This week in Los Angeles we’re giving voice to voiceless—protesting outside a law firm that’s one of the most prolific filers of complaints under the Private Attorneys General Act, or PAGA. This follows our ground-breaking lawsuit against the state filed last month demanding that California enforce its own laws rather than empowering trial attorneys to do so.
It’s time for state business leaders to stop complaining about PAGA and start doing something to fix it.
When first conceived in 2003 and made law in 2004, the Private Attorneys General Act was something Gov. Gray Davis, the legislators, and key author Sen. Joe Dunn never thought would turn into such a money maker for the trial attorneys.
If you are not familiar with PAGA then you have not been a victim of this law yet. The employers and employees both end up on the losing end and the trial attorneys are getting rich beyond their dreams.
You might have a flexible work schedule and if your employees take a lunch later than 5 hours, you are in violation. If you give a holiday gift card and do not calculate it properly, you are in violation. Maybe you do not have a commission agreement, or God forbid you do not provide a stool for your cashier. In either event, you are in violation. A disgruntled worker who decides to seek counsel gets coached by the trial attorney and before you know it you are in a class-action lawsuit. That late lunch, even a second, can cost you millions.
Why has the Legislature not listened to businesses and employees about the injustices of PAGA? Maybe there is too much money involved. Since 2004 more than 35,000 PAGA notices have been sent. The average settlement per employee is close to $75,000 — of which the employee is getting just $200 — so where is the money going? This law was made to protect the employees — not make trial attorneys rich.
Uber misclassified its employees and it cost the company $ 7.8 million. Trial attorneys netted $2.6 million, the state ended up with $3.6 million, and each employee supposedly wronged received $1.08. Trial attorneys typically take a third of any PAGA settlement, and the state takes three-quarters of the remainder, leaving very little for an individual employee.
Younessi Law in Los Angeles has sued businesses under PAGA over 747 times and ranks first on the PAGA list provided by the state. Trial attorneys like the Younessi firm have created a cottage industry that many Californians are not aware of. It has become a way to extort companies for millions and make lawyers very wealthy.
Trial attorneys are suing good businesses every day, and it is my hope that legislators start to see how bad this has become and take action. Our organization, the California Business and Industrial Alliance, has sued the state to simply get them to do their job. It seems simple: no other state outsources labor law enforcement to trial attorneys.
Employers have nowhere to turn and the state needs to step in and undo this law. Our 1,100-page Labor Law Digest also needs reform. Employers are at a huge disadvantage due to the complexity of California’s labor laws.
The fix is simple — repeal PAGA — and if anyone says different, it is because they must be benefiting from it financially.
Tom Manzo is president, of Timely Prefinished Steel Door Frames and president and chairman of the board of the California Business and Industrial Alliance.
