Opinion: Legislature Should End PAGA Lawsuits

By: Stuart Waldman

It is safe to say that no one likes getting threatened with lawsuits, especially small-business owners. Over and over, trial lawyers have been aggressively utilizing the Private Attorneys General Act (PAGA) to sue businesses for any alleged, minor labor infraction. The law was created more than 20 years ago and has been a complete and utter disaster for employers and employees alike. The only ones who have benefited are the lawyers.

The intent of PAGA was noble. It was supposed to be a quicker and more effective way to deal with workplace disputes, and the act allows workers to bring labor violation claims against an employer or former employer. The workers act as “private attorneys general” who can pursue civil penalties as if they were a state agency.

Under PAGA, the number of lawsuits filed against businesses has increased significantly. Trial lawyers file lawsuits against businesses for hundreds of possible violations. And it isn’t just businesses who get hit; they are going after nonprofits, too.

The worst part about it is that, in many cases, the violations are simple, small, and could easily be fixed. Failing to put up that new breakroom poster? PAGA violation. Missing a comma on a paycheck? PAGA violation. And there are many more examples, ranging from the mundane to the ridiculous.

Lawsuits over small matters

Also, most of the money doesn’t even go to the employees. According to the Fix PAGA campaign, a case filed in 2016 saw employees suing for “wage theft” because they had to walk to the back of a store to clock in for work. The case was settled for over $72 million, and the lawyers walked away with $24 million. What did the employees get? $77 each. Yep, $77.

In another case, an organization that serves individuals with disabilities was sued because it shortened the name to Inc. on paystubs, and employees got $61 each in the case. Did the change hurt any of the employees? No. Were they truly wronged because the pay stub had an abbreviation? Far from it.

For years, business advocates like VICA have gone to Sacramento to ask for changes to the PAGA law by allowing a right to cure, which allows fixable violations to be fixed efficiently and effectively. But time after time, these proposals have been rejected.

We are now asking the Legislature to act before a ballot measure to repeal PAGA goes to the voters in November. While we want it repealed, we are concerned about what may happen if the law is repealed by voters and then replaced by the Legislature.

California law allows proponents of a ballot measure to withdraw the ballot measure if the Legislature acts and they agree. The new proposal is fair and equitable for everyone except the trial attorneys, but they can take care of themselves.

What improvements can be made?

We are asking the Legislature to expand the California Labor & Workforce Development Agency’s existing process to resolve disputes. Additional fixes should include increased penalties for employers who willfully violate labor laws and increased investigations of industries and businesses with the most rampant labor law violations. These steps alone would severely reduce the need for costly, abusive lawsuits.

We need to reform PAGA now. Small businesses are the backbone of California, and they are working extremely hard every day to stay afloat. And for that, our elected legislators should work just as hard to ensure that those businesses are treated fairly and that predatory attorneys cannot abuse our system.

Stuart Waldman is president of the Valley Industry and Commerce Association.

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