For lawyers who defend wage and hour cases in California, “PAGA” is a four-letter word. The Private Attorneys General Act allows private employees to sue to recover penalties that the state labor commissioner could have collected. Employers and their attorneys dislike PAGA for these reasons:

  • It drastically expands the ways that employers can be sued, because employees can sue for violation of statutes that previously provided no private right of action.
  • It expands the potential liability, since employees can sue on behalf of themselves and other aggrieved employees.
  • PAGA claims are exempt from arbitration agreements.
  • The procedures that apply to PAGA actions are ill-defined. While a class action plaintiff has to satisfy specific requirements to represent a class, no one knows what, if anything, a PAGA plaintiff must show to bring a representative action.

Now comes word that Governor Jerry Brown’s budget proposal for the 2016-2017 budget year seeks “to stabilize and improve the handling of PAGA cases, largely to the benefit of workers, employers, and the state.” It intends to do this by adding additional positions to the Department of Industrial Relations and the Labor and Workforce Development Agency and have those agencies be more involved in reviewing incoming cases, pursuing them administratively, and approving PAGA settlements.

Copyright: romastudio / 123RF Stock Photo
Copyright: romastudio / 123RF Stock Photo

The idea that having the state involved in this process is going to somehow benefit employers is absurd. These agencies are bureaucracies premised on the belief that employers are inherently evil “wage thieves.” Their involvement in the process will only add greater levels of expense and uncertainty to a process that already has plenty of both.

Takeaways: PAGA is a mess that seems likely to get messier. The only way to “win” is not to get sued in the first place. A thorough wage and hour compliance audit can quite literally save even a medium-sized employer millions of dollars.