PAGA (Private Attorneys General Act) has wreaked havoc on employers since 2004 when it was enacted in California. It is a commonly seen in legal Complaints filed against employers costing businesses hundreds of thousands of dollars to get rid of a lawsuit for the smallest of mistakes, often unintentionally made by an employer. Any award settled or won by the employee requires that 75% of these funds go straight to the California Workplace Development Agency known as the CLWDA. You may be wondering who the real winner is in a PAGA case? It’s employee’s attorneys who take usually up to 1/3 of their costs and fees right off the top of the award before anything is even factored into the money that goes to the employees—and those are not the only fees and costs that come off the top. Employees would take far more if they sued individually. But does an individual employee even understand what PAGA suits really are?
This year, there is a chance to finally change this California law on the ballot this November 2024. New legislation is on the ballot, after pro-employer/business owners obtained enough signatures to get it there. This bill, called the California Employee Civil Action Initiative, would repeal and replace the existing PAGA law.
This is not a full repeal but rather is a re-writing of the legislation which replaces how PAGA works. The new law would double the statutory and civil penalties for a willful state labor law violation(s), not simply because one exists. It would also require that the 100% of the money collected be awarded to the employees, rather than to the attorneys unless the labor code allows it. New resources are necessary to be put in place as well to help employers become compliant with the California Labor Laws as written. The catch? The DLSE (Dept. of Labor Standards Enforcement) would be a party to all labor complaints. With their involvement hopefully Plaintiffs attorneys won’t abuse the PAGA claims since the financial incentive won’t be as clear depending on the claims. As Chauvel & Glatt has seen up close, these claims can put companies out of business.
Over the past year or so, the legal arena, from the United States Supreme Court to the California Supreme Court, has considered the impact of PAGA on employers, but there is disagreement amongst the courts but no clear cut answer. The extreme amount of PAGA claims being filed is egregious so it is so important for businesses to have an experienced legal counsel who understands PAGA, to do an audit of your business from an employment perspective to ensure you are operating California compliant. Even a paycheck mistake as PAGA exists right now could be awful for a company. So if you get a letter written with the CLWDA, do not ignore it. Seek counsel from Chauvel & Glatt’s Employer Lawyers located in San Mateo, California. Our attorneys are available remotely via video conference or phone or in person. And get out and VOTE!
This material in this article, provided by Chauvel & Glatt, is designed to provide informative and current information as of the date of the post. It should not be considered, nor is it intended to constitute legal advice. For information on your particular circumstances, please contact Chauvel & Glatt at 650-573-9500 for legal assistance near you.
