August 1, 2017
Compliance Matters
In 2004, the California legislature passed the Private Attorneys General Act ("PAGA") to remedy what the legislature perceived as systemic under-enforcement of the state's many worker protections. This under-enforcement was a product of two related problems. First, many Labor Code provisions contained only criminal sanctions, and district attorneys often had higher priorities. Second, even when civil sanctions were attached, the government agencies with existing authority to ensure compliance often lacked adequate staffing and resources to police labor practices throughout an economy the size of California's. To remedy these problems, the Legislature adopted a new schedule of civil penalties significant enough to deter violations, and then deputized employees allegedly harmed by the labor violations to sue on behalf of the state and collect penalties, to be shared with the state and other affected employees.

PAGA cases can be very expensive. If a PAGA claim is successful, the court may award up to $200 per employee, per pay period, for each violation of the Labor Code. In some cases, this quickly can add up to thousands or even millions of dollars. The plaintiff and other affected employees receive 25 percent of the total recovery, with the remaining 75 percent paid to the state government. As an added incentive, the lawyers bringing the case also are entitled to have the employer pay their reasonable attorney's fees, which may be even higher than the underlying penalties. This means that more employees and their lawyers will be jumping on the PAGA suit bandwagon.

Background :  In Williams v. Superior Court, the California Supreme Court ruled that a large retail chain, Marshalls, must disclose contact information for its hourly employees throughout the state, even though the employee only worked for a single store in Orange County. Lower courts were divided on this issue, so the Supreme Court weighed in and decided that the statewide discovery sought by the employee and his lawyer was appropriate.

The lower court had required Marshalls to turn over contact information only for hourly employees at the one store in Costa Mesa which employed the plaintiff in the case, Michael Williams. The Supreme Court disagreed and ordered the company to give Mr. Williams the statewide information which he and his lawyer were seeking.

Williams's lawsuit is a typical PAGA claim. It accuses Marshalls of failing to provide meal and rest periods to Williams and other hourly employees. According to Williams, on a companywide basis, Marshalls understaffed its stores, required employees to work without pay during meal periods, directed its managers to erase meal period violations from time records, and adopted a policy to pay no premiums for missed breaks. Williams also claims that Marshalls failed to pay wages timely or provide complete and accurate wage statements to Williams and other employees, and that it required Williams and other employees to carry out company business, including "bank runs" and travel for training sessions, without reimbursement.

What this case means for you :  More PAGA suits are coming. The ruling makes PAGA lawsuits even more enticing for plaintiffs' lawyers. PAGA cases are easier to bring than class actions because the employee will not have to go through the cumbersome task of getting court approval to proceed with the class claims. Instead, all a plaintiff has to do is file a claim notice online with the state Labor and Workforce Development Agency ("LWDA") and pay a $75 filing fee. The LWDA has 60 days in which to review the PAGA notice and decide whether to take action in response. In our experience, the LWDA rarely takes any action. The plaintiff must wait 65 days after submitting information before filing a PAGA lawsuit.

One likely upshot of the Williams decision: the cost of defending PAGA lawsuits will go up. So too will the cost of settlement. This underscores the need for employers to proactively scrub all of their wage-hour practices to ensure strict compliance with the Labor Code.

If you have any questions about the matters discussed in this issue of Compliance Matters, please call your firm contact at (818) 508-3700 or visit us online at .

Richard S. Rosenberg
John J. Manier
Ballard Rosenberg Golper & Savitt, LLP 

15760 Ventura Blvd.
Eighteenth Floor
Encino, CA 91436
(818) 508-3700

6135 Park Drive South
Suite 510
Charlotte, NC 28210
Matthew Wakefield:
(704) 846-2143 


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