As the Ninth Circuit prepares to rule on an appeal of $102 million in damages for alleged California Labor Code violations, including Private Attorneys General Act (PAGA) penalties, new legislation is under consideration to reform the controversial PAGA law.
AB 530, introduced Feb. 10 by Assemblymember Vince Fong, R-Bakersfield, would establish filing requirements in order to bring a PAGA claim, while AB 385, introduced Feb. 3 by Assemblymember Heath Flora, R-Ripon, would prohibit filing of PAGA action in certain circumstances during the California state of emergency.
More than 7,000 PAGA notices have been filed since the COVID-19 pandemic began, Tom Manzo, founder and president of the California Business and Industrial Alliance (CABiA), told the Northern California Record.
The case before the Ninth Circuit, Magadia v. Walmart Inc., stems from itemization of bonus payments on wage statements.
“The California Labor Law Digest is over 1,100 pages and a case like Walmart’s is proof of how bad the PAGA law truly is,” Manzo said. “The employees were not shortchanged any money; it was a mere technicality on the paystub as it identified a lump sum for additional overtime that individuals received as a result of bonuses – identified as “OVERTIME/INCT” — without breaking down how that sum was calculated. How does this type of violation equal $102 million dollars?”
Labor unions have long defended PAGA, though Manzo noted that in 2018, the construction industry successfully received a PAGA carve-out under AB 1654.
Significant legislative reform is needed, Manzo said, adding that AB 530 and AB 385 represent steps in the right direction, but more needs to be done.
The PAGA case against Walmart will have far-reaching impacts, Manzo said.
“California plaintiffs’ lawyers are likely to look at their clients’ wage statements even more closely – and to file even more class action lawsuits alleging that employers’ wage statements failed to dot every ‘I’ and cross every ‘T’,” Manzo said.