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February 2, 2022

The cost to defend a lawsuit or resolve pre-litigated matters under the Private Attorneys General Act (PAGA) has often led to bankruptcy for many California employers, a trend that has risen in recent years. In their Daily Journal article, “Reason for Improved Outlook to Mitigate PAGA Claims in 2022,” Senior Employment Counsel Corinne Spencer and Attorney Antwoin Wall explore this trend and some potential hope for change on the horizon.

While PAGA was initially implemented to help allow employees to regulate and enforce labor codes, the application has failed to improve employer practices and PAGA claims have skyrocketed for a variety of reasons that are unrelated to legitimate violations.

“Employees cannot waive their right in an arbitration agreement to bring PAGA claims, thus creating litigation challenges for employers,” the attorneys explain. PAGA also allows for attorney fees, causing most employers to settle to avoid expensive litigation.

Several business organizations have proposed the California Fair Pay and Employer Accountability Act (CFPEAA) for the 2022 ballot, which offers solutions to the shortcomings of PAGA. CFPEAA would eliminate the ability to pursue civil penalties via a representative action, and it would eliminate the ability for aggrieved employees to stand in the shoes of the Labor Commissioner and recover civil penalties through a representative action.

If you are interested in learning more on the realities of PAGA claims or the potential of CFPEAA, contact one of our attorneys here.

Read the full Daily Journal article here (subscription required).

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