By Tom Manzo
ABM Industries, a janitorial service provider, recently agreed to a $5.4 million settlement in a class-action lawsuit on behalf of 3,000 employees. The employees claimed they were not reimbursed for the use of personal cell phones to clock in and out and communicate with their supervisors.
Based on similar lawsuits, the trial attorneys should get about $1.8 million and the state of California $2.7 million. Then there are administrative fees and related costs totaling another $500,000. That leaves the 3,000 employees with roughly $400,000, or about $133 each.
It’s simply the latest example of a California law designed to protect employees but actually benefiting primarily trial attorneys.
If you are unfamiliar with this law, it’s the Private Attorneys General Act, or PAGA, enacted in 2004. Under the law, a disgruntled employee can seek an attorney and then become deputized by the state to enforce any labor law violation.
The California Labor Law Digest is over 1,100 pages, so there are plenty of laws to choose from. Most employers are not familiar with all of these because it has become an impossible task to keep up.
More than 35,000 PAGA lawsuit notices have been sent out since this law’s inception. The victims aren’t just businesses, but also nonprofits, religious institutions, schools, hospitals — almost anyone who has an employee. The trial attorneys do not care who the target is; they just care about their big payday.
Employers are being targeted for late lunches (even a minute late), miscalculated bonuses (even a penny off ) or having incorrect information on a paycheck stub (even a typo in the company name). Most of these so-called disgruntled employees are being recruited by trial attorneys with the promise of a big payday only to end up with far less than they were promised.
Penalties in a PAGA lawsuit can reach up to 2,430 times the alleged actual damages. This an outrageous number and is used as a threat to settle cases in mediation. In mediation everything is negotiable except for the trial attorney’s fees. The state made a deal with attorneys in 2004 that they get all of their fees paid in full.
PAGA has become one of the biggest extortion scams in the history of California. This law needs to be repealed.
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