Everything you ever wanted to know about PAGA but were afraid to ask

Everything you ever wanted to know about PAGA but were afraid to ask

  1. What exactly is PAGA?

Employees have always had the authority to file a lawsuit against their employer for violations of the Labor Code.  Usually, an employee would only do so if he had actually been damaged, i.e. he could show he had been underpaid.

PAGA did something different; it gave employees the governmental authority to assess penalties against businesses for violating the Labor Code.   PAGA authorizes monetary fines for every violation of the Labor Code, and gives “aggrieved employees” the power to enforce those fines on their own behalf and on behalf of other employees of the company.

PAGA also allows the “aggrieved employee” to recover his legal fees from the employer.

  1. Why should I care about PAGA?

If your business has employees, PAGA could affect you.  Even small, technical violations of the Labor Code can snowball into huge lawsuits under PAGA.

For example, consider what happens to a Kern County ag business with 100 employees who get paid every week.  One day, the new payroll manager decides to replace the company’s name and address on the employees’ pay stubs with the company’s logo.  Oops, that’s technically a violation of Labor Code section 226.  A year later the company’s potential liability under PAGA would be over a million dollars, plus attorney fees.

The lifecycle of a PAGA lawsuit

PAGA claims are often filed as part of a “class-action” and in conjunction with private (i.e. non-government) claims for damages.  A class-action is a mechanism where an individual can bring a lawsuit on behalf of a larger group of similarly situated people.  Often, a wage and hour class-action will last years, and cost the employer hundreds of thousands of dollars.

In a class action, the court eventually rules on whether the individual employee is permitted to represent the purported class of other employees who suffered similar Labor Code violations before the lawsuit can go further.  But in a PAGA case, there is no such requirement.  Thus, employers have fewer tools to get rid of a frivolous PAGA case.

  1. How is PAGA affecting Kern County businesses?

There are currently dozens of lawsuits pending against Kern County employers under PAGA.  These range from lawsuits against the largest ag and oil companies to lawsuits against an individual who only has a few employees.

These lawsuits can be very expensive to defend.  Once a PAGA case is filed, there is very little the employer can do to limit or control the scope of the lawsuit.

Is PAGA working?

PAGA is working great—for plaintiff’s lawyers.  For businesses it has been a disaster, and it does not seem to be producing any real benefit to workers.  For the most recent years we could find information, there were an average of 5,900 PAGA filings in California per year.  The State got an average of $5.7 million in penalties per year.

On average, each PAGA notice resulted in the State getting about $975 in penalties, and workers getting an average of $325.  But each notice costs California businesses significant amounts of time, heartburn, and legal fees, and many of them produced hefty settlements for plaintiff’s lawyers.

If you are interested in learning more about how you can protect your business against PAGA lawsuits, Belden Blaine Raytis lawyers Kaleb Judy and Viviano Aguilar will be presenting a “Lunch and Learn” about PAGA on March 21, 2018.  Click here to register