On appeal, Lester requested reversal of the trial court’s ruling against him on attorney’s fees. The Court of Appeals agreed. It stated first that the CWCA itself unambiguously gave the trial court discretion to award attorney’s fees to a prevailing party:
If, in any action, the employee fails to recover a greater sum than the amount tendered by the employer, the court may award the employer reasonable costs and attorney fees incurred in such action . . . . If, in any such action in which the employee seeks to recover any amount of wages or compensation, the employee recovers a sum greater than the amount tendered by the employer, the court may award the employee reasonable costs and attorney fees incurred in such action.
But it noted that the CWCA was silent as to what factors a trial court should consider in exercising that discretion. For those factors, the Court of Appeals turned to the legislative declaration made when the law was revised in 2007. That legislative declaration, said the court, indicated the Colorado General Assembly’s intention to apply to claims for fees by prevailing plaintiffs the same standard that applies to Title VII of the Civil Rights Act of 1964, a federal law that prohibits racial, sexual, and other types of discrimination, harassment, and retaliation.
The Court of Appeals explained that under the Title VII standard adopted by the Colorado legislature, a plaintiff is entitled to her attorney’s fees unless the employer can show that “’special circumstances would render [an award of attorney fees] unjust.’” Such special circumstances, “may arise when a plaintiff brings the lawsuit for the purposes of delay, or in bad faith; or seeks to harass, embarrass, or abuse another party or the court.” The existence of such factors is “unlikely to exist,” so a decision by a trial to deny a motion for attorney’s fees to a prevailing plaintiff should be “rare and disfavored.
The Court of Appeals then set forth several factors that a trial court may not consider in reviewing a request for attorney’s fees. An employer cannot establish special circumstances by showing that it acted in good faith, that it is a government, that the employee is capable of paying her own fees, or that it is a non-profit so that an award would impose a financial hardship on it.
The Court of Appeals held that the trial court did not limit its evaluation of Lester’s attorney fee request to whether special circumstances existed. As a result, it reversed the denial of that request and sent the case back to the trial court for review under the new standard.
What It Means for Employers
A plaintiff who proves that the employer violated the CWCA will receive attorney’s fees except in rare circumstances. Accordingly, the Lester case holds two primary lessons for employers. First, compliance with the law is crucial for an employer to avoid liability and attorney’s fees:
· Pay current employees correctly and timely under C.R.S. §§ 8-4-102, -103, -105, -106;
· Deduct from employees’ paychecks only those amounts permitted under C.R.S. § 8-4-105;
· When an employee is discharged, timely pay them what is earned, vested, and determinable whether they quit or were terminated involuntarily, C.R.S. §§ 8-4-101, -109, -110;
· Pay striking employees according to C.R.S. § 8-4-108;
· Post notices and keep records properly under C.R.S. §§ 8-4-103, -105.5, -107, -117;
· Do not retaliate against current or former employees for asserting CWCA rights. C.R.S. § 8-4-120;
· Comply with any industry-specific requirements. C.R.S. § 8-4-104 (mining); -115, -116, -117, & 119 (field labor contractors); -123 (nursing homes, building management companies).
Second, an employer should include language in its employee handbooks requiring employees to raise issues about their compensation as soon as they become aware of them and stating that the employer will promptly investigate and correct any errors.
Third, Make sure that all managers, especially those running remote offices, are familiar with the CWCA’s provisions or have ready access to someone who does. Read More...
Earlier this month, I had the privilege of participating in a weeklong mediation training at Harvard Law Schools' Program on Negotiation. It is known as one of the best such programs in the country, and I learned why. Five accomplished mediator-instructors and 48 participants, with legal and non-legal backgrounds and from 13 countries, for 9 hours per day. I learned many lessons through the presentations, exercises, and reading that are well worth sharing. There are five that I believe are especially useful in the context of employment disputes. In a previous post, discussed the use of joint mediation sessions in employment cases, and in a more recent post, I discussing positional and interest bargaining.
Lesson #3: The "Monkey Should be on the Parties' Back," Not the Mediator's
A mediator's success or failure should not depend on whether the mediator "brokers a deal" and the parties settle. Many mediators, and the parties to mediation, believe that a mediator's duty is to the deal. She's supposed to do everything in her power to get the parties to walk out with a settlement agreement, or at least the material terms of settlement, in hand. To be sure, getting to a settlement or at least closer to one is a key objective most parties to an employment dispute expect a mediator to do. But remember, mediation is voluntary. It is the parties who will decide whether to resolve their dispute or not. She can use a variety of methods to help them toward resolution: probing, questioning, suggesting. But the responsibility for settlement -- the "monkey," as the instructors called it -- is theirs, and theirs only. And despite pressure from the lawyers and their clients, the mediator may have to push the monkey gently back on the shoulders of those to whom it belongs. Read More...
Earlier this month, I had the privilege of participating in a weeklong mediation training at Harvard Law Schools' Program on Negotiation. It is known as one of the best such programs in the country, and I learned why. Five accomplished mediator-instructors and 48 participants, with legal and non-legal backgrounds and from 13 countries, for 9 hours per day. I learned many lessons through the presentations, exercises, and reading that are well worth sharing. There are five that I believe are especially useful in the context of employment disputes. In a previous post, I discussed the first -- on using joint mediation sessions in employment cases.
Lesson #2: The Parties May Get a Better Deal by Focusing on Interests, Not Positions
In the world of employment law, lawyers and their clients often come into mediations focusing only on a specific structure for settlement – their positions. Comedian Billy Connolly famously -- if profanely -- provides an example: http://www.youtube.com/watch?v=i2KLyBapfTc. A mediator may be able to elicit from each party the goals that that party wants to achieve and why – their interests. By concentrating on the latter, the mediator may help the parties generate options for achieving their goals that are even better than the positions they initially articulated.
Instructors at the mediation training illustrated the difference between the two kinds of bargaining this way: a parent was refereeing a dispute between his two daughters. Each took the position that the last orange in the house was hers. Exasperated, the parent cut the orange in two and gave each one half of it. Both kids were equally unhappy with this result. What the parent did not know, however, was that one wanted the orange to squeeze for juice, and the other wanted the peel to put in cookie dough. If the parent/mediator had elicited the interests of each child, he could have given the functional equivalent of a whole orange to each of the kids!
In the employment context, one or both parties may begin a mediation believing that they will be negotiating only about the amount of money (if any) the employer is willing to pay the former employee. But if the mediator probes to understand the goals underlying their respective positions (e.g., the defendant-employer may not have good cash flow in the fourth quarter; the now unemployed plaintiff is concerned about sustaining a big tax hit this year on a lump-sum payment), she may help them find the common ground that can create more value to both parties than if each had clung to the positions held at the beginning of mediation (e.g., a discounted lump-sum payment paid in the first quarter of the next year). A mediator who is adding value to the mediation sometimes can help locate the interest of each party that underlies that party's position and use that information to help move toward settlement. Read More...
Earlier this month, I had the privilege of participating in a weeklong mediation training at Harvard Law Schools' Program on Negotiation. It is known as one of the best such programs in the country, and I learned why. Five accomplished mediator-instructors and 48 participants, with legal and non-legal backgrounds and from 13 countries, for 9 hours per day. I learned many lessons through the presentations, exercises, and reading that are well worth sharing. There are five that I believe are especially useful in the context of employment disputes.
Lesson #1 -- Consider the Value of Joint Mediation Sessions, Alone or in Conjunction with Caucus Sessions
My experience as an advocate in Colorado is that mediators in employment cases usually rely on the caucus form. The neutral meets privately with one side in one room, and then with the other in a different room. The mediator then moves back and forth between them, bearing settlement offers and counteroffers, asking questions, and providing commentary. In certain employment disputes, this “shuttle diplomacy” can be an effective way to help the parties to “get to yes.” The parties may be a combustible combination unless they are separated from one another. Counsel may want to share information with the mediator but not with one another. Consultations with the representative of an employer’s employment practices liability insurance carrier or a co-defendant may be difficult unless they occur out of earshot of the plaintiff. A party’s lawyer may not want his adversary to see how his client reacts to what the mediator says or the offer she provides.
At the conference in Cambridge, however, the instructors, especially legal mediation pioneer Gary Friedman and Harvard Law School Professor Robert Mnoookin, challenged us to bring the parties and their counsel together in one place to mediate disputes. According to this view, joint sessions, unlike caucuses, give each of the parties and counsel the chance to understand directly the other side’s view of the controversy and what is needed to resolve it. They may find common ground as to facts or legal conclusions that, in turn, propels them toward a resolution. For example, meeting in joint session may help parties in a Title VII lawsuit determine what (if any) working conditions would make reinstatement a viable option. Or, in a dispute in which two managers are in a turf batter in their organizations but will have to work together when it ends, empowering them to resolve their dispute in joint session may help create momentum to begin building or rebuilding trust and forging a durable solution to their conflict. A third example is the rare (though not unheard-of) conflict in which an apology by one party can seal the deal end the litigation.
Another alternative is the use of both caucuses and joint sessions at different points during the mediation. For example, even if the parties are averse to being in the same room together during most or all of the mediation, it may be advantageous for their lawyers to meet together at length at the beginning of the mediation. At such a joint session, the mediator can help the lawyers establish a shared set of ground rules. They may be able to limit negotiations to avoid wasting time on matters on which the parties agree in a case (e.g., that front pay will be minimal at best because the employee became re-employed during the litigation) or are unlikely to agree (e.g., whether a defendant that lost a motion for summary judgment will prevail on liability at trial). On the other hand, such discussions in joint session may broaden the scope of negotiations, which may create fertile ground for settlement.
To be sure, joint mediation sessions are not always workable or desirable in resolving employment disputes. But the reflexive choice to rely solely on caucuses may impede rather than facilitate settlement. Conflicting parties, their lawyers, and their mediators should consider carefully whether use of joint sessions, alone or in conjunction with caucuses, are likely to create the value that the parties need to settle their dispute. Read More...