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California Voters May Deal a Fatal Blow to PAGA

Things aren’t looking so good for the long-term health of the Labor Code Private Attorneys General Act (“PAGA”).

On top of the U.S. Supreme Court’s granting review of a case challenging PAGA’s anti-arbitration rule (as we reported here) and a separate challenge brought by an association of California business owners currently pending before the California Court of Appeala new initiative is headed for the November 2022 ballot, which could deliver a fatal blow to the much-maligned law – and it couldn’t happen to a nicer statute!  (Former Governor Gray Davis unleashed this controversial measure on Californians shortly after he lost the recall election in October 2003.)

In its present form, PAGA authorizes allegedly “aggrieved” employees to bring representative actions to recover hefty penalties for purported Labor Code violations (many of which have resulted in absolutely no harm to a single employee).  More importantly, the engine that makes these lawsuits run is the recovery of attorneys’ fees.  Well over 6,000 PAGA lawsuits were filed in 2020 alone. The law has been criticized for enriching a small (but ever-growing) group of “bounty-hunting” plaintiffs’ lawyers who share but a fraction of the payouts with the “aggrieved” employees and the state, which is why we affectionately refer to PAGA as the “Prettymuch All Goes to the Attorneys” statute. (See also the California Chamber of Commerce’s take on PAGA (here)).

If passed by the voters in November, the Fair Pay and Employer Accountability Act (“FPEAA” – admittedly, not as catchy an acronym as “PAGA”) will take enforcement out of the hands of private “aggrieved” employees and their attorneys and give it back to the Labor Commissioner.  FPEAA bestows upon affected employees 100% of the penalties recovered, which is a major change from PAGA, which gives employees only 25% of the total penalty amount. The proposed law also would eliminate “stacking,” which allows penalties for multiple violations to add up quickly and reach astronomical amounts.

In addition, the FPEAA would establish a Consultation and Policy Publication Unit within the Department of Industrial Relations to publish information and provide confidential consultations to employers with compliance questions, and charges the California Legislature with ensuring the Department has the funding necessary for enforcement.

Stay tuned here as PAGA weathers the many challenges 2022 seems to have in store for it!

© 2023 Proskauer Rose LLP. National Law Review, Volume XII, Number 12

About this Author

Anthony J Oncidi, Employment Attorney, Proskauer Rose Law Firm

Anthony J. Oncidi heads the Labor & Employment Law Group in the Los Angeles office. Tony represents employers and management in all aspects of labor relations and employment law, including litigation and preventive counseling, wage and hour matters, including class actions, wrongful termination, employee discipline, Title VII and the California Fair Employment and Housing Act, executive employment contract disputes, sexual harassment training and investigations, workplace violence, drug testing and privacy issues, Sarbanes-Oxley claims and employee raiding and trade secret protection....

Phillipe Lebel labor & Employment Attorney Los Angeles Proskauer Law Firm

Philippe (Phil) A. Lebel represents employers in all aspects of employment litigation, including wage and hour, wrongful termination, discrimination, harassment, retaliation, whistleblower, trade secrets, and breach of contract litigation, in both the single-plaintiff and class-action context, at both the trial and appellate level, and before administrative agencies. Phil also represents employers in connection with labor law matters, such as labor arbitrations and proceedings before the National Labor Relations Board. Additionally, Phil counsels clients to ensure compliance with federal...

Law Clerk

Morgan Peterson is a law clerk in the Labor Department and a member of the Employment Litigation & Arbitration Group.