Summary of August 2025 Labor Law Updates for Orange County, California
This post provides a roundup of key labor and employment law decisions from California in August 2025, for employees, HR professionals, and compliance leaders. Presented by HKM Employment Attorneys, our aim is to highlight how these developments may impact workplaces and obligations under California law.
These August 2025 rulings underscore that California courts are continuing to tighten employer obligations in wage & hour law and arbitration procedure. Employers can no longer rely on ignorance of the law as a shield; they must proactively seek to understand their obligations. Arbitration agreements must be carefully drafted and adhered to, especially in paying fees timely.
Iloff v. LaPaille — Court Ruling (California Supreme Court)
Date: August 21, 2025
Summary:
Laurance Iloff had an informal arrangement with his landlords (Bridgeville Properties) in which he lived rent-free in exchange for performing maintenance work. After the arrangement ended, Iloff filed a claim with the Labor Commissioner, arguing he was an employee entitled to unpaid wages, liquidated damages, paid sick leave penalties, etc. The Labor Commissioner agreed; the superior court agreed Iloff was an employee, but denied liquidated damages on the theory the employer acted in “good faith” under the default rule, relying on parties’ mutual understanding that Iloff would work in exchange for housing. The Court of Appeal affirmed in part. The California Supreme Court reversed. It held that: To invoke the “good faith” defense under Labor Code § 1194.2 for avoiding or reducing liquidated damages for minimum wage violations, an employer must show that it made a reasonable attempt to determine what California law requires. Mere ignorance of the law—even if shared between worker and employer—is not sufficient. The Paid Sick Leave law (Healthy Workplaces, Healthy Families Act) claims may be raised in court via a Berman appeal (i.e. when an employer appeals a Labor Commissioner ruling). That is, employees can bring Paid Sick Leave law claims in the superior court when the employer has appealed the Labor Commissioner’s decision.
Implications:
Employers must proactively understand California wage & hour laws (especially minimum wage) and document efforts to comply. Informal arrangements that assume no relationship of employment or compensate with non-cash consideration will be scrutinized. If an employer fails to do so, they risk being liable for liquidated damages (essentially double the unpaid wages plus penalties) even if they thought their practices were lawful. Employees have broader ability to raise Paid Sick Leave law claims in appeals; thus, employers should expect more comprehensive liability in Berman appeals. HR, payroll, and legal teams should review compensation arrangements, housing-in-lieu arrangements, and situations where “free housing” or similar in-kind compensation is exchanged for labor.
Hohenshelt v. Superior Court — Court Ruling (California Supreme Court)
Date: August 11, 2025
Summary:
Dana Hohenshelt, employed by Golden State Foods, had an arbitration agreement obligating the employer to pay arbitration fees within 30 days of an invoice under California Code of Civil Procedure § 1281.98. The employer failed to pay on time, and the employee sought to withdraw from arbitration and proceed in court. The question was whether section 1281.98 is preempted by the Federal Arbitration Act (FAA), and whether late payment always forfeits arbitration rights. The Court held: Section 1281.98 is not preempted by the FAA, provided it is interpreted in harmony with California contract law principles that allow relief from forfeiture in cases of non-willful, non-grossly negligent, or non-fraudulent late payments. Late payment of required arbitration fees does not automatically result in loss of the employer’s right to enforce arbitration; delays may be excused if due to good faith mistakes, inadvertence, excusable neglect, etc., and provided harmed parties are compensated.
Implications:
Employers with arbitration agreements must ensure fee payments are timely under § 1281.98, but now have some breathing room: not all late payments will lead to forfeiture if non-willful or excusable. Employers should document any delay, reason for it, communications, and efforts to mitigate any consequences to the employee, in case later challenged. Arbitration agreements should be reviewed to ensure they clearly specify who pays fees, deadlines, and the process for handling missed payments; also provisions addressing relief from material breach should be considered. Employees may be better able to challenge arbitration enforcement if fee nonpayment is willful or egregious; but will have a harder case if delay was minor or genuinely excusable.
Conclusion: Looking Back on California’s Labor Law Updates from August 2025
California courts are increasingly scrutinizing wage-and-hour violations, discrimination, contract breaches, and severance and separation agreements—making local counsel essential. At HKM Employment Attorneys in Orange County, our Irvine-based team led by Cecilia Brennan has secured over $250 million for employees in all facets of employment law, including wrongful termination, wage claims, contract review, and more. Recognized by Super Lawyers and peer-rated AV, we provide responsive, no-fee-unless-we-win advocacy and help clients navigate pre-litigation strategies and courtroom actions. If the latest California rulings resonate with your experience, reach out to our Orange County office to explore how we can stand with you.
