Is Employer Liability Relief Possible in this Pandemic?

Chris Micheli
Chris Micheli is a Principal with the Sacramento governmental relations firm of Aprea & Micheli, Inc.

At both the federal and state levels, elected officials are considering proposals to relieve businesses of possible legal liability in response to the COVID-19 pandemic as it applies to their workplaces. California is unique because state law allows private litigants to enforce state labor laws and collect legal fees and expenses.

Enacted in 2003, California’s Labor Code Private Attorneys General Act (PAGA), also known as the “Sue Your Boss” law, is well known in the state’s business community for permitting excessive litigation over often technical violations of the law. In fact, the use of PAGA has become so prevalent as a litigation leverage tool that it is being used in a manner that is reminiscent of the abusive lawsuits filed under B&P Code Section 17200 and the ADA.

To make matters worse, PAGA has not served its purpose of supplementing funding for the Labor Commissioner in the way it was promised by the law’s proponents. Essentially, PAGA authorizes an aggrieved employee to bring a civil action to recover specified civil penalties that would otherwise be assessed and collected by the Labor & Workforce Development Agency. These representative actions are brought on behalf of the employee and other current or former employees for the violation of almost any provision of California’s extensive Labor Code.

The PAGA penalty by statute is equal to $100 per employee per pay period for the initial violation and $200 for each employee per pay period for each subsequent violation. As such, in a representative action, these penalties can be very substantial and can be retroactive for the same period as the Labor Code violations were alleged to have occurred.  The penalties collected in these private civil actions are to be distributed 75 percent to the State and 25 percent to the aggrieved employee. Making PAGA lawsuits even more attractive, the employee is entitled to reasonable attorney’s fees and costs.

While PAGA provides the employer with the right to cure certain violations before the employee may bring a civil action, it does not apply broadly enough. PAGA has become an unfortunate tool to leverage legal settlements and the statute needs to be modified to prevent this from happening.

Under the California Emergency Services Act, the Governor has authority to suspend existing regulatory statutes. PAGA can certainly be interpreted as a regulatory statute as it regulates conduct. Moreover, for businesses that are open and providing essential goods and services during this pandemic, they must have certainty with regard to their potential legal liability. If businesses are following CDC Guidelines or the State’s industry-specific guidelines, then they should be exempt from civil liability.

In the same vein, employers should be given relief from PAGA during the pandemic when complying with state-issued guidelines. The state has employer-funded resources through the Division of Labor Standards Enforcement in order to ensure compliance with the Labor Code by employers. Instead of relying upon private litigants, have the State do so while the state of emergency remains in place.

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