Is there a worse feeling than having to pay a fine for breaking a law you didn’t even know you were breaking? Due to a recent uptick in lawsuits filed under the Private Attorneys General Act (PAGA), claims filed related to labor code violations, several California companies are becoming familiar with the feeling.
And because California’s labor code features myriad complexities, your company could be next. Read on for an overview PAGA, why it’s become all the rage with disgruntled employees, and how you can prevent your trucking company from getting swept up beneath it.
A Brief History of PAGA
PAGA was incorporated into California state law in 2004 as part of the state’s effort to compensate for its minimal resources in enforcing California’s labor code.
In essence, PAGA protects statewide employees, both current and former, by enabling them to serve as their own private attorney when they believe that their employer has violated the state's labor code.
PAGA’s popularity experienced a dramatic surge on the heels of the following court rulings:
2009 – The California Supreme Court rules that many of the strict requirements for filing class-action lawsuits don’t apply to suits under PAGA, making it ridiculously easy for PAGA claims to be tacked onto class action claims.
2014 – The state high court rules that previously executed arbitration agreements don’t apply to PAGA. This resulted in an unprecedented boost in PAGA-only claims.
2017 – The California Supreme Court rules that employees filing PAGA claims are entitled to full cooperation from the employer in providing information upon request. Most companies prefer to avoid the staggering litigation costs this entails altogether by settling out of court early in the litigation process.
2018 – A state appellate court adjusted a PAGA provision to allow PAGA plaintiffs affected by one or more labor code violations to file claims for other labor code violations, even if the plaintiff wasn’t affected directly by them. This means that there’s nothing stopping a disgruntled employee from tossing proverbial labor code violation spaghetti against the wall and seeing what sticks.
Why PAGA Lawsuits Are Destructive
With PAGA lawsuits, the litigation costs alone will put a massive dent in your bottom line. But PAGA claims really begin to hurt when the court rules in favor of the employee, as this results in you having to pay damages to:
The individual(s) who filed the claim
The state, which recovers 75% of the total penalties
And (here’s the kicker) every employee on your staff at the time the PAGA claim was filed receives a cut, whether they participated in the claim or not
Depending on the violation, penalties range from $100 to $200 per employee at the time of the alleged violation.
Encouraged by his experience as president of a company that was hit with a PAGA lawsuit, Tom Manzo started the California Business and Industrial Alliance (CABIA). He believes:
“The Private Attorneys General Act takes everything dysfunctional about California's 1,000 plus page labor code and allows plaintiffs' attorneys to weaponize it. Our lawmakers need to realize small business owners cannot afford such excessive fines and penalties over a late lunch, a typo on a pay stub, or other minor violations that carry big consequences.”
Today, the CABIA is suing the state over PAGA lawsuits and asking it to enforce its own labor laws. Learn more about the CABIA’s work by visiting their website: www.cabia.org.
What Constitutes a Violation of California’s Labor Code?
A former or current California employee may file a PAGA claim if their employer has failed to do one or more of the following:
Provide Regularly Scheduled Breaks – This includes providing daily lunch breaks of at least thirty minutes.
Provide Proper Sick Leave – Depending on the number of employees on staff, companies may also be required to provide special leave for new parents, organ donors, members of the US Military, and victims of domestic violence or stalking.
Pay Employees Minimum Wage – The minimum wage may be upped in regions where the cost of living is higher, such as in Los Angeles and San Francisco.
Calculate Overtime Pay and/or Bonuses Properly – California state law stipulates that employees must be paid overtime whenever they work in excess of eight hours in one workday, 40 hours in one workweek, or seven consecutive days. And if more than one of these applies in a given workweek, the employer is required to pay whichever rate gives the employee a better payoff.
Provide Suitable Seating Arrangements – This is currently a hotly debated topic in California law. While it’s intended to apply to any job in which the nature of the work lends itself to sitting, there’s a tricky gray area for industries like retail and banking. In these, employees typically stand while working but aren’t required to do so.
Providing Commuter Benefits – This applies to companies located in large urban areas.
Providing Paychecks Promptly – In California, when an employee is fired, they must be issued a paycheck immediately upon termination of employment.
An Additional Note for Fleet Managers
In some industries, employers are required to regulate prevention of injury and cell phone use while driving. This leaves fleet managers in the transportation industry with yet another potential labor code violation to worry about.
Experts on PAGA Law
In many of the scenarios listed above, it’s easy to see how an employer could violate California’s labor code by way of an honest mistake. This is especially true of fleet managers. With your employees constantly on the road, it’s extremely difficult to track things like breaks and overtime pay.
Thankfully, at the Trucking Proud Insurance Agency, we have resources that are experts on PAGA law, and we’re on your side. Count on us to help you ensure that your daily operation is free of potential labor code violations and the hefty fines that come with them.
“5 Important Steps to Protect Yourself from a PAGA Lawsuit” by Annie Pilon
“More California Employers are Getting Hit with PAGA Claims” by Jonathan Janove
“California Labor Laws: What Small Business Need to Know” by Laura Handrick