A ballot measure that would reform the Private Attorneys Generals Act (PAGA) by strengthening the current system available for all workers through the Labor Commissioner, and ensuring monetary settlements are retained by the workers themselves instead of their attorneys, is awaiting title and summary from the California Attorney General’s office.
The Fair Pay and Employer Accountability Act would replace much of PAGA, including the fees paid to attorneys.
The next step is gathering at least 623,212 signatures from registered voters, as required by California Elections Code, for placement on the November 2022 general election ballot.
Supporters note the California Labor Commissioner budget has more than doubled since PAGA was signed in 2004, and the state has accumulated at least $113 million in allocated funding to put toward case management.
Right now PAGA cases not handled by the Labor Commissioner go through private attorneys, who keep 33 percent of any award granted, which is often in the millions while the award for workers is far less.
In one recent case, UPS – the largest private sector union employer in California with about 170,000 employees – was hit with a PAGA suit, which was settled for $15 million. The trial attorneys who filed the litigation received $5.5 million, while the four named worker plaintiffs each got $15,000. The average payment to the other UPS workers was about $60 each.
Capstone Law APC, one of the plaintiffs’ attorney firms, has filed nearly 850 PAGA cases against a wide range of businesses in the last several years; another of the plaintiffs’ firms has filed more than 750 PAGA cases, according to the Labor and Workforce Development Agency (LWDA) website.
Unions have sought PAGA exemptions, with two passed by the state Legislature - AB 1654 for the construction industry and most recently SB 646 for unionized janitorial workers - but other proposed legislative reforms have not passed.
But it’s hoped voters will approve PAGA reform, particularly in the aftermath of new empirical data brought forth in the Baker Welsh report, which was just released this year, showing that when going though attorneys, PAGA cases take, on average, a year longer and the worker gets substantially less than a case that the state handles.
Small businesses have also contacted the state to ask for PAGA relief.
“The Fair Pay and Employer Accountability Act will streamline the wage claim process for workers through an independent regulator, getting workers’ claims resolved more efficiently than through our backlogged courts,” Jennifer Barrera, president and CEO, California Chamber of Commerce, said in an email response to the Northern California Record.
The initiative also provides for a consultation unit, similar to what exists for OSHA, providing tools for businesses large and small to interpret, understand, and follow the law.
The Fair Pay and Employer Accountability Act would also end the practice of attorney shakedown letters to businesses, which as noted in the Baker Welsh report, typically state that if a business doesn’t settle, a PAGA claim will be filed with the state.
“These settlements are not reviewed by or reported to either LWDA or the courts,” the report states. “For this reason, the public will never have information on what workers receive, what the workers’ lawyers receive, or what employers pay in connection with these settlements. Most importantly, there is nothing to assure that workers have received what they are entitled to from these settlements.”
The basic premise of the initiative is strengthening the state system, for the benefit of both workers and employers, by replacing much of PAGA and reinforcing existing the administrative process.
“Harmed workers will receive 100% of the penalties and employers will be held accountable for willful violations,” Barrera said. “Ultimately, this ballot measure will offer workers better outcomes and offer more certainty for employers to comply with California’s complicated labor code.”