Since 2004, PAGA has been a concern for California employers. The Private Attorneys General Act enabled workers to sue their employers for all Labor Code violations. This is normally the realm of the state’s Attorney General. However, lawmakers knew that they had a problem with underground businesses avoiding taxes and licenses. They hoped that empowering employees to sue their employers as if they were representing an agency would uncover unsafe working conditions.
As many laws do, PAGA had unintended effects. Soon potential plaintiffs, and the attorneys representing them, discovered that they could sue for every violation under the sun. What’s more, the process was extremely profitable for everyone involved, except for business owners.
Suddenly, employers were being sued for minor, non-monetary violations. As an example, consider the case of the 99 Cents Only Stores. Cashiers sued for the right to have chairs at their workstations. The employees won, and the decision was upheld by the California Court of Appeal. This early case demonstrated how profitable such litigation could be.
Under PAGA, employees have the right to recover monetary penalties for an employer’s violation of any Labor Code. Prior to passage of the law, these civil matters would have to be brought by the State Labor Commissioner. PAGA also made it possible for fines to be imposed against employers for virtually every provision of the Labor Code.
Moreover, plaintiffs may recover 100 percent of their attorney’s fees. This meant that employees could address any perceived shortcomings in their working conditions, and that plaintiff’s lawyers were motivated to help them.
The California Business & Industrial Alliance is now suing California Attorney General, Xavier Becerra claiming that PAGA is unconstitutional. The plaintiff’s say that the state’s powers have been turned over to attorneys who are focused on personal gain. They claim that attorneys are using the law to avoid mediation and to extort millions of dollars from employers.
This lawsuit is new and nowhere near a resolution. However, it’s a reminder that employers should do their utmost to ensure compliance with Labor Codes, and it underscores the importance of working with a qualified business attorney.
If you are an California employer or business owner with questions about PAGA or any legal issue feel free to contact me, attorney Richard Oppenheim at 818-461-8500 or via the Contact form on this page.