The battle between companies and their workers’ right to sue

Tired of losing billions to worker lawsuits, California business leaders are betting millions that voters will eliminate the lightning rod Private Attorney General Act and give enforcement authority to a historically underfunded state agency.

“We see thousands and thousands of PAGA cases,” said David Lanier, using the acronym by which this citizen-driven enforcement system is known.

Lanier, a former secretary of the Labor and Workforce Development Agency, has taken an advocacy role for the initiative. “It’s not good for employees. For employers, it’s a no-win, it becomes a shakedown. But it’s an absolute cash cow for employment attorneys.”

Backers say the law they would like to change has cost them some $5 billion in settlements and penalties in the past five years.

The proposed initiative, aimed at the November ballot, would repeal a 2004 law that allows workers to file lawsuits on their own behalf and on the behalf of other workers to get compensation for certain labor-law violations.

Cash cow or not, the law has generated enormous settlements and penalties. Backers – including car dealers, farmers, trucking companies, restaurateurs – say the law they would like to change has cost them some $5 billion in settlements and penalties in the past five years.

“That gives (attorneys) five billion reasons to oppose this,” said Lanier.

Mariko Yoshihara, legislative counsel and policy director for the California Employment Lawyers Association, said that if PAGA were eliminated, employers would indeed spend less on settlements and penalties. But, she said, that would give them less incentive to fix the wage-and-hour violations that prompted the action in the first place.

“They’ve stolen $5 billion from workers, and they don’t want any enforcement.” — Lorena Gonzalez

“I feel strongly that this is an erosion of the ability of workers to join together for their rights,” said Yoshihara. “That seems to be what employers are most afraid of.”

It was unclear whether organized labor might take a role in the ballot battle.

“If labor ever wanted to fix it, this is the recipe,” said Lanier.

Or not.

Lorena Gonzalez, the former Assembly member who sought employee rights for gig workers, is the incoming head of the California Labor Federation. And she’s not buying it.

“Companies that violate labor laws think this is a good idea,” she said.

“They’ve stolen $5 billion from workers, and they don’t want any enforcement,” she said. “They’d rather leave it to an underfunded agency.”

The Labor Commission historically has lacked the resources to rigorously enforce labor law, but currently has a reserve of about $100 million.

At the time PAGA was enacted in 2004, lawmakers worried the Labor and Workforce Development Agency lacked resources to investigate every accusation of violation.

That number, however, is how much the nonpartisan Legislative Analyst thinks it will cost every year to fund a beefed-up enforcement operation. In addition, the state could lose millions more because fewer cases will mean fewer penalty dollars, which are split 75/25 between the state and the worker who initiated the complaint.

At the time PAGA was enacted in 2004, lawmakers worried the Labor and Workforce Development Agency lacked resources to investigate every accusation of violation. With PAGA, however, workers enforce the Labor Code, with state permission, through private litigation. It was seen as a tool especially suited to go after labor practices that fall hardest on the lowest paid workers.

Initiative backers must collect 623,212 valid signatures by early June to qualify their measure for the general election ballot. As of February, the Secretary of State reported that backers had submitted 25 percent of the signatures required. Backers this week said they are now closer to 75 percent.