Fifteen years ago, a state budget crisis pushed California to adopt the Private Attorneys General Act, or PAGA. This law allows private attorneys to sue employers on the state’s behalf when those employers violate certain state employment and labor laws.
The law is especially important to workers because the California Supreme Court has ruled that employers cannot require PAGA complaints to be handled in individual arbitration. This is significant because employers routinely require, as a condition of employment, workers to agree to arbitrate all claims against the employer.
In some work environments, there are rampant violations. These can include sexual harassment and safety issues. In these situations, PAGA can be a resource in obtaining relief.
Recently, PAGA came under significant fire by a business group known as the California Business & Industrial Alliance. The group filed a lawsuit claiming that PAGA is unconstitutional and that trial attorneys essentially wrote the law for their own benefit. As evidence of the second point, they noted that there have been more than 35,000 PAGA notices filed since the law went into effect 15 years ago, and that more than 100 firms have filed 50 or more such notices.
Moreover, the group disapproves of how the proceeds of PAGA lawsuits are distributed, with some attorneys earning significant fees while some employees receive very little in compensation. That said, when the state handles these cases directly, it collects 75 percent of the proceeds and gives the worker 25 percent.
One attorney commented to reporters that enforcement of California’s labor laws is “daunting.” The state simply doesn’t have the resources or personnel to handle that enforcement on its own. The California Business & Industrial Alliance has argued that the current budget surplus should be used to ramp up enforcement by the state.
Some employers complain that the consequences of a PAGA lawsuit can be ruinous. Some complain that the violations being targeted are relatively minor. For example, one USDA meat plant owner says he was hit with a PAGA lawsuit because the lunch time his employees chose was too distant from their start time under the state labor code.
His defense lawyer apparently called the $500,000 PAGA lawsuit “legal extortion.” He complains that there is insufficient opportunity for employers to correct the violations before a major penalty is levied and that the penalties do not match the seriousness of the violations.
However, a spokesperson for the California Employment Lawyers Association points out that the law specifically allows courts to reduce penalties if they see fit in order to prevent “extortive, abusive or unconstitutional enforcement” by private firms acting on behalf of the government.
“PAGA now stands as a critical and one of the last remaining tools for workers in California to take collective action to remedy violations of their rights under the Labor Code,” said the spokesperson.