PAGA – Are You Compliant?

PAGA – Are You Compliant?

The Labor Code, Private Attorneys General Act (PAGA) authorizes aggrieved employees to file lawsuits to recover civil penalties on behalf of themselves, other employees, and the State of California for Labor Code violations. See PART 13 – The Labor Code Private Attorneys General Act of 2004 [2698-2699.6] Bill here.

First, I think we all want employers to treat their employees fairly and to comply with the law. We have all had jobs where we were not treated well or fairly and reform is an ongoing challenge for lawmakers. But, after reading this PAGA Bill, I see a maze of complicated language, awkward procedures and an almost impossible array of regulations to be able to keep your company in compliance every minute of every day. For sure, some employers need to be reigned in from their unfair practices, but many employers are acting in good faith and making every effort to comply to the law.

PAGA gives power to everyone

PAGA gives power to literally everyone to start this legal action with lawyers that are more than happy to profit from it. This seems like a sure-fire way to halt business growth at a time that we need it most. The law has been around since 2004, so I looked into why there has been such a massive increase in these cases. With some rulings by the state high court in 2014 and the California Supreme Court in 2017 see SHRM article here PAGA claims have increased dramatically.

The California Chamber of Commerce says that PAGA is a major obstacle in repairing California’s economy. And with employers spending so much time struggling to comply, how can their business move forward to serve more customers and create new jobs?

I most especially found section i to be very suspect in anyone trying to say this bill is to benefit aggrieved employees: (i) Except as provided in subdivision (j), civil penalties recovered by aggrieved employees shall be distributed as follows: 75 percent to the Labor and Workforce Development Agency for enforcement of labor laws, including the administration of this part, and for education of employers and employees about their rights and responsibilities under this code, to be continuously appropriated to supplement and not supplant the funding to the agency for those purposes; and 25 percent to the aggrieved employees.

And this doesn’t even address the lawyers

Lawyers are in the middle of this mix as well. I have to wonder what is left for the employee who has filed.

From an opinion piece written by CABIA (California Business & Industrial Alliance President and Founder Tom Manzo and Caitlyn Jenner:

Trial lawyers discovered that PAGA is an “unmatched weapon” for tormenting employers and now file thousands of notices annually under the law. The state has acknowledged that it reviews only a small fraction of them. Many contain allegations that are settled out of court, leaving the state without any indication if employees were properly compensated under the deal.

Right now, about all you can do is make every effort to prevent having a complaint filed against you. You can use this checklist from CABIA as a starting point. Is your company not based in California, but you have employees in California? Then you need to be sure you comply as well. Make sure HR and front-line management who are responsible for ensuring compliance with meal/rest and overtime understand the law and enforce it in their everyday practices. The California Supreme Court ruling in 2017 entitles PAGA plaintiffs to receive a lot of employer information early in the litigation increasing the employer’s litigation costs. It becomes tempting for employers to settle even if it is a frivolous claim in order to avoid these costs.

In addition to doing your best to stay in compliance, making the best hires will help you minimize problems with employees.