By Tom Manzo
Unscrupulous attorneys are scorching businesses and nonprofits daily with a weapon called the Private Attorneys General Act, better known as PAGA. Most do not even see this coming and when they do it is too late.
A disgruntled employee can go see an attorney over taking late lunch breaks that would consist of anything over 5 hours, even a minute. The attorney then will review their paycheck stub and look for other violations, incorrect spelling of name, wrong check ending date, bonus calculation, etc., and all are stacked into one big suit. What makes this worse is the employee now represents every employee and the lawsuit becomes a class action and can go back four years to include all past employees. Even if your employees have taken their lunch at 11:30 a.m. for many years, if their start time is 6 a.m., you are in violation for a late lunch.
The state of California feels they need to tell us when to take our lunch and if we do not, the state allows private attorneys to enforce the labor laws. The half of an hour late lunch will cost you big– you owe the employee one hour of pay and the penalty is $ 100 for the first pay period and $200 for each pay period going back 4 years. Since the paycheck is inaccurate, any terminated employees are owed 30 days’ pay. If you were giving any type of incentive and it was not classified in the overtime rate you will be penalized for that also. As the laundry list grows so does your settlement amount and, before you know it, you owe millions of dollars over a late lunch.
The greedy attorneys are not just suing businesses, they are suing organizations like the San Diego Humane Society, Mission Home Health, Calvary Chapel of San Diego, Rady Children’s Hospital, the San Diego Unified School District, Goodwill Industries and Vibra Hospital. There were over 6,000 of these lawsuits just in the last year. I know, because I purchased the list from the state.
This law was put in place in 2004 and somehow the state did not record anything until September 2016. Private attorneys were enforcing the law, but no one was watching over them for 12 years. The state has allowed the “fox to guard the hen house” and it is time we changed that. The California Labor Law Digest is over 1,039 pages and is filled with laws that do not make sense, laws that are outdated, and laws that are so complex only the attorneys understand them. Real reform needs to take place.
We need to hold our legislators accountable for labor law bills they pass and question why. The state needs to stop adding to the Labor Law Digest and start reducing and making the laws much easier to read and understand. If your bathroom is less than 68 degrees you will be in violation, and is this type of law even necessary? If you work in the film industry past midnight you are required to have a hot meal, but if you work at WalMart or 7-Eleven, a cold sandwich is acceptable.
The company I run, Timely Industries, was hit with a PAGA suit and it completely changed our environment and culture. We were family oriented and now we are bureaucratic thanks to the state. There was trust in allowing employees to take lunch without punching in and out, but now they have to, because the state does not trust the employee, the employer, or the organization. At Timely there are no more flexible hours, no bonus incentives, no working past 10 hours, all for fear of another suit. If an employee works past ten hours they have to waive their second lunch and we cannot get a good answer if that should be done daily, weekly, etc.
That is why I formed the California Business and Industrial Alliance to change these laws. Our nonprofit will spread the word through op-eds, ads, lobbying efforts, and proposed new legislation that makes sense. The penalty for good companies and nonprofits does not make sense, and California is the only state with PAGA. The lawyers are the only ones benefiting from this at everyone else’s expense. Please join our cause at cabia.org.
Tom Manzo is founder and president of the California Business and Industrial Alliance, which promotes the interests of California-owned small and mid-sized businesses and the people they employ.
