California Supreme Court to Employers: Ignorance of the Law is Not a Defense

When an employer fails to pay an employee at least the minimum wage for all hours worked, current California law allows the employee to sue the employer and collect the minimum wages owed plus an additional amount known as “liquidated damages” equal to the amount of minimum wages owed.  In essence, the prospect of a liquidated damages award doubles the employer’s liability for any failure to pay minimum wage.

Current California law allows an employer to escape having to pay this additional liquidated damages amount if the employer can show that it acted in “good faith” – that is, that the employer had reasonable grounds for believing that its failure to pay the employee was not unlawful.

Recently, the California Supreme Court addressed the question of what qualifies as “good faith” by an employer.  In a unanimous opinion in Iloff v. LaPaille, the California Supreme Court ruled that, to establish a good-faith defense to liquidated damages liability, an employer must show that it made a reasonable attempt to determine the requirements of California’s minimum wage law.  An employer’s ignorance of California’s minimum wage law was not sufficient, the Court concluded.  Because the employer in Iloff made no effort whatsoever to determine the law, the Court concluded that an award of liquidated damages was proper.

You can read the Court’s full opinion in Iloff v. LaPaille here.