Employers Protected from Out-of-Control PAGA Claims

California’s  Private Attorney General Act (PAGA) continues as a weapon of choice against employers, 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.

There is however some good PAGA-related news for employers. In Wesson v. Staples the Office Superstore, LLC,  the Court of Appeal has recognized a new defense that allowed Staples to defeat a store general manager’s (GM) attempt to impose PAGA penalties for allegedly misclassifying 346 GMs as exempt-from-overtime employees.

In Wesson, the trial court dismissed the PAGA claims as unmanageable after plaintiff acknowledged that establishing liability would require six days of evidence for each of the 346 instances – including examination of  individual store “size, sales volume, staffing levels, labor budgets, store hours, customer-traffic levels, products and services offered for sale, and many other variables” – resulting in an eight-year trial.  Plaintiff had also declined to provide a plan to show how the trial could otherwise be managed and simplified.

The Court of Appeal affirmed the dismissal, finding that such a lengthy trial would wreak havoc on the trial court, making it impossible to attend to its other assigned cases.

Take Away:  Not every PAGA case is complex.  Some involve only a few employees or issues that may be common to all, for example an across-the-boards defect in paystubs or failure to pay overtime to hourly workers.  However, a PAGA complaint that requires worker-to-worker analysis to determine liability may now be dismissed as unmanageable, leaving only the plaintiff’s individual claims to be decided.

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

See also:

• Update Cautionary Tale Episode 42A PAGA Monster Quelled for Now – Appeals Court Overturns Wal-Mart’s $102 Million Penalty and Damages Judgment (July 2, 2021)
• Good Workplace Policy is Boss – Our Template Handbook & Forms for 2021 (May 28, 2021)
• Cautionary Tale Episode 42 The PAGA Monster Is Hungry – Non-Compliant California Employers at High Risk under Special Law (May 14, 2021)

Helena Kobrin
Tim Bowles
September 17, 2021