The Problem with California's Private Attorneys General Act

Date: July 18, 2017

Right now, you and your business are at risk, and you might not even know it. Under California law, employees can sue their employer for something as minor as a missed lunch break or misclassified information on a paystub.

California’s Private Attorneys General Act (PAGA), known as the “sue your boss” law, intended to improve workplace protections for employees’ safety. But instead, PAGA has become a multi-million dollar operation benefitting attorneys and leaving businesses with sometimes six-figures worth of penalties, according to The Orange County Register.

The law was passed in 2004, and between 2005 and 2013, claims have increased by over 400 percent. This is in part because under the law, three-quarters of the penalty payouts are awarded to the state and only one-quarter goes to the plaintiff. Employers are also required to cover the plaintiffs’ attorney fees, and that is where the real payout lies.

Disgruntled employees have targeted small businesses claiming “violations” that were actually under the employee’s will or that don’t take into account factors like workplace flexibility. The lawsuit combined with attorney fees can be enough to put a small business under or force employers to cut benefits or lay off employees to manage the costs.

Gov. Jerry Brown signed an amendment in 2015 aimed at dialing back frivolous PAGA lawsuits, but the reforms haven’t been as effective as needed.

“The Office of the California Attorney General has significant influence over important issues to our NFIB members such as Prop. 65 enforcement, Private Attorneys General Act (PAGA) litigation, and costly state penalties and fines on small business owners,” said NFIB/California State Director Tom Scott.

NFIB calls on California’s new Attorney General Xavier Becerra, appointed late last year, to push forward meaningful reform to ensure laws like PAGA aren’t being abused and are meeting their original intentions.


Related Content: Small Business News | California | Legal

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