Wage & Hour
New Penalties for Unpaid Wage Judgments Under SB 261
Updated
Senate Bill 261, authored by Senator Wahab, adds new collection tools for unpaid wage judgments and expands who can recover fees when enforcing them. The measure amends Labor Code section 98.2 and adds Labor Code sections 238.05 and 238.10. It takes effect January 1, 2026.
Background
The Division of Labor Standards Enforcement, under the Labor Commissioner, handles complaints and hearings over unpaid wages, penalties, and other compensation. When the Commissioner issues an order, decision, or award, Labor Code section 98.2 governs appeals to the superior court and the entry and enforcement of the resulting judgment.
Existing law lets a judgment creditor, or the Commissioner as assignee, recover court costs and reasonable attorney’s fees for enforcing the judgment. The Legislature found that wage theft remains widespread, estimating that employers failed to pay low-wage workers billions of dollars each year in California’s largest metropolitan areas, and that simple interest alone does not deter nonpayment.
What the Law Changes
SB 261 adds Labor Code section 238.05, which subjects a judgment debtor to a civil penalty of up to three times the outstanding judgment amount, including postjudgment interest, when a final wage judgment stays unsatisfied for 180 days after the appeal period ends. A debtor avoids the penalty by reaching an accord under Labor Code section 238 before the 180th day and staying in full compliance until satisfaction.
The statute directs a court to assess the full requested penalty unless the debtor shows good cause to reduce it by clear and convincing evidence. Penalties are split evenly: half to the employees named in the judgment, shared proportionally, and half to the Division for enforcement and education, upon appropriation. A successor to a judgment debtor is jointly and severally liable for these penalties.
A wage judgment left unsatisfied for 180 days exposes the judgment debtor to a civil penalty of up to three times the outstanding amount, and courts must award reasonable attorney’s fees and costs to a prevailing plaintiff enforcing such a judgment.
Fees, Costs, and Who May Enforce
SB 261 amends section 98.2 so that a public prosecutor, as defined in Labor Code section 180, may recover court costs and reasonable attorney’s fees as an assignee of the judgment creditor, alongside the judgment creditor and the Labor Commissioner. New Labor Code section 238.10 requires a court to award all reasonable attorney’s fees and costs to a prevailing plaintiff in any action brought by a judgment creditor, the Commissioner, or a public prosecutor to enforce a final judgment for unpaid wages, penalties, or other amounts.
What This Means for You
SB 261 applies to final judgments arising from the nonpayment of wages for work performed in California. It authorizes a civil penalty of up to three times an unpaid judgment after 180 days and requires fee and cost awards to prevailing plaintiffs enforcing these judgments.
I write these summaries as general information about developments in California employment law. They are not legal advice and don’t create a mediator–client relationship. For guidance on a specific matter, consult a qualified attorney.