California’s Private Attorneys General Act (PAGA) is broken, ineffective and inefficient for workers and unfair for thousands of businesses. Under the lawsuit-first system, workers get pennies on the dollar while lawyers make billions, and thousands of California businesses are targeted with predatory, shakedown lawsuits over minor errors.
California needs to create a better, fairer way, which is why CalChamber has proudly joined Fix PAGA. Fix PAGA is a broad, diverse coalition of businesses and industries advocating for the State Legislature to enact meaningful, necessary reform during the upcoming legislative session.
California’s Broken System
Enacted in 2004, PAGA was intended to be a more effective way to help workers resolve labor disputes. At the time, the Labor and Workforce Development Agency (LWDA), which investigates worker claims, was understaffed, and workers were unable to get resolution quickly. PAGA allows aggrieved employees to file lawsuits to recover civil penalties on behalf of themselves, other employees, and the State of California for Labor Code violations. Two decades later, PAGA’s lawsuit-first approach has failed.
Although LWDA has the authority to investigate claims, lawyers can’t collect fees through that process, so they urge employees to file lawsuits in court. On average, lawyers receive 33% or more of the total PAGA recovery, leaving very little for workers.
Through PAGA litigation, workers must also withstand lengthier resolution periods. State data shows it takes nearly two years on average for a PAGA court case to be resolved – almost twice as long as cases decided by LWDA.
Even the state’s own Labor Commissioner’s office found that PAGA’s lawsuit-first system “fell short of protecting the interests of the state and workers.”
Lawyers know that the mere threat of a lawsuit is likely to force a settlement – making family-run businesses, non-profits, local governments, school districts, labor unions and other employers across all industries prime targets for predatory lawsuits, often for minor technical violations.
PAGA lawsuits have resulted in more than $10 billion in payments from employers since 2016, with a significant chunk going to lawyers.
Creating a Better, Fairer System
It’s time for the California State Legislature to fix PAGA and expand on the existing LWDA processes, which are proven to resolve employee claims faster and provide workers with more restitution.
A lot has changed in the 20 years since PAGA was introduced. According to state budget documents, LWDA has approximately $250 million available for the 23/24 fiscal year, which would support staffing and administrative positions. Additionally, LWDA has a dedicated permanent funding source that’s flexible and not reliant on the State’s General Fund.
Legislative fixes the coalition is advocating for include:
- Faster resolutions for workers
- Ensuring most – if not all – of the money awarded through recovery goes directly to workers
- Tougher penalties on businesses that willfully violate labor laws
- Eliminating the need for costly, abusive lawsuits
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- The state should provide more information and guidance to businesses on navigating the Labor Code while allowing employers to correct mistakes and avoid costly legal challenges.
Coalition Activities & Get Involved
The Fix PAGA coalition recently launched a broad advocacy campaign, including mail and digital advertising, to educate legislators and voters on why PAGA reform is needed. The coalition is also meeting with legislators and staff to discuss reforms the state should prioritize during the upcoming legislative session.
The coalition is thankful to members who have agreed to meet with business owners and employees affected by PAGA’s ineffective and unfair system, and we look forward to continuing conversations into 2024.
If your chamber and/or members are interested in joining the coalition effort and getting involved, please visit the FixPAGA website.
