California’s Healthy Workplaces, Healthy Families Act (known as the “Paid Sick Leave Law” or “PSLL”) requires employers to provide employees, with a few narrow exceptions, three days of paid sick leave each year. The PSLL does not give employees a private right of action, meaning that employees can’t sue their employers directly under the PSLL. The Labor Commissioner and Attorney General are primarily responsibile for enforcing this law, and certain public agencies and actors, such as local prosecutors, can also sue to enforce it.
Until recently, the question remained whether employees could use some procedure other than suing under the PSLL to enforce their right to paid sick leave. On February 24, 2023, the first California Court of Appeal to directly address the question answered “YES” in Wood v. Kaiser Foundation Hospitals.
Paid Sick Leave Violations Can Form Basis of Employee Claim for Civil Penalties
In Wood, a nonexempt, hourly employee of Kaiser filed a lawsuit under the Labor Code Private Attorneys General Act (or “PAGA”). PAGA allows an employee to sue her employer for civil penalties, based on just about any alleged violation of the Labor Code. Importantly, a PAGA plaintiff sues on her own behalf and on behalf of all other “aggrieved” employees – that is, any other current or former employee who has been affected by the employer’s alleged violation of the Labor Code – seeking penalties for each employee, and each violation.
Ms. Wood’s lawsuit claimed that Kaiser violated the PSLL by failing to properly pay sick leave and refusing to allow employees to take sick leave. Kaiser argued that the PSLL does not permit employees to seek an award of PAGA penalties, and the trial court agreed.
The Court of Appeal reversed, based on an in-depth analysis of the history and intent of PAGA, the PSLL, and the Unfair Competition Law (or “UCL,” which allows individuals harmed by a defendant’s wrongful acts – including violations of the Labor Code – to sue on behalf of the public.)
Central to the Court’s ruling was PAGA’s purpose: responding to the state government’s inability to adequately enforce the Labor Code by “deputizing and incentivizing” those who, in the view of the Legislature and the Wood court, are “uniquely positioned to detect” Labor Code violations – the employees experiencing and witnessing the violations. Through PAGA, the Legislature codified its view that, even though the UCL had authorized claims by one person for remedies arising out of Labor Code violations committed against others for over 20 years, the UCL did not sufficiently incentivize employees to enforce the Labor Code. Specifically, the UCL provides limited remedies and – unlike PAGA – does not allow a successful plaintiff to recover attorneys’ fees.
After carefully examining the history and the language of the PSLL, the Court stated:
Given the perceived necessity for mandating minimum paid sick leave … it seems inconceivable that the Legislature intended to prohibit PAGA actions to enforce the [PSLL]. Doing so would essentially leave only the Labor Commissioner and the Attorney General to litigate violations—and the Legislature had already determined a decade earlier that these agencies were flatly incapable of adequately enforcing labor laws. To accept Kaiser’s argument is to believe the Legislature intended the Act to be nothing more than statutory cotton candy—something that looks nice but has no substance. We are confident that was not its intent.
What This Means For Employers: Comply with PSLL and Other Labor Code Provisions!
Employers should always be wary when a court rules that an alleged violation of a particular law can form the basis of a PAGA action. Under PAGA, an “aggrieved employee” can recover penalties for not only the employer’s violations directly affecting her, but also can recover penalties for every type of violation committed against every other “aggrieved employee.” Notably, to be “aggrieved,” an employee need only be affected by “one or more of the alleged violations.” This means that a plaintiff who experienced a single violation of the PSLL, such as an employer’s failure to pay one hour of sick time, and no other alleged violations whatsoever can sue for penalties arising out of every type of violation committed against every other employee. Given that most PAGA penalties are assessed per employee, per pay period, employers’ potential exposure in PAGA cases can be massive.
Keep an eye out for updates when, and if, other Courts of Appeal decide this issue. The Wood decision, issued by the Fourth District Court of Appeal, is not binding on other California appellate courts. Further, several federal district courts before the Wood decision had ruled that the PSLL precluded claims for PAGA penalties. Going forward, federal courts will not be bound by the Wood decision – if they find compelling evidence that the California Supreme Court would disagree with Wood. For these reasons, more litigation of this topic is likely!
You can read the Court’s opinion on Wood v. Kaiser Foundation Hospitals here.
