Employer Fraud Claim Survives Against Employee Claiming Waiting-Time Penalties

Employers often face claims by employees alleging they were not paid all wages due at the end of employment. This can be significant in California, where failure to pay any part of an employee's wages at termination can result in a "waiting-time" penalty equal to 30 times an average day's wages under Labor Code section 203. Unpaid wages could include hourly pay, overtime premiums, or even unused vacation. Section 203 can be viewed here.


Section 203 appears in most California wage suits on top of the basic pay claims. The California Supreme Court is also considering whether unpaid meal and rest-period premiums count as "wages" and support waiting-time penalties as well. (The case, Naranjo v. Spectrum Security Services, has not yet been argued but can be followed here.)


One particularly difficult situation involves models, actors, and similar individuals who perform short-term work such as photo shoots. A model obtained for one day, for example, may argue that failure to pay the same day as the work creates immediate liability for penalties (as the work is completed that day).


This has become a repeat issue in the industry, where some models have been fully paid via their agency or another party but, because they were not paid on the day they worked, nonetheless file a claim for nothing but waiting-time penalties. The entity retaining the talent and any related providers (such as photographers, makeup artists, etc.) can be shocked by such claims, especially where their agreement expressly provides that the talent's agency be paid directly. Such claims are common even in small counties; multiple claims have been filed on behalf of the same individual, for example, in one small North Bay county. See, e.g., here and here.


This is exactly what happened in Brighton Collectibles, LLC v. Natalie Hockey. According to the appellate opinion, Ms. Hockey was a model who negotiated a one-day, $3000 shoot through an agency, LA Models, Inc. The retaining business sent payment to the agency after receiving an invoice it sent weeks later. Ms. Hockey did not claim that she had not been paid, instead filing suit solely for $90,000 in waiting-time penalties (30 x $3000) because she had not been paid the day of the shoot.


The business counter-sued for fraud, alleging that Ms. Hockey intentionally misrepresented how she preferred to be paid by inducing the business to send payment to her agency rather than paying her immediately. Ms. Hockey filed an "Anti-SLAPP" motion alleging that the countersuit was improper, which was granted by the court but overturned by the appellate panel. The higher court appears to have a dim view of Ms. Hockey's strategy, holding that "such deceit, if proven at trial, does not entitle her to a [$90,000] bonus."


The case is both a cautionary tale and a bright spot for employers, who should remain vigilant in ensuring final pay is made promptly. Brighton Collectibles, LLC v. Natalie Hockey can be viewed here.