The Private Attorneys General Act (PAGA) started out as a relief measure designed to empower California employees against employers who violated the Labor Code. Under PAGA, employees step into the shoes of an enforcement agency and, as such, can recover civil penalties when violations are found.
The goal was to help state agencies catch blatant violations of wage laws by putting power in the hands of the victims.
Unfortunately, the act doesn't distinguish between a serious wage violation and a small one, nor does it differentiate between a genuine mistake and a purposeful attempt to manipulate the books.
Naturally, PAGA has devolved into something that many business law attorneys consider a tool of extortion. Its misuse endangers the viability of many small businesses that get targeted over very minor wage violations -- the technical kind that occur from bookkeeping errors and don't harm employees. When those businesses are pressed too hard financially with fines or litigation defense fees, they can't afford to sustain their operations and end up closing -- which puts their employees out of work.
Many feel that California, thanks to PAGA, has turned into a hunting ground for people looking to make an easy buck off of technical violations without any real interest in preventing true problems. The challenge of avoiding a PAGA suit has many employers rethinking bonuses and flexible schedules -- two areas in which it is easy to incur a technical violation -- just to avoid the possibility of a lawsuit they can't afford.
Assemblyman Vince Fong, who represents Kern County, hopes that legislation he's proposed will stop the abuse of the state's small businesses.
The measure, AB 2016, would require potential litigants to provide the employer with a specific explanation of the apparent wage violation. The employer could then cure the problem, ending the need for litigation (and all its expense). If approved, it would move PAGA much closer to its intended purpose and put the focus on problem prevention and solutions rather than on monetary gain.
Issues like these illustrate just how difficult it can be to keep up with the legal requirements of a business -- and why it's wise to consult with an attorney whenever you're in doubt about your company's compliance with the law.
Source: The Daily Independent, "Vince Fong introduces bill to curb abusive lawsuits plaguing small businesses statewide," Feb. 06, 2018