The Big Picture
On August 21, 2025, the California Supreme Court handed down a decision in Iloff v. LaPaille that every employer should pay attention to. Why? Because it touches two hot-button issues:
- When you can (and can’t) avoid paying double damages for minimum wage violations.
- Whether employees can tack on paid sick leave claims when you appeal a Labor Commissioner ruling.
Spoiler: the Court made things tougher on employers.
Minimum Wage Mistakes: “But We Didn’t Know!” Isn’t a Defense
One of the issues in Iloff was whether an employer who honestly (but wrongly) believed they were complying with the law could avoid paying liquidated damages—that’s lawyer-speak for “paying the worker twice what you owe them.” The Court’s answer: ignorance is not bliss. Just because you and the worker both thought your arrangement was fair doesn’t mean you’re off the hook. The only way to get out of liquidated damages is by showing you actually made a reasonable effort to figure out what the law required. That could mean consulting legal counsel, checking guidance from the Labor Commissioner, or otherwise doing your homework. Think of it like filing your taxes—you don’t get to say, “Well, I thought TurboTax had me covered” if you never actually opened the program.
Paid Sick Leave: You Can’t Escape It on Appeal
The second issue was about what happens when you appeal a Labor Commissioner decision (known as a “Berman appeal”). Some employers hoped that meant employees couldn’t raise new claims in superior court—specifically, paid sick leave violations. The Supreme Court shut that door. Employees can absolutely bring those claims into the appeal, which means your risk doesn’t shrink just because you moved the fight to a different courtroom. Translation: appealing a ruling may actually open the door to more liability, not less.
Why This Matters for Employers
Here’s the bottom line for business owners and HR teams:
- Wage compliance isn’t optional. Even creative pay setups—like free housing, meals, or “we all agreed this was fine”—can still violate minimum wage laws.
- Document your good faith. If you want any chance at avoiding liquidated damages, you’ll need a paper trail showing you tried to get it right.
- Be cautious with appeals. A Berman appeal doesn’t clear the slate—it can add more issues to the mix.
What You Should Do Now
- Audit your pay practices. If you’re paying workers in housing, perks, or anything other than money, double-check that it meets minimum wage requirements.
- Keep receipts (figuratively). Document the steps you’ve taken to comply with wage and hour laws. Judges love receipts.
- Update your sick leave policies. Make sure accrual, use, and notice are in line with California’s requirements.
- Think before appealing. Sometimes fighting a Labor Commissioner ruling in court makes sense; sometimes it makes your problem worse. Run the cost-benefit analysis before pulling the trigger.
Final Takeaway
The message from Iloff v. LaPaille is pretty clear: “I didn’t know” won’t save you. Employers are expected to be proactive, not reactive, when it comes to wage and sick leave compliance.
So, if your business relies on handshake deals, creative compensation, or “common sense” over actual legal compliance, now’s the time to tighten things up. Because as the Court just reminded us, what you don’t know can hurt you—and your wallet.
