Lawsuit Abuse Awareness Week is Done, But the Problem Persists

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

You might have missed “Lawsuit Abuse Awareness Week” last week but the effects of lawsuit abuse on California businesses and consumers are a year-round concern. 

California is still considered a minefield of legal traps and costs when it comes to doing business here and adding to all Californians cost of living. 

California trial lawyers have targeted businesses with Private Attorneys General Act (PAGA) lawsuits that allows anyone who believes themselves to be an “aggrieved employee” to file a lawsuit on behalf of both themselves and their coworkers in the name of the state. The idea was to provide an extra layer of accountability for labor laws, but there are significant problems with the law in practice.

First, there is the issue that even minor infractions of California’s incomprehensible labor code, including relatively insignificant mistakes as placing a wrong date or address on a paycheck, are treated as if they were serious offenses. Fines are often multiplied for every employee in the case, meaning that PAGA violations can be a dangerously expensive affair, running up a bill that smaller businesses simply cannot afford to pay.

In turn, an employer’s operating capital is put in jeopardy and brings the threat of job loses to employees because a business’s lost revenue is real. Between the fines collected by the state and the fees taken by attorneys little is left for the employees who put their names on the lawsuit. 

Proposition 65 with its mandated cancer warning has opened up more opportunities for lawyers looking for clients and a payday and more headaches for businesses resulting in threats to close small businesses, stifle innovation, and keep courtrooms across the state too busy.

The long term affects of the lawsuit craze can be debilitating to the state’s economy. A study released last year by the Perryman Group for Californians Against Lawsuit Abuse argued that excessive tort actions comes with direct costs of $11.6 billion, nearly 200,000 lost jobs, and a loss of about $1.75 billion in local and state revenues. 

You would expect that the legislature would work toward ending this drain on economic resources. But the legislature included a provision in the recently passed SB 1, an environmental law, that attempted to open another door for private attorneys to sue businesses for not living up to the rules in the law without a chance to fix any problems. 

Fortunately, Governor Newsom vetoed SB 1. 

Lawsuit Abuse Awareness Week was designed to bring attention to the problem of excessive lawsuits. Inside of adding more opportunities for lawyers, legislators need to implement changes that discourage the irresponsible misuse of our courts.

Lawsuit abuse is a serious problem that deserves year-round attention, not just a weeklong spotlight. 

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