While there have been a few employer-favored developments,  claims under California’s  2004 Private Attorneys General Act (PAGA) continue to rise, permitting a single worker to seek Labor Code penalties on behalf of a company’s entire payroll.  Facing potentially crushing liabilities or without the resources to fight bogus accusations, many employers seek to promptly settle such claims, further encouraging PAGA lawyers to find other targets.

A recently encountered example: a building contractor, to its credit, had for years ensured its field workers accurately clocked out and back in for their mandated meal periods.  Yet, facing a seemingly innocuous PAGA accusation that the company deprived its crews of their “lunch rights,” those records yielded an irregular pattern of meals potentially in Labor Code violation.  The prospective impact of this single accusation? 30 workers, average 1.5 violations per week, $100/first violation and $200/further violation per worker per one-week pay period over minimum 12 months = $468,000.

The Supreme Court continues to confirm the unforgiving nature of this law.  In Estrada v Royalty Carpet Mills (January 18, 2024), the Court invalidated a 2021 lower appeals court ruling that employers could nuke PAGA claims for their unmanageability. See, All Is Not Lost – Employers Protected from Out- of- Control PAGA Claims (September 17, 2021).

Management-side law firms have responded with helpful insights on how employers can still tactically deal with such law suits.  See, e.g., Estrada v. Royalty Carpet Mills Largely Curtails Manageability Defense in California PAGA Cases (January 19, 2024); and The California Supreme Court Pulls the Carpet Out from Underneath Employers (January 18, 2024).

We aim to similarly assist our clients ensnared in such litigation. However, very few California employers have the resources necessary to make such moves, particularly all the way to a trial.

The Estrada decision once again confirms PAGA is here to stay.  It takes but one ex-worker – perhaps rightfully disgruntled, perhaps not – and a seasoned plaintiff’s lawyer to crank-up a suit. PAGA requires no permission from any co-worker and no co-worker can opt out. The defendant employer in Estrada case had left California in 2017 for the high cost of doing business here and, with the case now headed back to the trial judge, still faces liability under this law.

Take-Aways:

By far the best PAGA defense is to never present or perpetuate the grounds to invite one. With the aid of experienced employment lawyers, thoroughly and regularly audit all relevant workplace pay policy and practices.  Promptly correct all irregularities found.  Spotless – or, at least, near spotless — records and protocols are a powerful deterrent and the most effective response if, heaven forbid, PAGA comes knocking from the depths.

For further information, please contact Tim Bowles, Cindy Bamforth or Helena Kobrin.

See also:

• Friday, February 23, 2024 Annual Seminar for Employers Covering Employment Legal Essentials and New Workplace Laws
• PAGA Monster Quelled … For Now – Appeals Court Overturns Wal- Mart’s $102 Million Penalty and Damages Judgment (July 2, 2021)
• Please: Document Workplace Meal Breaks – Require Employees to Clock Out and Back In on Their Meals (June 4, 2021)
• The PAGA Monster Is Hungry – Non-Compliant California Employers at High Risk under Special Law (May 14, 2021)

Tim Bowles
February 2, 2024