Court of Appeal clarifies individual liability under Lab. Code § 558.1, Berman tolling rules: Iloff v. LaPaille

In Iloff v. LaPaille (2025) 117 Cal.App.5th 404, the Court of Appeal (First Appellate District, Division One) clarified that the statute of limitations for Berman proceedings runs from the filing of the initial claim form, that Lab. Code § 558.1 does not grant courts discretion to withhold personal liability but rather requires it if statutory criteria are met, and that the value of lodging must be included when calculating waiting time penalties.

Plaintiff performed property maintenance for Defendants in exchange for rent but received no other compensation. After his termination, he filed a wage claim with the Labor Commissioner through the Berman process, was found to be an employee, and was awarded unpaid wages. During the subsequent appeal to the superior court, the trial court found Plaintiff was an employee but denied liquidated damages, sick leave penalties under Lab. Code § 248.5, and personal liability against Defendant LaPaille. Following a reversal by the California Supreme Court, which held that Defendants failed to establish a good faith defense to liquidated damages and that Plaintiff could pursue sick leave penalties, the matter was remanded to the Court of Appeal to address several specific wage and hour issues.

The Court of Appeal affirmed in part and reversed in part. Regarding the statute of limitations for unpaid wage claims, the Court of Appeal followed Cuadra v. Millan (1998) 17 Cal.4th 855 and clarified that the statute of limitations is tolled for purposes of the Berman procedure as of the date a plaintiff files an Initial Report or Claim form, rather than the date of the formal Complaint. On the issue of individual liability, the court held that Lab. Code § 558.1 creates a private right of action. It clarified that the statute does not grant trial courts the discretion to withhold personal liability. Instead, if an owner, director, officer, or managing agent meets the statutory criteria, the court must hold them personally liable; the word “may” in the statute simply grants the employee the discretion to pursue that liability. Because the statute is procedural, the court further clarified that such individual liability can extend back to the enactment of § 1197.1.

The court also addressed the calculation of waiting time penalties under § 203, ruling that the value of Plaintiff’s rental housing must be incorporated into the “daily rate of pay” used to determine those penalties. Additionally, following the California Supreme Court’s direction, the court reversed the trial court’s denial of liquidated damages and administrative penalties under § 248.5. While the court found no legal basis to challenge the denial of Plaintiff’s UCL claim, the overall ruling provides significant clarity on how lodging-based compensation and procedural tolling affect the recovery of damages and penalties in California wage disputes.

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