California’s unique Private Attorneys General Act allows workers to step into the shoes of a state enforcement agency and represent other workers hurt by alleged labor law violations. Although similar in ways to class actions, PAGA claims aren’t subject to employment contracts that include agreements to resolve disputes only in individual arbitration.

But companies operating in California won’t have to worry about PAGA if a business group prevails in a constitutional challenge to the law. The California Business & Industrial Alliance filed a lawsuit late last year in state court arguing that PAGA, intended to encourage private enforcement of labor laws, has become a “tool of extortion and abuse” that allows “greedy and unscrupulous plaintiffs’ attorneys to shake down California employers.”

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