211 So. 3d 1179
La. Ct. App.2017Background
- Plaintiff Ali Fahed worked at PoBoy Express after ASM Food, Inc. (ASM) was incorporated; he alleged an oral agreement with co-founder Fayz Ayesh to be co-owner/manager with an $8,000 monthly salary plus a share of profits.
- Fahed worked ~22 weeks (Nov 2014–Mar 2015) and claimed he was paid only $250/week in cash; Ayesh admitted Fahed was owed $750/week but disputed the $8,000/month claim.
- Tax records/1099s and payroll journals were inconsistent: W-2s and ASM’s tax filings showed lower wages, while 1099s reflected $4,000 (2014) and $6,000 (2015) reported as nonemployee compensation. Accountants and payroll witnesses testified but lacked independent documentation of cash payments.
- Fahed sued under the Louisiana Wage Payment Act; the wage issue was tried separately. The trial court awarded $11,000 in unpaid wages and $1,500 in attorney fees, but denied statutory penalty wages. Fahed appealed only the denial of penalties and the attorney-fee amount.
- The trial court found a bona fide dispute over the amount owed (oral agreement vs. admitted $750/wk), factual uncertainty due to informal cash/payroll practices, and therefore declined to impose penalty wages; it awarded a modest attorney fee which the appellate court affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether statutory penalty wages under La. R.S. 23:632 should be awarded | Fahed argued ASM arbitrarily withheld wages and penalties should apply for unpaid wages after demand | ASM (via Ayesh) argued there was a good-faith, bona fide dispute over the amount owed (oral salary claim vs. admitted weekly pay), so penalties are not warranted | Denied — court found a bona fide dispute and factual uncertainty; no manifest error in refusing penalties |
| Whether trial court abused discretion in awarding only $1,500 attorney fees | Fahed argued he was entitled to $27,112 and should have been allowed to present fee evidence | ASM argued the fee award was within the court’s discretion given the limited, summary nature of the wage claim and record | Affirmed — appellate court found the award reasonable and within trial court discretion |
Key Cases Cited
- Winkle v. Advance Prods. & Sys., 721 So.2d 983 (La. Ct. App. 1998) (explains elements for recovery of penalty wages and that penalties yield to equitable defenses)
- Beard v. Summit Inst. for Pulmonary Med. & Rehab., 707 So.2d 1233 (La. 1998) (penalty provision is coercive; good-faith defenses may bar penalties)
- Carriere v. Pee Wee’s Equipment Co., 364 So.2d 555 (La. 1978) (recognizes reasonable basis for resisting liability prevents penalty award)
- Bridges v. McClenaghan, 14 So.2d 652 (La. Ct. App. 1943) (upholds denial of penalties where records and dealings were informal and dispute was bona fide)
- Covington v. McNeese State Univ., 118 So.3d 343 (La. 2013) (standard for appellate review of attorney-fee awards and trial court discretion)