Iloff v. LaPaille, 18 Cal. 5^th 551 (2025)

Laurence Iloff performed maintenance on various structures that were located on property that was owned by Bridgeville Properties, Inc. and managed by Cynthia LaPaille. Under an informal arrangement, Iloff’s employers allowed him to live rent-free in one of the houses on the property but did not provide him any other benefits or compensation for his services. After his employers terminated the arrangement, Iloff filed claims against them with the California Labor Commissioner. The employers contended that Iloff had been an independent contractor, but the Labor Commissioner determined he was an employee and was entitled to unpaid wages, liquidated damages and penalties. Following a bench trial, the superior court found that Iloff was an employee, but ruled Iloff was not entitled to liquidated damages because his employer had acted in “good faith” in not paying him and had “reasonable grounds for believing” they were complying with the minimum wage law. The superior court also rejected Iloff’s claim for penalties under the Paid Sick Leave law, concluding that the statute did not authorize Iloff to seek those penalties in the context of the employers’ appeal from a Labor Commissioner ruling. In this opinion, the Supreme Court held that in order to prove the good faith defense to a liquidated damages award, the employer must show it made a reasonable attempt to determine the requirements of the minimum wage law, which these employers failed to do: “In this case, our determination is straightforward because the employers do not claim to have made any attempt to determine the requirements of the law governing compensation for Iloff’s services to their business.” The Supreme Court further held that an employee may raise a Paid Sick Leave law claim in the context of an employer’s appeal of a Labor Commissioner ruling.