A controversial labor law, AB 1947, which was opposed by the business community due to an attorney fee incentive, was signed by Gov. Gavin Newsom on the Sept. 30 deadline.
“It establishes a one-sided attorney fee provision for an employee who successfully brings a civil action for a violation of Labor Code 1102.5," Ashley Hoffman, a labor and employment policy advocate with the California Chamber of Commerce, told the Northern California Record by email.
If the claim is found to be meritless, however, and the employer prevails, the employer is not entitled to collect attorneys’ fees.
The Chamber and a coalition of more than three dozen industry groups asked Newsom in a Sept. 3 letter to veto the measure, which was sponsored by the California Employment Lawyers Association (CELA).
The state Labor Code prohibits employer policies that prevent employees from reporting potentially unlawful activity, and it bars retaliation against the workers who disclose information. The employee claim can be filed with the Department of Labor Standards Enforcement (DLSE), or in civil court.
“Because the statute now explicitly allows for attorneys’ fees, it will encourage plaintiff’s attorneys to bring these claims in a civil action,” Hoffman said.
“Whereas before an employee may have filed a wage claim with the DLSE, which is less adversarial and keeps costs down for both parties, attorneys will be more likely to seek out these cases,” Hoffman said. “It is also foreseeable that plaintiff’s attorneys will be more likely to send a pre-litigation demand letter to employers, threatening to file a lawsuit in order to get a large settlement amount without even having to file the complaint.”
Besides the attorneys’ fees provision, AB 1947 also extends the statute of limitations for an employee to file a wage claim with the Labor Commissioner from six months to one year.
In the context of the COVID-19 pandemic, the law has compounded concerns across the business community, which has sought liability protections against excessive litigation related to the coronavirus.
“Litigation costs from these claims could significantly impact a business’s ability to re-open when so many businesses are suffering right now as a result of COVID,” Hoffman said.
The governor last year had vetoed a similar bill, AB 403, which also was sponsored by CELA.