The state Capitol at night. Photo by Max Whittaker for CALmatters

In January, a new law, Senate Bill 646, will take effect that exempts California’s janitorial employees from the Private Attorneys General Act, commonly known as PAGA.

SB 646 was clearly a win for the janitorial industry, but it begs the question: Why did California lawmakers agree that PAGA was detrimental to unionized janitorial workers without admitting that it is just as damaging to workers of every industry? 

If you are not familiar with PAGA, it is a law passed under Gov. Gray Davis in 2003 that allows employees to sue their employers for any labor law violation. It may have started as an effort to help workers, but quickly spiraled out of control to form an exploitative system in which both workers and employers are shortchanged by greedy trial lawyers. 

California’s Labor Law Digest is over 1,100 pages long, so it is an impossible task to comply with all of these rules. Employers end up in class action lawsuits over things like late lunches — even if it is one minute past the fifth hour of work.

Small oversights like a paycheck stub with an incorrect employee ID number or a missing hyphen in the company’s name can result in multi-million-dollar lawsuits. Trial lawyers have turned PAGA into a billion-dollar industry.

The author behind SB 646, Sen. Robert Hertzberg, is a friend to Big Labor and worked with the Service Employees International Union to create the PAGA exemption for unionized janitorial companies. As he worked to sell the bill to his colleagues in the Senate, Hertzberg struggled to explain why the bill was only detrimental to janitorial workers, but not everyone else. 

“PAGA is a powerful tool for underrepresented workers, but PAGA also puts enormous pressure on employers to settle claims regardless of the validity of those claims,” Herzberg said.

The SEIU tried to play the same game. The union called itself “a firm supporter and defender of the Private Attorneys General Act” while also working to carve out its members from the bill.  

So why the double talk? Either PAGA is harmful to everyone, or there’s no reason for the carveout. Well, Hertzberg — in a moment of rare political honesty — showed what was really going on behind the scenes. 

While defending his bill to the Senate, Hertzberg stated, “I think certainly there will be a bunch of companies to make the determination of a PAGA risk to then organize on the other hand, and that’s a good thing.” In other words, PAGA can continue to destroy businesses unless they unionize. Then his buddies in Big Labor will help pass an exemption for them, too. 

What is unfortunate is that, in Hertzberg’s district, there have been thousands of PAGA lawsuits and most of the victims are small businesses, non-profits, and religious institutions. 

A recent victim is Hope of the Valley Rescue Mission in Pacoima. Why doesn’t Hertzberg carve them out? The Keyes auto dealership is facing a similar problem. Hertzberg can see the company’s sign from his office yet he has done nothing to protect this 60-year-old business from multiple PAGA lawsuits.

As Hertzberg noted while making the case for SB 646, employers are often cornered into settling PAGA cases “regardless of the validity.” But Hertzberg won’t lend a hand to these businesses unless it meets the demands of his special-interest friends. 

A newly updated study by the CABIA Foundation compared PAGA cases to cases decided by the Labor and Workforce Development Agency and found that workers receive 4.5 times smaller rewards, employers pay out an average of $310,000 more, and cases take roughly a year longer to settle under PAGA. This is a broken system that hurts everyone but the trial lawyers. 

In 2018, unionized construction workers were carved out of PAGA. Now, unionized janitorial workers have gotten their carve out too. But California politicians continue to pretend that PAGA is a good law while simultaneously getting their allies out of it.

This pattern in Sacramento needs to change.

Tom Manzo is the president and founder of the California Business and Industrial Alliance.

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