©2024 Seyfarth Shaw LLP www.seyfarth.com 2024 Cal-Peculiarities | 119 5.15 PAGA Civil Penalty Claims for Labor Code Violations California’s Labor Code Private Attorneys General Act of 2004 (PAGA) is a bane to employers and a boon to the plaintiffs’ bar. PAGA is perhaps the California peculiarity par excellence. It has no precise precedent or analog in the American legal system, although recently other states have contemplated their own similar statutes. PAGA’s stated purpose is to enlist employee plaintiffs to stand in for the California Labor Commissioner to enforce the Labor Code, on the rationale that the Labor Commissioner lacks the resources to enforce the law and that, without PAGA, the level of law enforcement and the level of civil penalties would fail to deter employers from breaking labor laws. (For those who remember their maritime history, PAGA may bring to mind the letter of marque—a governmental license issued to enterprising ship captains that authorized them to fit out an armed vessel to capture enemy merchant shipping, through acts that otherwise would constitute piracy. Today’s PAGA pirates are enterprising plaintiffs’ lawyers who use PAGA as a vehicle to extract large settlements that often depend on hypertechnical, trivial violations of the Labor Code. Indeed, one prominent PAGA plaintiffs’ lawyer has a personalized license plate—“MR PAGA”—on his Rolls Royce.) PAGA aims to fix these perceived problems by authorizing employees to sue in the Labor Commissioner’s stead to seek civil penalties that go to the state and to “aggrieved employees,” with 75% of penalties going to the state and 25% of penalties going to the aggrieved employees.407 As interpreted by California courts, PAGA permits any current or former employee of a California company to sue the company on behalf of all “aggrieved employees.” Even though PAGA has a one-year limitations period, a PAGA action can seek massive civil penalties for virtually all violations of the Labor Code—no matter how trivial the violation and regardless of any actual injury—so long as the plaintiff can claim a single violation. A current or former employee becomes a PAGA plaintiff simply by sending a letter to the LWDA and the employer to notify them of the alleged Labor Code violations and then waiting for 65 days to see if the LWDA itself will take action (which it almost never does).408 Once the LWDA fails to act, the employee is free to sue, ostensibly on behalf of the LWDA and the other “aggrieved employees.”409 Plaintiffs’ lawyers like to bring PAGA actions because PAGA creates private rights of action to sue for Labor Code violations that previously only the Labor Commissioner could address, PAGA creates massive, unlimited civil penalties and multiplies potential liability still further because it empowers employees to sue on behalf of others as well as themselves, and because in doing so they need not meet the requirements of a class action, PAGA enables a plaintiff affected by one violation to seek penalties for all violations affecting other employees, and not just those violations that personally affected the plaintiff, PAGA can enable plaintiffs to sue for civil penalties for themselves and other aggrieved employees even if the plaintiffs have agreed to dismiss their own individual Labor Code claims, PAGA enables massive discovery of private information such as the contact information of a company’s employees, and arbitration agreements waiving representative PAGA claims are unenforceable. PAGA suits have powerfully proliferated since PAGA’s early days, especially when plaintiffs’ counsel discovered that PAGA actions were immune to arbitration agreements410 and that PAGA-only actions cannot be removed to
RkJQdWJsaXNoZXIy OTkwMTQ4