Road to PAGA Ballot Initiative Paved by CA Supreme Court Ruling

Joel Fox
Editor and Co-Publisher of Fox and Hounds Daily

As if businesses were not troubled enough by substantial penalties tied to minor labor law infractions when private attorneys take on lawsuits under the Private Attorney General Act (PAGA), a California Supreme Court ruling has opened the door for more business burdens when confronting PAGA lawsuits.

In a recent unanimous decision in Williams v. Marshalls the court ruled that plaintiffs attorneys have the right in discovery to examine all of a company’s employee records—whether employees worked at the site the alleged infraction took place or not. The plaintiff does not need to show good cause that the company had a statewide policy that violated labor laws before businesses are required to produce the information.

The plaintiff in the case alleges that the Marshalls department store denied proper meal and rest period breaks. An attorney for the plaintiff asked for employee records of all 16,500 company employees in the state. After a lower court denied this request focusing on the store in question, the Supreme Court reversed.

What this means for business is a greater cost in providing all the records and the potential of facing a much larger monetary penalty.

Steep penalties required under a PAGA lawsuit forces many businesses to settle the cases. Many business community members argue settlement with a big payoff to attorneys is a goal of many lawyers who bring the lawsuits. Such a strategy only intensifies because of the Supreme Court ruling. A 2014 case ruled that PAGA lawsuits couldn’t be sent to private arbitration.

Many PAGA lawsuits are brought over minor infractions of labor laws, but the fines can be steep when assessed over a period of time when taking into account the number of employees involved. Businesses want a chance to correct any infraction before the costs and troubles of a lawsuit are presented but current law doesn’t permit that.

As the burdens on businesses build under the PAGA law, and with no help expected from the California legislature, the chance for an initiative to correct the lawsuit assault becomes more likely.

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