Dan
Welcome to sound business insights. I’m Dan Watkins. This episode is about the Private Attorneys General Act – PAGA. This podcast is not intended to provide legal advice.

Neil
In this episode, we’re talking about the private attorney general act or PAGA. What is PGA and where did it come from?

Speaker 1: (00:38)
The Private Attorneys General Act has been around for a long time. It is sort of a catch all.  If you want to, you can bring an action as if you were the Attorney General for the State of California on behalf of Californians and sue somebody. And it’s been used in a lot of different ways. It’s also been used in something called Qui Tam, which is a Latin term for,

Neil
whistleblower

Dan
To bring in an action on behalf of other parties. And that happens in different types of actions and these kind of actions are all around the United States. So they’re old and they’ve been used for different types of grievances throughout the history of the State of California. But right now they’re being used on behalf of employees. And when you do so you share some of the money with the State of California, and then you also get money for your clients and the state wins some money and they don’t have to pay their own Attorney General to do it. And also your clients get money and you get some more rights where as a regular class action might be more difficult for you to bring, but in a regular class action, you don’t have to pay the state.

Neil
So which side of the fight are we on in this?

Dan
We represent employers. So we’re always trying to do whatever we can to help our clients when it comes to this threat, which is active. And basically there’s a lot of plaintiff’s lawyers out there treating themselves as bounty hunters and going after these companies.

Neil
And many of our clients didn’t realize this not only applies to their current employees, it also applies to former employees, correct?

Dan
Yeah. They just came out with a recent decision that says that they don’t have to even continue to work there, that they can still sue you and act as a class representative.

Neil
And they can draw people into the class that used to be there who are no longer even working for you.

Dan
Well, that’s some of the tricks of the trade that I probably won’t talk about today. There are all kinds of rules and regulations on what they can’t do and what we can’t do in defending it and how we approach that. And every case is different and every settlement and every resolution is different. It’s a different kind of beast. The Judge gets involved. All the attorneys get involved. You have to make sure you’re fair to the people that are part of the class. So it’s very complicated and how you handle it in the beginning and throughout the case is important. You can’t just hire a lawyer to go out there and be really aggressive and expect a great result. All you’re going to end up with is a higher bill and higher risk, and nobody being scared away.

Neil
Dan, what types of issues can expose one of our employers to a pocket action?

Dan
Well, typically it’s wage an hour wage an hour, and everything that goes with that reporting classification, whether you are getting proper rest time, meal time, any possible technical failure by the employer and how they treat the employees can end up as a PGA violation,

Neil
Health and safety,

Dan
Health, and safety can go that way. It can also go through OSHA, but yeah, it’s basically anything you can imagine in the employment arena all the way down to unfair competition.

Neil
So how would you describe the risks and exposure for an employer in a PAGA action?

Dan
I think that failure to act immediately is the biggest risk. You get a claim, you get a letter, you get a notice and you don’t take action right away. That’s your opportunity to cure, fix and get out of the way of the PGA case. The lawyers who are hoping to Sue you don’t make any money if you act quickly, but if you delay and push back or ignore them, then they gain bigger rights and more motivation.

Neil
PAGA actions are class actions. We do class action defense in many areas, including even organic labeling and other types of class actions in a PAGA suit or class action. What’s the best defensive strategies.

Dan
Everybody knows about class certification. You can’t have a class and you have, unless you have like people in a like situation that have suffered the same harm. And a lot of times plaintiff lawyers will try to group everyone together in hopes of getting the judge a certified, so that it’s assumed that everyone has suffered the same harm. And most employers don’t treat each employee the same. I mean, they’re all individually hired and contracted for. And sometimes the problems that are being alleged are not universal. So we want to fight that right away. And we also want to do our discovery and find out if everybody in the company wants to really join this class.

Neil
So Dan what’s the worst case scenario. What’s the worst thing that can happen in a podcast action.

Dan
Well, talking to you, I’ve been emphasizing, you have to do this and we’ll be successful, but sometimes that doesn’t happen and we don’t resolve the matter right away. We don’t have success preventing the class certification and we are in the meat of it and our clients have some liability. That’s when we have to come up with strategies for settlement and mediation, and which mediators are knowledgeable in the, in the community, in this kind of law, those who have a pulse understanding what is and is not reasonable resolutions. Of course the plaintiff’s lawyers are going to want as much as possible, but what’s fair. What’s reasonable what our clients can afford, what kind of, uh, curing measures we can put forward. And the judges that we have, knowing that the actual judges that we have and, and how they’ve ruled in the past all to advise our clients on what’s the best way out of this. And that’s the worst case scenario. When we’re sitting there talking about giving away our clients’ money, for honest mistakes, that can be punitive in nature. That’s the hardest. And that’s the worst case scenario. And we try our hardest not to get to that point, but sometimes it does.

Neil
And what’s the best case scenario.

Dan
Best case scenario is the client gets that, notice that little letter in the mail, contacts us, we check everything out. And if there’s anything wrong, we cure it. We fix it. And before the plaintiffs can even file an action. Every possible issue they’ve complained about has been fixed, cured and remedied. So the motivation is denied. The plaintiff’s council, the big payoff is gone. And once that plaintiff’s lawyer knows that they’re not going to make a lot of money on it. They usually don’t want to spend much time.

Dan
So we’ve got this letter that our clients brought us, and it’s time to answer the complaint. We’ve got several options. What do we do if we’re at the complaint stage and we haven’t been successful in curing and doing the other things we like to do to make the case go away, we’ve got to answer the complaint. And when it comes to answering the complaint, of course you deny, in general, deny everything, but you also identify affirmative defenses. The definition of affirmative defense is it’s a new matter. It says, in addition to what the plaintiff put in the complaint, we have other reasons why they’re not entitled to anything. And these are our defenses. One would be when an employee breaches the contract, he or she is suing on. You can’t expect the benefit of your bargain If you didn’t perform, right? The next one is the employee’s not hurt. They weren’t actually hurt. And the members of the party they’re trying to bring forward, many of them suffered no damages. So they have no damages.

Dan
They shouldn’t be able to proceed. Also they’re not really in this class. They have no standing to sue. Although the courts keep expanding that , it’s still a valid defense. In fact, every one of our complaints has about 50 affirmative defenses in it. That identify things that might come up in discovery that we don’t know about, but we want to plead in advance in case they come to be true or evidence in the case. So, yeah, it’s complex. And we are aware of the mandatory affirmative defenses. And also we identify ones that are not necessarily mandatory, but important in case someone says, well, you never brought this up. It’s not relevant in trial. And you can point to your complaint, your answer. You can point to your answer and say, uh, yes, your honor, it’s right here.

Neil
So Dan, there’s also the reputation of the Watkins firm. We’ve been in business 40 years. We have a proven track record. There’s got to be some weight that gets added to the equation when we’re defending a client. And then there’s also posturing that we can take that protects them. Can you talk about those two issues a little bit?

Dan
Definitely. Um, we don’t go mad dog on our opposing council, but we try to be straightforward and make it clear that the roadmap for litigating with us is going to end up if they go all the way in a trial where we have a very good track record of being successful in front of judges and juries, that’s not yelling and screaming. That’s just saying, if you’re going to make us go to trial and we defend this case, history will tell you that we’ve done very well. And other plaintiff’s lawyers have assumed they were going to win and came away with nothing.

Neil
What impact does that have on getting a case resolved?

Dan
Well, we hope it has some. The other thing is being honest with the opposing counsel, we will talk about things in addition to the basic facts that maybe the other attorney wasn’t thinking about. For example, if there’s suing our client and we know our client is never going to be able to pay the kind of money they’re asking for, we’ll let them know. We’ll tell them the truth and say, look, you’re wasting your time here. Nobody’s going to get paid on this unless everybody’s reasonable.

Neil
Hmm. The best defense is always a good offense. How do you prevent PAGA exposure? What’s the best defense that employers can put in place.

Dan
Um, it’s hard to prevent PAGA exposure. And I know that people get sued and they feel like blaming themselves, but it’s happening everywhere. The best defense is to act quickly, get a hold of a lawyer who knows what they’re talking about and do your investigation and discovery. That’s required by law as an employer. When you find out someone says, you’re doing something wrong, you have to immediately go look at it and determine if they’re correct and fix it. Because when you don’t do that and you let it delay, delay, delay the, um, amount of money you pay goes way up, way up, way more than if you would’ve just fixed it at the time, it takes all the incentive out of suing you. If you handle these things quickly, and that’s where these cases come from, they come from greedy lawyers who want a big chunk of your money. And if you address it immediately, that tells them they’re not going to get very much money and they go away.

Neil
Dan that’s kind of sobering, but as an employer, is there anything I can do to reduce the odds that I’ll ever face a PAGA action?

Dan
Well, our clients are usually medium to small businesses and some of them are small enough where they don’t have their own HR manager. They don’t have their own team that can tell them the day to day questions everybody gets from employees. Well, we have that here. So our clients can call in and talk to one of our administrators that can act as their out of office, HR manager, answer those questions quickly and avoid the problems. We also draft employee manuals that cover a lot of issues that may rise up. You have a notice requirement in California, you have to put up the right posters. You have to put up the right notifications in your break room, and you should have an employee manual that covers those things as well. And more so that when you are being scoped, when you’re being investigated by some greedy plaintiff’s lawyer, I keep saying that and over and over again, but, uh, when you are, and they see the professional nature of how you run the business and the forms and things that you have, that you turn over, they’re less likely to believe that there’s a, there’s some wrongdoing at the end of the trail.

Dan
And it may prevent you from enduring a two and a half year lawsuit. And that also applies to policies and procedures and how they actually go about enacting what they say they’re going to do. Isn’t it correct? You’re going to get people saying you did this wrong and that wrong. And if you don’t have a policy and procedures manual, and you don’t have someone to call right away, and you don’t have a relationship with your lawyer, your CPA and your banker, then you’re going to have trouble in your business.

Neil
So Dan we’ve covered a lot of ground on PAGA. If you had to give a piece of advice to employers about PAGA and avoiding it, what would you say to them?

Dan
Act immediately. When you hear about a problem, it’s pay me now or pay me later, deferred maintenance. If you jump on it quickly, it won’t cost that much and you’ll resolve it and you’ll have a better company. But if you delay, the penalties are so stiff and it puts companies out of business, a simple, quick action to the first notice you get, and your lawyer can resolve a lot of problems for you fast, quick, and easy. But if you come into the office after you got the complaint and we only have a week to do our discovery and the deadlines have all passed, we’re all we got one hand tied behind our back.

Neil
So in one word – act

Dan
correct.

Neil
Thanks, Dan.

Dan
Sure.  You can learn more about Watkins Firm at watkinsfirm.com or call our office (858) 535-1511.