Legislation opposed by the California Chamber of Commerce and a large coalition as a Cost Driver that would undermine a historic 2024 agreement between business and labor groups to reform the Private Attorneys General Act (PAGA) cleared the Senate Appropriations Committee on May 23.
SB 310 (Wiener; D-San Francisco) would create a new private right of action for wage and hour penalties to be manipulated by trial attorneys, undermining the 2024 PAGA reform, which sought to reduce avenues for litigation abuse and overall costs on employers.
Need for PAGA Reforms
The need for the PAGA reforms was well-documented. A report by the former leaders of California’s labor and occupational safety agencies estimated nearly $10 billion was awarded in PAGA court cases between 2013 and adoption of last year’s reforms. But due to significant attorney fees, workers received only a small portion of the awards.
The unreformed PAGA took effect in 2004, spawning a huge increase — more than 1,000% — in lawsuits. By 2014 and every year after, the Labor and Workforce Development Agency was receiving about 4,000 PAGA notices annually.
Labor claims filed under the pre-reform PAGA took twice as long to resolve and provided workers with only one-third of the compensation compared to employment claims reviewed by state regulators.
Fix PAGA Coalition Reacts
In response to SB 310 advancing to the Senate Floor, the FixPAGA Coalition — represented by the California Chamber of Commerce, California New Car Dealers Association, California Restaurant Association, Western Growers Association and California Retailers Association — issued the following statement on May 23:
“What a difference a year makes, and not for the better.
“Last spring, the Legislature passed two bills that enacted a vital reform of the Private Attorneys General Act (PAGA), a 2004 law that had done less to benefit California workers than enrich trial attorneys at the expense of business owners and their families.
“Governor Newsom’s signature on those bills led to supporters of PAGA reform withdrawing their ballot initiative, a comprehensive proposal that was supported by hundreds of thousands of California voters demanding change. The bill package was supported by the business community and labor unions, and secured unanimous votes in both houses.
“Today, the California Senate made it seem as though that agreement was written with invisible ink.
“We are dismayed that Senate leadership has advanced Senate Bill 310 to the full chamber for a floor vote next month – a deeply flawed proposal that seeks to undo the thoughtful and balanced approach toward reforming PAGA that was enacted last year.
“SB 310 would generate a flurry of frivolous lawsuits, a stunning about-face from the 2024 laws designed to curb litigation abuse. It would create a new pathway for trial attorneys to exploit penalties as leverage in meritless cases.
“We urge the Senate to stand by the agreement that is represented in the two bills signed into law less than a year ago. Californians should be able to trust that thoughtful negotiations, producing sound public policy, are more important than back-room political dealmaking.”
Jennifer Barrera, President & CEO, California Chamber of Commerce
Brian Maas, President, California New Car Dealers Association
Jot Condie, President & CEO, California Restaurant Association
Dave Puglia, President & CEO, Western Growers Association
Rachel Michelin, President, California Retailers Association
