Enacted in 2004, California’s Private Attorneys General Act (PAGA) was intended to be a more effective way to help workers resolve labor disputes. Two decades later, it’s clear that PAGA’s lawsuit-first approach has failed – it’s ineffective and inefficient for workers and unfair for thousands of small businesses.
It’s long past time for the Legislature to fix PAGA to create a better, fairer system for workers.
PAGA lawsuits have resulted in more than $10 billion in payments from employers since 2016, with a significant chunk going to lawyers and workers getting pennies on the dollar.
Lawyers know that the mere threat of a lawsuit is likely to force a settlement to avoid litigation costs – creating a system that is ripe for abuse and extortion.
”We’ve been a part of the San Diego community for three decades. I cherish my employees and feel an immense sense of pride in providing the community with fresh baked goods and authentic espresso. But my experience with PAGA has been nothing short of heartbreaking. I don’t know how we’re going to keep our doors open.”
"As a non-profit that provides support for adults with developmental disabilities and their families, we operate with very tight margins and don’t have hundreds of thousands of dollars to fight expensive PAGA lawsuits. We care deeply about those we serve, and our employees are essential in providing the continuum of care and resources our clients need, but if we’re hit with another lawsuit, we may not be able to continue to provide our critical services. This would be devastating for one of the most vulnerable populations throughout California.”
“I’m a proud wife and mother to three young girls. I opened a franchise location to provide our family with a way to save and prepare for the future. Unfortunately, everything could come to a screeching halt. After being served with a PAGA lawsuit, I feel like I’m being extorted. Our legal fees are piling up and we’re already having to explore difficult operational decisions to keep our doors open. Unfortunately, we’ll likely never open a business in California again.”
“For almost 50 years, our family business has delivered physical, occupational, and various critical health services to patients throughout Northern California. Several years ago, we were hit with a PAGA case that is still in progress and will ultimately take hundreds of thousands of dollars to resolve. Dollars that could and should have been directly put back into the business in the form of higher wages, improving our facilities for our employees and patients and/or potentially opening up another facility in another community. This is not about us as an employer. This is directly affecting our staff and patients. It’s time to reform PAGA to help both workers to thrive and businesses to survive.”
“We provide person-centered services and resources to empower and support hundreds of individuals with intellectual and developmental disabilities. Being targeted by a PAGA suit due to the unique nature of our work is threatening to shut our doors. It's devastating to think about how losing these services could impact the most vulnerable in our community. We’re going to fight this lawsuit, but it will cost us and those we support in more ways than one.”
“We support thousands of individuals with disabilities, people with mental health diagnoses, and young adults in Central and Southern California. One of the resources we provide to individuals is helping to strengthen workplace skills so they can feel empowered and confident as members of their community. So, to have a frivolous PAGA lawsuit filed against us over a non-existent or minor workplace issue is detrimental to our existence. PAGA needs to be reformed to ensure non-profits aren’t continually and unfairly targeted.”
“We’re very proud to help connect businesses and workers throughout California, fostering opportunities that create professional and economic growth. Unfortunately, my business was targeted by a PAGA lawsuit due to misplaced dates on paystubs. This process has been beyond stressful and devastating. This abusive system needs to be reformed.”
“The mental and behavioral health services we provide directly impact the well-being of hundreds of individuals throughout Northern California. Being hit with a PAGA suit absolutely has hurt our ability to provide services to those most in need in our community. This system is deeply broken, and it’s hurting patients - we need to reform PAGA.”
“We’re a family-owned business that has been a part of our community for over 40 years. Our employees are helping cultivate our dream and we always strive to provide them with the flexibility they need. Now, after dealing with an abusive PAGA lawsuit, we can’t offer that same flexibility out of fear that someone will take advantage of PAGA’s broken system again.”
"It’s always been my dream to run my own business, and I’ve been fortunate enough to keep the doors open for nearly 20 years. But my experience with PAGA has turned running my restaurant into a nightmare. A simple third-party payroll error cost me thousands of dollars in legal fees. Now I’m worried. Will I be extorted next for a benign clerical mistake?"
“Our organization helps support individuals with intellectual and developmental disabilities and Veteran families who are experiencing homelessness or are at risk of becoming homeless. To put it simply, our experience with PAGA has been heartbreaking and has hampered our ability to provide critical, community-based services. PAGA is being abused and gravely impacting thousands of non-profit organizations like ours that are providing care and resources to some of California’s most vulnerable populations.”
“Our non-profit provides exceptional services to hundreds of individuals with disabilities. We also honor and appreciate our dedicated staff. It’s been exasperating to see money that we can ill afford to lose be unjustly taken by frivolous lawsuits and attorneys that are regularly targeting non-profits like ours. We couldn’t afford to fight the claims levied against us and when the lawsuit was settled, we had to enter into a payment plan to keep our doors open. This lawsuit will affect our agency for years to come.”
“We have been a leading provider of housing and services, support, and advocacy for intellectually and developmentally disabled individuals for almost three decades, and receive most of our funding through the state and federal government. Bad actors in the legal industry have repeatedly targeted providers like us because they know we don’t have the resources or bandwidth to go through prolonged litigation while continuing to provide care. PAGA is being abused, and lawmakers need to act to prevent dishonest lawyers from diverting much-needed taxpayer funding that supports the disabled population we serve”
“My parents started our family-owned restaurant business nearly 40 years ago after immigrating to the United States. We’ve been fortunate enough to be able to expand and invest in our employees, including offering student loan repayment. Unfortunately, frivolous PAGA lawsuits have forced us to cut back on investing in employee benefits and development. We need a better system that partners with employers and helps educate on how to navigate California’s complex Labor Code, while ensuring employees receive everything they are rightfully owed. PAGA is not a proper solution—our goal as community members and business owners is to ensure we are taking care of our community, and that is through serving our employees as well. While the intention of the Legislature may have been to protect and empower employees, PAGA has instead served to siphon away funds we were investing into our employees’ futures to legal costs.”
The State Legislature should fix PAGA and expand on existing Labor and Workforce Development Agency (LWDA) processes, which are proven to resolve employee claims faster and provide workers with more restitution.
California should utilize the existing LWDA process to streamline resolution, minimize the need for lawsuits and help ensure swift and fair recovery for workers.
Fixes should ensure most — if not all — of the money awarded through recovery goes directly to workers.
Fixes should include increased penalties for employers who willfully violate labor laws.
The state should also encourage LWDA and other enforcement agencies to investigate industries and businesses with the most rampant labor law violations.
California should provide more information and guidance to small businesses, non-profits and others on navigating labor laws while allowing them to correct mistakes and avoid costly legal challenges.