The California Business and Industrial Alliance (CBIA) has asked Gov. Newsom to issue a 90-day moratorium on Private Attorneys General Act (PAGA) lawsuits until after the COVID-19 infection crisis has passed. Tony Manzo, CBIA president, argues that trial attorneys are taking advantage of the coronavirus to threaten health care businesses.
Last week alone, 167 claims were filed under PAGA, according to Manzo.
"These claims, while lucrative for trial lawyers, often cost businesses thousands if not millions of dollars in settlement and legal fees for even a minor infraction of California’s labor code," Manzo wrote in his letter to the governor.
PAGA confers a private right of action to employees to prosecute labor code violations and permits employees to keep 25% of civil penalties collected. The remaining 75% is awarded to the state.
"Aggrieved employees typically recoup far less," said Manzo of the worker incentive.
The spread of COVID-19, otherwise known as coronavirus, the past few weeks has caused thousands of California employers to layoff employees or close down their businesses, according to a press release.
Despite this, trial attorneys continue to show no mercy for the Golden State’s front line businesses—including hospitals, senior care homes, and in-home care services—as well as hard-hit industries like restaurants and hotels, according to media reports.
"Fortunately, there is a way for you to protect our state’s already vulnerable businesses from falling prey to unscrupulous trial attorneys while the crisis over the coronavirus continues," Manzo states in his letter. "An executive order should be signed that would put a moratorium on PAGA lawsuits for the next 90 days."
The governor's office did not immediately respond to the Southern California Record's requests for comments.
"It’s shameful that trial attorneys are targeting our state’s hospitals and health care services," Manzo said. "These businesses and their employees are working hard to keep us all healthy and safe. They should not be rewarded with financially crippling PAGA suits."
Hospitals and health care services targeted in the past week by PAGA suits include Cedars-Sinai Medical Center, CareChoices Hospice and Palliative Services, Inc., Hollywood Health System, Inc., Alliance Healthcare Services, Inc, Townsgate In-home Services, Atria Senior Living and Fresenius Medical Care Holdings, Inc.
"As the virus continues to wreak havoc on our economy, these lawsuits could spell even more ruin for much-needed Golden State medical services and businesses at-large," Manzo told the governor. "While the businesses listed above—as well as many more on the frontlines of this public health crisis—face one of the most difficult periods of economic upheaval in California’s history, they now must deal with an expensive legal battle as well."