Plaintiff's counsel do not have the ability to collect their attorneys' fees before the DLSE, because the DLSE does not award attorneys' fees to represented claimants. Neither does the DLSE have a process for plaintiff's counsel to file liens with this State agency for recovery of their fees.

In fact, a commonly reported problem among plaintiff's counsel is that the DLSE has obtained the back wage check, remitted the check to the client, and never informed the attorney about the transmittal of that check. History is replete with stories of plaintiff's attorneys never receiving payments for their successful work in recovering employee wages via the DLSE.

A successful plaintiff who sues for incentive wages in Superior Court and is the prevailing party, is automatically a recipient of reasonable attorneys' fees. Labor Code §218.5. Although the Court has no discretion to award such fees, as in the case of plaintiffs recovering minimum wages or overtime wages (who “may” recover a reasonable attorneys' fee), the practical difference is nonexistent. See Labor Code §1194.

Because the prevailing party is the one entitled to reasonable attorneys' fees, the prevailing party defendant is also automatically entitled to fees when an employee's Superior Court matter resolves in favor of the employer. Labor Code §218.5, in essence, applies the English rule to fees recoveries. Earley v. Superior Court of Los Angeles County (2000) 79 Cal.App.4th 1420.

There are different consequences between getting into Superior Court either directly or via the DLSE. Going directly to Court, without passing “Go” (i.e., the DLSE) means the plaintiff has at least a 50% chance, in theory, of recovering attorneys' fees. That mathematical percentage reduces to a 25% chance when the Plaintiff uses the DLSE.

When a matter proceeds through the DLSE, that agency is required to issue an “order, decision, or award.” Labor Code §98.1. Either party, within 10 days, may file an appeal of that decision or award with the appropriate Superior Court. Labor Code §98.2. Obviously, only those who are unhappy with the DLSE's decision, including the employee, are the ones likely to file the appeal.

The plaintiff's problem in utilizing the DLSE for incentive wage claims is that the probability of fees' recovery reduces (mathematically) from 50% to only 25%. That this is so is because the employee has four potential outcomes from using the DLSE, only one of which produces a recovery of plaintiff attorneys' fees.

If the employee prevails at the DLSE, the employer is mostly likely the one who files an appeal, taking the matter into Superior Court. As indicated above, an appeal from a DLSE decision or award, results in an award of attorneys' fees against the one who has appealed. If the Superior Court result is unfavorable to the employer who has appealed, fees are assessed against that employer and THE EMPLOYEE RECOVERS FEES. This result is the same as would have occurred had the employee gone directly to Superior Court, been the prevailing party, and had fees awarded under Labor Code §218.5.

If the employee prevails at the DLSE, and the employer appeals the matter into Superior Court and prevails, THE EMPLOYEE PAYS NO ATTORNEYS' FEES. The employee was not the person who appealed and cannot have fees assessed against him/her. Labor Code §98.2(c). This result is opposite the result that would have occurred had the employee gone directly to Superior Court, been the unsuccessful party, and had fees awarded against the employee under Labor Code §218.5.

If the employer prevails at the DLSE, the employee is mostly likely the one who files an appeal to Superior Court. If the Superior Court result is favorable to the employee who appealed, THE EMPLOYEE RECOVERS NO FEES, because fees are only assessed against the appealing party, who happens to be the employee. This result is the opposite that would have occurred had the employee gone directly to Superior Court, been the prevailing party, and had fees awarded under Labor Code §218.5.

If the employer prevails at the DLSE, the employee appeals the matter into Superior Court, and the employer prevails, THE EMPLOYEE MUST PAY THE EMPLOYER'S FEES. This result is the same as the result that would have occurred had the employee gone directly to Superior Court, been the unsuccessful party, and had fees awarded against the employee under Labor Code §218.5.

The following chart illustrates the attorneys' fees results.

	ER prevails in Sup. Court	EE prevails in Sup. Court
Directly to Superior Court	ER gets Fees	EE gets Fees
ER appeals DLSE	ER gets nothing	EE gets Fees
EE appeals DLSE	ER gets Fees	EE gets nothing

The employee, in theory, controls the DLSE process. An employee who believes that the DLSE will generate an unfavorable award to the employee should never allow that agency to issue its final decision. An unfavorable DLSE decision works only to the disadvantage of the employee. A favorable DLSE decision merely maintains the employee in the position s/he would have been in had s/he filed an action directly in Superior Court.

Even employees who are unrepresented before the DLSE should abandon their claims when they become aware of a potential unfavorable DLSE ruling. Most such employees will request their counsel to take the matter either (a) on a contingent fee basis or (b) on a statutory fee recovery basis. Option (b) does not exist for claimants who have lost their DLSE matters and had to appeal into Superior Court. Because the amount of fees are often small, the plaintiff will not be able to find counsel except on an hourly basis.

Incidentally, fees awarded to a successful claimant who has used the Superior Court, or both the DLSE and the court, are arguably the property of the attorney, not the client. Flannery v. Prentice (2001) 26 Cal.4th 572. Fees may be awarded for the work performed at the DLSE to recover such incentive wages. Wallace v. Consumers Cooperative of Berkeley, Inc. (1985) 170 Cal.App.3d 836, 847.