The Private Attorney General Act (PAGA) is an Outdated Law

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

October 12, 2003 Gray Davis signed a new law SB 796 referred to as PAGA and I am not sure if anyone really knew what the outcome would really be. In the first seven months of PAGA 65 cases were filed and the first 9 suits totaled 336 million in penalties. AMGEN was sued over technical violations totaling 170 million dollars in the opening months. To put this in perspective last year close to 8,000 PAGA Lawsuits were filed so that number could easily hit the billions. Let’s not forget this has been going on for 15 years.

The law was created because the state did not employ enough to keep up with the growing labor population and there was a budget crisis at the time. If the state could not enforce labor law violations why not allow the trial lawyers? If you have ever heard the term making a deal with the Devil, this one will be in Webster’s Dictionary. 2018 California has an 8.8 billion dollar budget surplus and this law no longer needs Private Attorneys to enforce Labor Law Violations. The main alleged reason the law was enacted was due to a budget crisis, today there is not one, so the only reason there would not be a change could be driven by the trial lawyers and their lobbying efforts in Sacramento.

In 2003, SB 796 was introduced by Senator Joe Dunn, an attorney, who recently sued the State Bar of California. Keep in mind Trial Lawyer Dunn was the Executive Director and fired for excessive international trips and expenses. He then filed a whistleblower lawsuit and as karma would have it he lost in arbitration. I am not even sure if the unions understood this bill even though they were in support of it. PAGA Lawsuits have been filed against unions like the Teamsters and the UFW and the UFW lawsuits cost millions. When passing such complicated laws they need to spend more time analyzing them and should be done in a bi-partisan effort with real common ground.

The real question is who has been supporting bills like this and why. As business owners and entrepreneurs are building their businesses and doing what they do best the legislators are continuing to pass more and more complex labor laws that most do not understand. Late lunches, misclassified incentives, wrong employee ID numbers, or simply missing a hyphen on a paycheck can cost employers millions. Consider the late lunch violation, anything past five hours from your start time could cost millions, although if you were in a union and had a collective bargaining agreement the 5 hour rule does not apply. Take some of our prison guards as an example, they can work 12 without a lunch or break, and if a small company did the same it would be 3 major violations.

The only winner in PAGA is the trial lawyers. Most recently Google paid a million, the employees received $15 each and the lawyers over $ 330,000. Uber drivers received $1.08 each and the lawyers walked away with 2.3 million dollars. Victims of PAGA are not just businesses either, think of non-profits like the Salvation Army, San Diego Humane Society, Children’s Homes, and the list goes on.  Real reform is needed when it comes to labor laws in California. We continue to hear about low unemployment rate, 5th largest economy, and so on. Just talk to someone who has paid out a PAGA lawsuit and ask them how wonderful everything is. One famous quote to consider is, “Pride before the fall.”

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