Posted on November 27th, 2018
Let’s get into a brief background explanation first about PAGA and then we will explain why very recent PAGA decisions could lead to even more crushing pressures against California employers.
The original Private Attorneys General Act of 2004 (PAGA) rolled out to much outcry and contention.
The laws original intention was to allow private citizens to pursue civil penalties on behalf of the State of California Labor and Workforce Development Agency as long as the formal notice and waiting procedures of the law are followed correctly.
This approach of PAGA actually gives a private citizen the right to pursue fines against employers and companies that would normally only be available to be pursued by the State of California
Now if that original description of that laws intention does not sound like a huge thorn in the side of business owners by itself it has only grown more outrageous as time has gone on.
Since its inception, it has been setting precedent after precedent against business and mostly growing in the scope of issues it forces on employers.
But some really notable updates went into effect recently (in June of 2016).
The best defense, in this case, is to stay well informed on the how and why of PAGA claims before they get filed against you.
What Changed Recently With PAGA
Earlier this year in the Spring of 2018, the California Court of Appeals decided a case that could potentially increase the scope and impact of Private Attorneys General Act (PAGA) claims brought by an employee against his employer.
In a case of guard suing the security company, the court went to work over the question of “whether a plaintiff (the security guard) who brings an action (lawsuit/claim) under PAGA against thier employer, can try to go for penalties not only for the Labor Code violation(s) that affected them (the lone plaintiff) but also for different violations that affected other employees!”
Do you see how now ONE claim against your business by ONE person can now potentially turn into a massive disaster for you and your business under this scenario?
One person affected by at least one Labor Code violation committed by you (the employer) – can now pursue penalties for ALL the Labor Code violations committed by you (the employer).
Also that one single employee that started alleging a single violation of the California Labor Code may now bring PAGA claims against you (his/her employer) for ALL violations, that affect any of your other employees!
The Private General Attorney Act gives your employees (and greedy employee-side attorneys) even more power to destroy your business with an avalanche of lawsuits and penalties!
We see the potential nightmare coming and that’s why we’ve compiled this quick but thorough rundown of the act to try to keep you out of the legal hot water.
PAGA Claims Breakdown
The intent behind the law was to empower employees to bring to light deficiencies in labor policy. Ideally, this would be used to bring unscrupulous and ‘under the table’ companies in accordance with the law.
Unfortunately, the majority of lawsuits created by PAGA don’t do that. Many have unfortunately also been used to bring petty issues and broad readings of this new policy forward, clogging up the courts and punishing business owners and employers once again.
We’ll go over what PAGA provides for employees first. Then we’ll walk you through the processes it entails.
Last, we’ll visit some of the limitations made by updates and case precedent.
Provisions
As the name illustrates, PAGA gives employees the ability to act as private attorneys general for themselves.
Now, employees could do this in limited contexts before the act.
PAGA made the change that they could bring civil actions for non-monetary issues.
Your employees wield the power to sue you for cash over issues not affecting their pay.
Worse, the Labor Code doesn’t need to cover a penalty stipulation, PAGA places fines on anything not covered. This means $100 for a first offense and $200 for any subsequent violation on the same infraction.
Further, these fines reoccur per employee per pay period. On top of all that, one employee can sue on the behalf of others. This snowball effect hits hard for even minor discrepancies.
The second part of PAGA creates leverages the real power. Attorneys for suing employees can recoup 100% of their fees from you, the employer.
This creates a low-risk issue for the attorneys. The act basically allows any of the hundreds of Labor Code items to be leveraged into money for themselves and away from you.
Notices and Filing
Since the 2016 update, PAGA claims must file an online notice. A copy must be sent to employers. Similarly, upon receiving a notice you have to file one online with copies also sent to respondent employees.
LWDA (Labor and Workforce Development Agency) has 60 days to review notices.
All of this comes before a filing. An additional fee applies to notices in the form of a filing fee. This $75 fee applies to notices started by employees but responding to the notice also costs employers.
While both parties can claim forma pauperis status to get around the fee, let’s face it, employers are far less likely to receive that benefit. Fortunately, only the first response to a notice requires the fee, so you can effectively fight the notice with details as needed.
Another important point on filing, the LWDA shackled itself with a time frame to respond to notices. The intent was to keep things moving and help remove lingering dread that an alleged infraction could be investigated.
Much like the rest of PAGA, the result swings in favor of the employees. If LWDA doesn’t send a response indicating a citation or investigation it doesn’t mean a removal. Employees may still file a suit if no response is set within the limit and LWDA not responding doesn’t hold up as lack of cause.
In this case, the absence of evidence for a suit doesn’t allow you to make claims against the suit.
Once notices have been made, whether or not LWDA investigates, filing can occur. Filing gets done by the employees’ attorney or the employees themselves. Under PAGA any such filing needs to be addressed the same as if OSHA or the LWDA filed against you.
A final note on filing, if the LWDA doesn’t receive a notice for some reason, any reason, it is difficult to use that fact. So a notice of cure sent by you may not be actually received and a case may proceed anyway. While this is unlikely to be a successful case, the bad press hit of a suit may still hit.
Limitations
In the last two years, PAGA has gotten some pushback in the courts which have set some useful precedent.
A recent win for employers (and those are rare) came from a case in which notice letters scope came into question.
Employees writing their own notice letters could fail to address actionable issues. This allows the court to toss the case as insufficient.
Solo employees acting on their own behalf without much thought of others will weaken their stance under the LWDA. This could create a wedge to push the courts to dismiss other claims made without sufficient LWDA investigations.
Further weakening the solo complainant, in 2017 a ruling for one employee was not allowed to proceed further.
The employee agreed to arbitration and was barred under that from pursuing further action.
A solo employee, once their claims have been addressed and settled, no longer qualifies for PAGA claims.
This centers on the needs of an employee to be an ‘aggrieved employee’. Once this status has been lost, things fall apart.
Rulings against PAGA claims have not been common. These decisions show a willingness from the courts to tighten definitions. This makes it harder for opportunistic plaintiff attorneys to score what they see as easy money.
Be Ready
If the past 10 years are any indication, PAGA claims will remain a threat. The wheels turn slowly and redress or removal of the act is unlikely. You’ll need to always be ready to fight PAGA in California.
Arm yourself for that fight with further information for your business, book a consultation and see what we can do for you.
