The Private Attorneys General Act (PAGA) is a California law that allows employees to sue their employers for labor law violations on behalf of the state. Although the initial intentions of the statute were good, in practice the policy has unfolded into a nightmare for businesses and does little to help workers.
Nothing exemplifies this better than the ongoing legal battle between Uber and worker rights advocates. Uber is arguing that PAGA is unconstitutional because it allows employees to bring civil actions on behalf of the state for labor law violations. Uber contends that PAGA violates the separation of powers by allowing private citizens to enforce state law, and that it also violates the right to a jury trial by allowing employees to bring PAGA claims in court.
One of the biggest problems with PAGA is that it allows employees to file lawsuits for even minor violations of labor law. This has led to a flood of lawsuits, many of which are as innocent as typos on a paystub.
These penalties can be very costly for businesses, even if the violations were unintentional. In some cases, the penalties can be more than the business’s annual profits.
As a result, private trial lawyers have been given the greenlight to exploit the complex 1,000-page labor law code to increase their bottom line, often at the expense of both employers and employees. Sadly, PAGA lawsuits are driven more by the pursuit of personal gain than genuine concerns about labor law violations.
The high cost of PAGA lawsuits has directly forced many businesses to cut back on hiring and investment. This has had a dire impact on California’s economy. In fact, a study by the California Chamber of Commerce found that PAGA has cost the state’s economy billions of dollars.
In addition to the economic costs, PAGA also has a negative impact on employees. The flood of PAGA lawsuits has made it more difficult for employees to file legitimate claims. This is because employers are now more likely to settle PAGA lawsuits, even if they are not valid, in order to avoid the high cost of litigation.
Consequently, employees who have actually been harmed by their workplace are less likely to get justice.
PAGA is burdening businesses in California and driving many to leave the state. The Golden State has already lost hundreds of businesses due to the uninhabitable business climate, including Toyota, Nestle, Carl’s Jr. Jamba Juice and many more.