Thursday, July 18, 2019

PAGA Settlement Threats


The Private Attorney General Act (PAGA) has become a weapon used by unscrupulous trial attorneys to extort millions from business owners and non-profit organizations. Grey Davis and Joe Dunn championed this law in 2004 and Grey Davis was recalled due to gross mismanagement of California finances. Joe Dunn was recently fired as executive director of the California State Bar due to excessive international travel expenses. The bottom line is the two individuals who set this law up have a track record of illegal behavior.

PAGA is known as the “Sue Your Boss Law”, and minor infractions such as missing a period on a paycheck stub or incorrect employee ID could cost an employer millions. The state thought it was a good idea to deputize employees to enforce labor law violations with their attorneys. My question is with a California Labor Law Digest of over 1,100 pages how are the deputized citizens capable of knowing what is right or wrong with the influence of trial attorneys?

In a recent Detroit Free Press article it states across Michigan, police departments have enlisted civilians to work alongside licensed officers to patrol communities and even assist real cops with arrests. But unlike the regular officers licensed by the state, these armed civilians are unregulated. The state agency responsible for police licensing and training is not regulating reserve officers despite gaining authority last year to do just that and has no idea how many such unlicensed volunteers there are statewide. This lack of oversight continues despite numerous incidents of questionable even illegal conduct by reserve officers in recent years.

Does this sound familiar? We should evaluate a few cases and see what you think. One manufacturer in souther California offered a flexible work schedule with employees coming in at various start times. The company was doing what they thought was a good thing. The employees who were friends and family wanted to eat together and some ate beyond 5 hours, anywhere from 10 minutes to 40 minutes. The penalties and fines cost over a million dollars. Another company who had been in business since the 1940’s had a start time at 5:00 and lunch hour at 11:00 and had been doing this since they started. No one ever complained, they got their break in between, although their lunch was taken beyond 5 hours and cost the over $500,000. What is worse is the trial attorneys get the majority of these settlements while the employees end up with pennies.

If a disgruntled employee was not influenced by a trial attorney this case would of never taken place and there would not be more than 5,000 cases a year filed jamming up the courts. UBER was sued under PAGA and each employee received $1.08 each and the trial attorneys took home over 2.6 million dollars!

This law is only in California and needs to be repealed, just like Grey Davis. There have been many legislative attempts although the trial attorneys deep pockets have paid off with donations during election season. Labor turns a blind eye as if you are unionized and have a collective bargaining agreement, you don’t even need to take a lunch. This fix is simple, right the wrong and change this law. Since 2004 there have been more than 35,000 victims and counting.

Recently I was told of a company in the Inland Empire who had an employee that retained an attorney over late lunches. The attorney spoke with the business owner and stated, “Settle today for $25,000 for the one employee and I will not file a PAGA lawsuit.” I wonder if the LWDA, Legislators, or Judges are even aware of such behavior. Imagine an owner of a small diner or director of a non-profit being faced with that decision and having to make it knowing it is legalized extortion. Trial attorneys can use the threat of PAGA for a quick score and you could be next.
Inland Empire Business Journal
The Inland Empire Business Journal (IEBJ) is the official business news publication of Southern California’s Inland Empire region - covering Riverside and San Bernardino Counties.