Employment Litigation · Primary-source case analysis

Iloff: Ignorance of Minimum-Wage Law Does Not Establish Good Faith

By Aneeta Mishra and Timothy Chan

Published May 25, 2026

Iloff v. LaPaille concerned a property worker paid through free housing rather than wages, the employer’s good-faith defense to liquidated damages, and the scope of a de novo superior-court appeal from a Labor Commissioner award.

The worker was found to be an employee

Laurance Iloff maintained rental property and its water system under the owner’s direction. After the arrangement ended, the Labor Commissioner and superior court rejected the assertion that he was an independent contractor.

Good faith required a reasonable legal inquiry

An employer cannot establish the section 1194.2 defense merely by showing that the parties did not believe wages were required. The employer bears the burden of proving a context-appropriate, reasonable attempt to learn and comply with minimum-wage law.

No such attempt was shown

The employers presented no evidence that they tried to determine the governing requirements while Iloff worked. Their ignorance and informal understanding therefore could not support the good-faith defense on this record.

The paid-sick-leave claim could be heard

A section 98.2 appeal is a trial de novo, and the employee could raise a related Paid Sick Leave law claim in that proceeding. The Court reversed the contrary rulings and remanded.

Key takeaways

• Classify the worker under current California law before calculating wages.
• A good-faith defense needs evidence of a reasonable compliance effort.
• Document legal advice, agency guidance, and corrective steps contemporaneously.
• A de novo Berman appeal can encompass a properly raised paid-sick-leave claim.