Last week, an employers’ group that represents small and medium sized business across California sued the State claiming that its Private Attorneys General Act (“PAGA”) statute was unconstitutional.
As readers of this blog know, PAGA is a controversial state statute, found in the Labor Code, that allows an individual employee to “stand in the shoes of the State” and sue his employer for civil penalties flowing from the employer’s wage-and-hour violations. What makes PAGA so devastating is that PAGA allows the plaintiff-employee to recover “civil penalties” from the employer not only for the violations suffered by that employee but also for the violations suffered by each and every other employee who has ever been employed by that employer. Penalties for one single wage-and-hour violation thus get multiple by hundreds or even thousands due to the numbers of employees affected. Plus, when you have multiple violations — which is usually the case — these equations get multiplied again and again.
On top of this, there’s attorneys’ fees. If a PAGA plaintiff is successful in proving even one violation, the employer has to pay the plaintiff’s attorneys’ fees. This is the “jackpot” known as PAGA. It has spawned an entire industry of lawyers and law firm that scour the State looking for employees willing to sue as “PAGA plaintiffs.”
But some employers have finally had enough — and are fighting back.
On November 28, 2018, the California Business and Industrial Alliance sued the State in Orange County Superior Court. The lawsuit seeks an order from the Court declaring that PAGA is unconstitutional under the 5th Amendment (due process), the 8th Amendment (excessive fines and cruel and unusual punishment prohibited), and the 14th Amendments (equal protection) of the U.S. Constitution. The group also seeks an injunction from the Court that prohibits the State and its courts from enforcing PAGA in any future lawsuits or for any further purpose.
The lawsuit, if it is successful, could have huge repercussions for employers and employees across California. The first status conference for the case is set for March 1, 2019. We will keep an eye on this litigation, of course, and keep you informed of all interesting and important developments.
The official name of the case is California Business and Industrial Alliance v. Becerra (Case No. 30-2018-01035180). If you would like to read the complaint, which contains a lengthy analysis of PAGA and its legislative history, you can find it here.
