By Jeff Allee a Los Alamitos resident and supporter of Citizens Against Lawsuit Abuse
California labor laws are intended to protect workers from unfair employers who seek to take advantage one way or another. But, sadly, these well-intended laws instead have morphed into a cynical tool for abusive lawsuits based on minor technical violations.
The result is a cottage industry that generates exorbitant amounts of money for profit driven lawyers at the expense of hardworking business owners and entrepreneurs.
It’s time to turn this flawed system around. And what better time to consider a change like that than during Lawsuit Abuse Awareness Week, which takes place this year from Oct. 7 – 11.
Fair-minded employers across the state are facing the onslaught of unwarranted legal action by way of the Private Attorney General Act (PAGA). Signed into state law back in 2004, the original intent of PAGA was to shield workers from bad employers who failed to pay employees their full wages for all hours worked. In some cases, these were unscrupulous businesses that were in operation for only a short period of time and then closed down or skipped town.
Legal loopholes, however, have allowed employees to sue their bosses, making it a cash cow for attorneys who are incentivized to troll and file suits because it is practically impossible for business owners to achieve absolute perfection to comply with hyper technical and ever-changing employment rules. Due to the strict nature of PAGA, an employer with a mere technical violation of the state’s voluminous labor laws, can face extreme penalties.
In fact, more than 40,000 PAGA claims have been filed over the past 15 years.
But even employers who try in earnest to follow all the laws are still getting hit with these meritless suits. For example, employers who fail to list the beginning and ending dates on a paycheck stub, even if the employee was paid, paid on time and the check cleared the bank, are still at risk of being sued with an abusive PAGA class action lawsuit.
When an employer is sued, they are leveraged into settlements because the penalties can create a multi-million-dollar liability, even for business with as few as 30 employees. The penalty is $100 per employee per pay period for a first offense. After that, the penalty doubles to $200 per employee per pay period, for each violation that follows.
PAGA allows the employee to file their complaint on behalf of all employees at the business, effectively making the case a class action lawsuit. Because the violations stack, once a claim is filed, a determined lawyer will search the owner’s records for as many violations as they can to compound the threatened and the resulting leverage to settle.
And the fear certainly drives employers to settle. When Uber was hit with a PAGA suit, the state got $3.6 million, the attorneys received $2.2 million and the aggrieved drivers were given just $1.08 each.
Entrepreneurs need to be able to focus on their next big idea, and employers should be looking at how to grow their business or take care of their teams of employees. They shouldn’t be concerned about facing unfair, stringent regulations and laws that risk putting them out of business. And business folks aren’t the only ones who are hurt by these suits. Cities, non-profits, labor unions and government agencies all face this type of abuse, and employees and consumers are also hurt when jobs are lost, and the cost of goods and services rise.
Lawsuit Abuse Awareness Week is nationally recognized. It can be the right time for people across the state, including here in Los Alamitos and Cypress, to take action by urging California’s leaders to recognize the onerous legal burden caused by a rigged system.
State lawmakers need to take a step back from including PAGA as the enforcement tool in almost every new piece of legislation. They must also begin looking at ways to directly curb the misuse of PAGA lawsuits as a way to protect businesses and jobs.
In simplest terms, the goal should be to have our state’s labor laws do what they were intended for — protecting and serving the public in a fair and trustful way.
Jeff Allee is a Los Alamitos resident and supporter of Citizens Against Lawsuit Abuse