January 25, 2022
Many employers in California have had the unfortunate experience of either litigating a lawsuit or resolving a pre-litigated matter under the Private Attorneys General Act (PAGA), typically after extensive time, effort and resources have been expended. In both instances, the cost to defend is usually enormous and some small (and large) businesses have been forced to declare bankruptcy because of PAGA claims. In their Lawyer Monthly article, “Relief From Runaway PAGA Claims May Be On The Horizon,” Senior Employment Counsel Corinne Spencer and Attorney Antwoin Wall explain recent uptick in PAGA claims and its adverse impact on employers.
The attorneys emphasized that PAGA claims have skyrocketed for various reasons including the fact that employees cannot waive their right in an arbitration agreement to bring PAGA claims, thereby creating litigation challenges for employers. Underlying claims that create exposure in PAGA actions include the full gamut of wage and hour violations, such as missed meal and rest breaks, failure to provide itemized wage statements, and failure to pay overtime.
As a result of this rise, several business organizations proposed an initiative, the California Fair Pay and Employer Accountability Act (CFPEAA), for the 2022 ballot. If approved by California voters, the CFPEAA effectively repeals PAGA by eliminating the ability to pursue civil penalties via a representative action. For employers, the greatest upside of the CFPEAA, as it relates to future PAGA lawsuits, is that 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 impact PAGA claims and the additional benefits of the CFPEAA, contact us here to speak to one of our attorneys.
Read the full Lawyer Monthly article here.