Southern California Record

Tuesday, November 12, 2019

CABIA founder on PAGA: 'Where is all the money going?'

State Court

By Rich Peters | Nov 5, 2019

General court 06

SAN JOSE – A $12 million settlement was recently approved by Santa Clara Superior Court Judge Thomas E. Kuhnle against Safeway for failing to provide seats to more than 30,000 store cashiers.

The Private Attorneys General Act (PAGA) settlement gives the plaintiffs nearly $2 million for labor code violations, but attorneys will get $4.2 million and the California Labor and Workforce Development Agency (LWDA) will receive $5.6 million. The ruling will, in the end, pay employees a maximum of just $66.66 each.

Signed in 2004 by then-Gov. Gray Davis, PAGA authorizes aggrieved employees to file lawsuits to recover civil penalties on behalf of themselves, other employees, and the state of California for Labor Code violations but has since then grown into a litigious monster for the state. However, as more businesses become burdened by similar PAGA litigation, state leaders are calling for reform.


“Walmart settled a $65 million case (last year) over not having seats available for their cashiers,” Tom Manzo founder and president of California Business and Industrial Alliance (CABIA), said comparing the two cases. “The math on this settlement was the trial attorney representing the aggrieved employees will be receiving $21,664,500. This leaves $42,843,500 in the settlement fund. The state will receive 75 percent of that and the California LWDA will be able to deposit $32,132,625 into their account. $10,710,875 will go the 99,000-plus employees, netting them a check roughly at $108 each.

“Some (Walmart) employees will recover less and some more based on length of employment and hours," Manzo said. "If some of the employees do not respond or not found that money will also go to the state. All of this is over suitable seating and this is a law in California’s Labor Law Digest.”

Manzo also touched on the fact that trial attorneys are not only profiting off of these cases, but also dictating company policy.

“Walmart is being told by the trial attorney suing them this is a good deal because maximum exposure could have been up to $522,184,200. He cited his findings on the cases against Rite-Aid and Target, and Target ended up settling for $9 million,” explains Manzo. “Please keep in mind this is so a cashier can have a seat available if they choose to use it.”

Despite a massive call for PAGA reform, Gov. Gavin Newsom has actually widened the bill’s already broad scope with the approval of bills such as the recently signed Senate Bill 142, which expands the rights of lactating mothers in the workplace. The passing of SB 142 and similar workplace-related bills is expected to only add to the already copious corporate litigation across the Golden State with employee plaintiffs coming out on the short end of settlements.

“The real question is where is all of this money going?” asks Manzo. “The state needs to answer this question. Since the state did not keep track of PAGA prior to 2016, you can see the trial attorneys have been ripping off the state as well.”

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Organizations in this Story

Santa Clara County Superior CourtCalifornia Business and Industrial Alliance

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