An issue that is gaining traction in the business world – destructive lawsuits against corporations and other corporations under the Private Attorneys General Act known as PAGA – reflects a political and political upheaval in California nearly 20 years ago that saw the greatest effort to reform the state employee represents. Compensation system in which I played a role.
The aim of the PAGA Act was to establish an external mechanism outside of the state department for the enforcement of labor standards that would allow workers to appeal against violations of the labor code in order to deprive workers of adequate remuneration. However, over the past two decades, a multitude of attorneys have discovered a quick payday by threatening corporations and even nonprofits with large scale litigation. Executives often choose to resolve the threat rather than face the uncertainty of judicial action.
Often, minor violations of the complex labor code of 1,000 pages lead to expensive lawsuits that threaten the closure of companies.
As with the workers’ compensation revolt, the business community has come together to support reforms of the General Law on Private Attorneys. The business ideas would ease financial pressure, block impending lawsuits and also improve the results of workers seeking compensation through government agencies responsible for workers’ welfare.
A report just released by the California Business and Industrial Alliance shows that labor matters decided by the Labor Workforce and Development Agency, compared to cases initiated by PAGA, show that workers get almost double the pay, the cost of the employer halved and cases settled in less time. It is a win-win for all parties except the lawyers. The business plan is to step up government efforts to deal with industrial action while reducing the impact of private PAGA lawsuits.
While the workers’ threat to the business world has been extensive, the growing threat posed by the Private Attorneys General Act is encouraging the business world to encourage change before things deteriorate, especially for companies trying to get out of pandemic caused ditch to climb out.
The concerns and determination of companies to make changes to the PAGA law reflect the situation of workers in the early 2000s.
In a desperate business world, suffering from soaring compensation fees for workers, nongovernmental recruiters came across companies like Geier to steal companies with the lure of fairer compensation schemes in other states. The California Chamber of Commerce broke a tradition of non-gubernatorial endorsements and endorsed Arnold Schwarzenegger in the 2003 recall campaign in hopes of solving the workers’ comp problem.
In the shadow of yet another callback from the governors, the business community is calling on the governor and lawmakers to fix the broken PAGA system. If the legislature does not implement reforms, talk of a possible initiative becomes louder.
That brings me back to my role in changing employee compensation. As the leader of a small group of companies, I was a proponent of a reform initiative for workers. The move was welcomed and effectively used by Governor Schwarzenegger to deliver his first major political achievement – convincing lawmakers to pass a negotiated statutory reform of workers’ compensation. At the time, many lawmakers admitted that they would not support the legislation if it weren’t for the circulating initiative. However, they did and the initiative was discontinued.
The legislature should react more quickly to the problem of the General Law on Private Lawyers.
Voting for the shortcomings of PAGA could include some interesting aspects. Reform legislation should not only include a “right to be healed” of mistakes – in other words, a way for companies to correct minor mistakes of little importance – but could also have wider implications.
The threat posed by PAGA lawsuits has expanded with the controversial AB 5 Employee Status Act. Whether an employee is an employee or an independent contractor is likely to open the door to a flurry of PAGA lawsuits. One initiative could include changes to AB 5 to avoid justifications for PAGA claims related to the Workers / Independent Contractors Act.
Legislators will be able to regulate the PAGA law, which, while well-intentioned is out of control, threatening businesses and other organizations without really helping the workers it was trying to help. As the business community rallies support for reform, it is worth studying the history of the great 2004 workers’ compensation struggle.
Joel Fox was Associate Editor of FoxandHoundsDaily.com on California Politics and is Associate Professor in Pepperdine University’s Graduate School of Public Policy, [email protected]