In October 2003, Gov. Gray Davis passed the Labor Code Private Attorneys General Act (PAGA) into law which authorizes aggrieved employees to file lawsuits to recover civil fines and penalties for violations of the State of California Labor Code on behalf of themselves, other employees and the State of California. Previously, this could only be done by a State agency (ex. Labor Commissioner or the Attorney General). According to this act, private citizens can now sue for these violations with the legal support of trial lawyers. If successful, these fines imposed under the law are split; 75% going to the State of California Labor and Workforce Development agency and 25% going to the injured party. (This 25% is in addition to the monies owed the employees, such as unpaid overtime, unpaid meal premiums, bounced check fees, etc.)
The problem became clear right away as 65 cases were filed in the first seven months, with the first 9 suits seeking $336 million in penalties. More recently, last year there were close to 8,000 PAGA lawsuits filed pushing the amount sought by these claims to the billions of dollars.
At the time that this law was enacted, there were not enough attorneys available to handle these labor lawsuits while the State of California was experiencing a serious budget crisis, forcing them to allow trial lawyers to take over many of these cases. Now known as PAGA lawsuits, the result of this act is that employers have been forced to pay millions of dollars to employees who previously may not have been able to find the legal support now available to them. To make things worse, California Appeals Court has ruled that PAGA cannot be included in an Arbitration Agreement.
The only thing that can potentially protect employers is to proactively create a culture of compliance. A culture of compliance can be created by engaging a labor law attorney involved in your business model. It is crucial that you seek help from that attorney in creating employee handbook, job descriptions, human resources policies and procedures along with mechanisms to discipline employees that fail to follow policies and procedures. In the end, the only winners here are the trial lawyers while the victims are the businesses who are suffering while having to pay out these huge fines to their employees.
If you are a member of one of those businesses who cannot afford to payout these huge awards granted to these trial lawyers, consider a consult package with Rupal Law to give you the legal support and guidance you need while defending your business’ integrity against these trial lawyers who tend to just do it for the money. Contact us today to learn more and take the first step towards knowing what you, as a business owner, are actually liable for. www.rupallaw.com
