Last week the California Supreme Court published an opinion in Alvarado v. Dart Container Corp. of California that should strike fear in the hearts of the state’s small businesses.

It is a significant decision for employers operating in California that offer incentive pay for working longer/atypical hours (i.e., shift differentials) or non-discretionary bonuses, because the decision departs significantly from the federal method of calculating the regular rate of pay. Specifically, the Court ruled that an employee’s overtime pay rate should be calculated each time an employee has earned a flat-sum bonus during a single pay period. I know that sounds wonky, but stick with me: This conclusion is significant for employers because many (logically) calculate overtime off their employees’ regular rate of pay, rather than a hybrid rate that includes occasional bonuses.

To add insult to injury, this change that was just decided is retroactive for four years.

If employers are worried, plaintiffs attorneys had the exact opposite reaction. This changing interpretation presents a payday bonanza for them thanks to the Private Attorney General Act, better known as PAGA. It allows an employee to file a suit and their lawyer will turn that into a six- or seven-figure class action lawsuit, even if the employer is acting in good faith and made only a minor paperwork error. Common sense is not being used in cases like this.

There were over 8,000 complaints filed in the last year and the only real benefactors are the lawyers. In one recent example–a complaint settlement with the transportation company UBER–employees each received  $1.08 while the attorneys took home over $2.5 million dollars.

I formed the California Business & Industrial Alliance, also known as CABIA, to reform labor laws that are hurting businesses all over our state. Judges, legislators, and the media do not hear all of the stories I am hearing daily.
Most business owners are afraid to tell their story for fear of more lawsuits or retaliation.

The examples are numerous: There’s the owner of a limousine company who was sued for undocumented lunch breaks from a former employee who was terminated for drug use; there’s the owner of a deli who paid half of a million for late lunches, something they have been doing since 1947; there’s the owner of a computer supply company who was hit for more than 2 million dollars for misclassifying commission; and the trucking company who has been sued for millions, another trucking company hit 4 times. It’s not just private business: The Humane Society, the Salvation Army, the Children’s Homes, and even the United Farm Workers have been hit. Caesar Chavez and the UFW did not work as hard as they have to turn around and hand out millions for a frivolous lawsuit to attorneys who do not care about the UFW.  The stories go on and on and it is time we make changes.

The law to protect employees has turned into a cash cow for the lawyers. It’s time for California to make a change. Join our cause.