PAGA Lawsuits Crush Small Business

Tom Manzo

President, Timely Prefinished Steel Door Frames and President and Chairman of the Board at California Business and Industrial Alliance


In 1971, the Day family opened their business, Timely Prefinished Steel Door Frames, in Pacoima, California. Since then, they have employed thousands and had generations of families and friends grow up with thecompany. Together, we have seen the good times, the difficult times, and the bad times. And like a family, we have always stuck together.

Unfortunately, thousands of businesses across the state are under attack from greedy trial attorneys taking advantage of the Private Attorney General Act (PAGA). While this law was created with the best intentions to penalize employers who commit egregious violations of the California Labor Code, it has created a “Bounty Hunter” atmosphere for trial attorneys to target all businesses. The Day family business is the latest target.

The PAGA provides an oversized financial incentive for trial attorneys who bring forward a lawsuit alleging violations of the California Labor Code. Rather than giving businesses the opportunity to correct these violations, which are usually minor and administrative, the trial attorneys pursue millions in penalties and walk away with nearly 50% of the awards intended for employees.  In the end, trial attorneys are the only ones who make it out as the winners. The employees receive very little and the businesses are left struggling to keep their doors open.

Earlier this year, Timely became the target of this Bounty Hunter law when a disgruntled employee claimed we misclassified a quarterly safety bonus. At Timely, we happily give out bonuses as a safety incentive, but because we made an unintentional mistake and did not classify it as an overtime rate, we are facing millions of dollars in penalties. Many of our employees and their families depend on these bonuses to help pay for necessities like food, housing costs and health care. Sadly, we will not be able to provide safety bonuses anymore because of the exorbitant litigation costs and penalties that we face.

Like many businesses across the state, Timely is finding it more and more difficult to operate with such burdensome rules and regulations. In fact, California is the only state in the country with a law like PAGA. It is time that Governor Brown and California Legislature take a serious look at reforming PAGA instead of allowing trial attorneys to continue abusing the system.

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