CalChamber Board Endorses California Fair Pay and Employer Accountability Act

The California Chamber of Commerce Board of Directors has voted to support the California Fair Pay and Employer Accountability Act, a reform initiative that would repeal the Private Attorneys General Act (PAGA) and replace it with enhanced enforcement mechanisms by the Labor Commissioner.

“This initiative eliminates an abusive method for trial attorneys to file frivolous claims, and provides a pathway for employees to pursue claims for wages and penalties, where the employee keeps 100% of the recovery” said CalChamber President and CEO Jennifer Barrera.

Ballot Initiative

The California Fair Pay and Employer Accountability Act would: (1) repeal the current process that allows attorneys to file frivolous claims; (2) create a process for employees to efficiently recover any unpaid wages and penalties through the Labor Commissioner’s office; (3) double penalties for willful violations; and (4) provide the employee with 100% of the recovery, rather than having to share it with an attorney and the State. The initiative also creates a Consultation and Publication Unit to provide confidential consultation to employers and binding compliance letter advice to be posted on the unit’s website. Finally, this initiative would prohibit arbitration of hearings before the Labor Commissioner.

Lawsuits filed under PAGA have increased more than 1,000% from the law’s first year in effect with the Labor and Workforce Development Agency (LWDA) receiving approximately 4,000 PAGA notices each year since 2014. The profusion of PAGA lawsuits has been driven by significant monetary awards that can be leveraged against an employer for minor violations.

These lawsuits, however, have not increased the recovery amount employees receive or protected their interests. These lawsuits primarily benefit the attorneys. After reviewing more than 1,500 PAGA settlements, the LWDA gave plaintiff’s attorneys “a fail or marginal pass,” at adequately protecting the interests of aggrieved employees.

“Voters should approve this important reform measure for the benefit of workers and employers. This initiative will ensure legitimate claims are resolved in a timely fashion with workers receiving awards, rather than trial attorneys. In addition, the measure will allow employers to invest more revenue in their employees and operations rather than defending themselves against frivolous lawsuits,” Barrera said.