The good faith defense in wage and hour

On Behalf of | Mar 20, 2023 | Employment Law |

In wage and hour disputes, companies stand to face intense scrutiny around their practices around their hourly employees. California has extremely complex rules around breaks, vacation time, and accurate pay stubs and that can intimidate any employer. But you have more security than you realize.

One of the key defenses that you may utilize in defense of any wage and hour matter is the “good faith defense.” This defense posits that you, as the employer, operated with every intention of following the law. Mistakes may not cost you as much as you think.

Elements of a good faith defense

People use a good faith defense in types of litigation, from intellectual property to regular tort law. But operating in good faith, the term means that you’ve done your duty to the best of your knowledge. Anyone operating in good faith may still have liability for an incident, but perhaps your final outcome won’t be as major.

In a good faith defense for wage and hour claims, you may have to prove certain elements, as it was in a recent case resolved before the supreme court of California. The entire case hinges on the fact that the employer did not willfully refuse wages and did not knowingly withhold them.

California law is written to punish a willful and knowing withholding of owed wages. However, if the wages earned or breaks taken were not reported and the wages earned in that time were not recorded, there is no way for an employer to know that.

What would be a willful and knowing act?

A willful and knowing act of wage theft would be one in which you order an employee to work outside of their hours without pay. It would be manually underreporting hours worked. You would have to make an effort to violate the law.

An accident, however, may lead to a better outcome for you. You will still have to pay the wages owed, but there is a strong chance you can avoid the other penalties.


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