Just as Californian’s businesses are recovering from last year’s pandemic, they’re faced again with another obstacle: PAGA, a labor law allowing civilians to pursue legal action for almost anything they deem worthy. The law has been criticized for allowing greedy attorneys and citizens to exploit worker protections and backlog the court system.
While large multinational companies can employ huge legal teams to fight exploitation, that’s not possible for small California companies that are the backbone of the state economy and new jobs creation.
According to the Society for Human Resource Management, the Private Attorneys General Act allows employees “to recover civil penalties and to receive part of the amount recovered as compensation.” Before PAGA, alleged labor code violations were prosecuted by state and local prosecutors. But as the word “Private” in the name indicates, PAGA allowed private parties also to sue businesses for such alleged violations.
It’s been a huge new expense for businesses. It’s a special kind of double jeopardy: the businesses can still be sued by the state labor authorities and by the PAGA pursuers.
The law has “nothing stopping” incentivized lawyers from pursuing legal schemes for the sake of profit and recruiting employees who are willing to participate for a potential payout. Attorneys can spend millions of dollars advertising legal services across the state to identify small businesses to make money off of. Minor alleged infractions, such as missed lunch breaks or not giving an employee an itemized wage statement, can lead to lawsuits with massive payouts.
California still is the only state to have a law like PAGA. In June, Maine passed a similar law, but Democratic Gov. Janet Mills vetoed it. Other states are considering adopting similar laws, however.