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California’s unique employee lawsuit law could be repealed if ballot measure passes

January 23, 2024

In 2003, just five days after California voters recalled then-Gov. Gray Davis, he signed landmark legislation making it easier for workers to sue their employers for violations of state labor law.

The Private Attorneys General Act, or PAGA, allowing employees to file suits not only for themselves but on behalf of other workers, is unique to California.

Davis’ action, an obvious payback to unions that had supported him in the recall election, ignited a political and legal struggle that will reach a climactic point in November when voters decide the fate of a business-backed ballot measure that would, in essence, repeal PAGA.

The measure’s sponsor, Californians for Fair Play and Accountability, is already running ads, contending that PAGA ill-serves employees while enriching lawyers who file class-action lawsuits.

PAGA backers – personal injury attorneys and labor unions, particularly – argue that the law is needed because the state’s labor commissioner lacks the resources to vigorously enforce workplace laws, thus allowing employers to get away with violating them.

The ballot measure duel climaxes two decades of skirmishing in the Legislature and the courts. Its advocates have, with some success, expanded the law’s reach by persuading the Legislature to enact a raft of new workplace laws that could be enforced.

The most far-reaching is the 2019 law that codified a state Supreme Court decision and tightly limited employers’ use of independent contractors, thereby converting hundreds of thousands of Californians into payroll employees. The U.S. Department of Labor recently adopted similar regulations.

Other labor law expansions passed by Gov. Gavin Newsom have included a measure protecting employees that refuse to work if they believe conditions are unsafe, and another requiring employers to disclose wage scales.

While the two sides were clashing in the Legislature, they were also fighting over the issue in federal and state courts.

In 2021, the U.S. Supreme Court handed employers a partial victory by declaring that workers who signed arbitration agreements could not later file PAGA suits. A delivery driver’s PAGA suit against his employer, alleging that he was unlawfully denied reimbursement for expenses, is pending in the California Supreme Court.

Late last week, the court declared that trial court judges don’t have the power to toss PAGA suits because of their complexity – a case arising from an Orange County worker’s claim that his employer violated break rules. It was a setback for employers who hoped that PAGA suits could be dismissed without a trial if a judge declared them to be unmanageable.

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Obviously, PAGA has not only survived various attempts by employers to shrink its reach but over the past two decades the Legislature and courts have, if anything, expanded its potential impact on employer-employee relations. A legislature allied with unions would probably continue to broaden the law’s applicability.

That’s why employers decided to take their issue to the ballot. The measure that’s qualified for the November election would repeal PAGA and, instead, beef up state enforcement of workplace rules.

Their campaign will stress the replacement provisions, labeling it the “Fair Play and Employer Accountability Act.” However, the official language for the measure stresses its repeal of PAGA, saying it “eliminates employees’ ability to file lawsuits for monetary penalties for state labor law violations,” echoing the opponents’ characterization.

The campaigns for and against the measure, therefore, will be a battle of perceptions. PAGA’s defenders will say it’s needed to protect workers from rapacious employers while its opponents will say it’s needed to protect workers and employers from rapacious lawyers.

CalMatters is a public interest journalism venture committed to explaining how California’s state Capitol works and why it matters. For more stories by Dan Walters, go to Commentary.

Orange County Register

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California’s unique employee lawsuit law could be repealed if ballot measure passes

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