What Does a San Diego Employer Need to Know About PAGA?
The California Private Attorneys General Act or PAGA is a law which carries substantial risk for any San Diego or Southern California employer. PAGA allows your employees to, in effect, act as internal attorney general. This allows employees to attempt to bypass the arbitration agreements contained within your employment contracts and pursue civil penalties in a class action as if they were an agency of the State of California.
The Private Attorneys General Act or PAGA results in a qui tam or whistleblower type claim. In qui tam claims those who assist a government agency in a case may receive part or all of the recovered financial damages or resulting penalties recovered in by the agency as a result of the prosecution of the case.
PAGA was established in 2004 as California’s legislature sought additional sources of taxation through enforcement of our State’s complex labor laws. Through PAGA, your employees may file a lawsuit against you and your company on behalf of the California Attorney General.
Lawsuits under PAGA substantially increased after a 2009 California Supreme Court ruling which established that PAGA actions are not limited by the stringent class action certification requirements in a typical action.
Additionally, the California Supreme Court in 2017 ruled plaintiffs in a PAGA action may request and receive substantial information from you as an employer very early in the legal action. This decision places substantial incentive on employers to settle these cases very early in the process in an attempt to avoid significant contingent liability.
The “aggrieved employees” under the statute may receive compensation if they have been affected by any labor violations while in your company’s employ. Thus, they may file a PAGA claim for one issue, but recover financial compensation for any and all labor violations established under the suit, even if the original claim is proven to be meritless.
Can an Employee Bypass the Arbitration Clause of Our Employment Agreement?
Most California employment contracts require employment disputes to be resolved through arbitration. Most California labor agreements also prevent the employee from joining in any class action against your company to limit your legal exposure in any employment related dispute.
The California Private Attorneys General Act or PAGA effectively bypasses both of these protections exposing your company to substantial financial and legal risk. A court is prevented from enforcing the arbitration agreement in a PAGA lawsuit. Further, any attempt to waive the employee’s rights to file a PAGA claim are not enforceable in California as they violate “public policy.”
Employees face a statute of limitations of 1 year from the last alleged violation of labor law.
What Violations is a San Diego Employer Exposed to in a PAGA Claim?
The California Private Attorneys General Act or PAGA specifically identifies 3 areas under which your employees may attempt to file a claim:
- Violations of the California Labor Code Section 2699.3(a) and 2699.5
- Violations of California Health and Safety Regulations
- Any Violation of California Labor Law under California Labor Code Section 2699.3©
This constitutes a broad range of employment policies, guidelines and labor laws which all California employers are required to uphold. The Watkins Firm will defend a San Diego or Southern California in a PAGA Action to limit financial exposure and help to take corrective action which can reduce or eliminate existing claims.
What Financial Exposure am I Likely to Face as an Employer?
An initial PAGA violation carries a civil penalty of $100 per employee per pay period. Any subsequent PAGA violation result in a $200 per employee per pay period civil penalty. These penalties add up quickly.
For example, if you have 100 employees, and you prohibit them from taking their lunch break for any reason and the practice has been going on for 26 weeks, the resulting penalty is $100 per employee for the first week’s violation and $200 per employee for each of the subsequent 25 weeks. In this example, your company would face a civil penalty of $520,000 as well as compensation for any related overtime or unpaid wages claims. Under PAGA, 25% of all civil penalties recovered go back to the employee(s). This provides a strong incentive for an employee to look for a potential PAGA claim resulting in substantial exposure to you as a California employer.
Learn More About Your Risks as a San Diego Employer Under PAGA and How to Protect Yourself
The Watkins Firm has defended Southern California and San Diego employers for decades. Get the sound advice and counsel you need as a San Diego employer. Learn more about the California Private Attorneys General Act or PAGA and how to protect your interests. We invite you to review the strong recommendations of our clients and contact us or call 858-535-1511 for a free consultation today.
Contact a Business Law Or Real Estate Attorney Today
To set up a free, no-obligation consultation with one of our knowledgeable San Diego business lawyers, call us at 858-535-1511 or contact us online.