LOS ANGELES – The state of California collected $88 million in penalties from employers last year in cases brought under the Private Attorney General Act (PAGA), a unique law allowing workers to sue on behalf of the state – nearly three times as much as in 2018 – according to a new report from the UCLA Labor Center.
"While some employer-backed lobby groups have articulated strong concerns about PAGA, we find no evidence of a negative effect on the economy or a flood of frivolous litigation," the report states.
However, a number of businesses and organizations around the state don't agree with that conclusion.
“The labor funded activist groups, the Center for Popular Democracy, the UCLA Labor Center, and the Partnership for Working Families, have teamed up to publish a new report calling PAGA a clear success haven't met Daniel Gaines, a top PAGA Trial Lawyer,” wrote Tom Manzo, Founder and President of the California Business & Industrial Alliance (CBIA), in a statement to the Southern California Record.
“Gaines is a partner at Gaines & Gaines, one of the state's most-prolific filers of PAGA lawsuits. In an apparent recognition of his ‘success,’ Gaines drives a white Rolls Royce with a license plate to identify a source of his wealth: MR. PAGA.”
Manzo continued, explaining that hundreds of trial lawyers have pursued this financial windfall, which empowers them to use the power of the state to threaten massive penalties over arcane violations of the state's 1,100-page labor code.
“More often than not, employers settle rather than risk financial ruin--netting a quick buck for all the Mr. and Mrs. PAGAs who make up California's trial bar,” said Manzo.
“The report's authors picked a series of unusual metrics to measure PAGA's success, such as the state's cut of PAGA financial penalties nearly tripling between 2018 and 2019. Let's be clear: Employer law-breaking did not triple between 2018 and 2019; rather, these increased penalties are a function of the flood of new PAGA notices being filed by trial lawyers. The growing dollar figure attached to PAGA is proof-positive that the law needs closer scrutiny by the state legislature.”
Manzo said that the report ignores that many PAGA violations have no impact on employee wages or working conditions and that the report extols how PAGA "allow[s] the state to collect millions of dollars in penalties from law breaking employers who would otherwise profit from exploiting workers." Additionally, he said that the report "justifies PAGA's vindication" by pointing the record $88 million of state funds that it's recovered in 2019 and that the expansion of a bad law is not proof of its success and, if anything, it provides more ammunition for reform efforts.
“This raises an interesting question: If PAGA is so great, why did the state's lawmakers see fit to exempt unionized construction businesses?” he questioned.
“Lawmakers interested in understanding the abuses of PAGA should first speak to the employers who are victims of the law--not the interest groups who cherry-pick data to paint a false picture of the law's impacts.”