To Speed Up Economic Recovery, Businesses Need PAGA Relief

For Golden State businesses trying to reopen following the coronavirus lockdown, there’s one big question to consider: What’s the temperature in your company’s bathroom?

Actually, that’s just one of hundreds of questions business owners struggling to get up and running again will be expected to answer. Get one wrong, and it can open you up to a lawsuit under the Private Attorneys General Act (PAGA) — a law that deputizes citizens to step in and enforce even the most minor infraction of California’s 1,100 page labor law digest. 

By the way, the correct answer of the bathroom temperature is 68 degrees. Even one degree lower, and it’s considered a violation. Don’t believe me? Just ask Big Lots, a company that’s currently staring down the barrel of a PAGA lawsuit over its own bathroom temperature. 

The suit was filed by Joseph Lavi, whose Beverly Hills law firm ranks 9th in our Hall of Shame for the number of PAGA suits it has filed. Perhaps Lavi can use the settlement money to buy himself a new car to match Daniel Gaines, another well-known PAGA lawyer who actually drives around in a Rolls Royce that says “MR PAGA” on the license plate.

Big Lots isn’t the only target. During just one weekend in May, over 150 PAGA notices went out, averaging 31 future lawsuits a day. Businesses targeted by these suits included Goodwill Industries, Cedars-Sinai Hospital, and Hometown Buffet.

This PAGA blitz has been going on since the start of the coronavirus crisis. The organization I run, the California Business & Industrial Alliance (CABIA), has been fighting to stop it. However, it appears our legislators would rather satisfy the self-interested demands of their political allies than protect the wellbeing of business owners.

CABIA sent a letter to Governor Newsom asking for a moratorium on lawsuits filed under PAGA during the coronavirus crisis. In our letter, we noted that PAGA cases were being filed at an alarming rate — even against already vulnerable businesses, or those serving on the frontlines of the crisis. A small sampling of the businesses being targeted includes CareChoices Hospice and Palliative Services, Inc.; Alliance Healthcare Services, Inc.; and Atria Senior Living. 

In response, dozens of labor unions and their allies — including trial lawyer advocacy groups — wrote their own letter calling for the Governor to reject CABIA’s request.

One well-known advocacy group, Consumer Attorneys of California (CAOC), joined the list of signers. CAOC’s recent lobbying budget was close to $5 million dollars. And there’s a handful of Political Action Committees (PACs) spending money on the group’s behalf. One affiliated PAC, the Consumer Attorneys Association of Los Angeles PAC, spent $68,000 in political contributions in 2018 alone.

Smaller to medium sized business owners don’t have that kind of time or money to devote to lobbying legislators, or making campaign contributions. They’re busy enough trying to run a business or navigate the hundreds of rules laid out in California’s labor code.

But trial lawyers, who arguably benefit the most from large PAGA settlements, have a keen interest in keeping the law alive and well (and the funds to do so). Meanwhile, their firms keep hundreds of business owners tied up in often financially devastating legal battles.

As of now, CABIA’s request for a moratorium on PAGA suits has gone unanswered. While this outcome is disheartening, it doesn’t come as a surprise. We’ve also spoken up about other harmful laws in California, including AB5, with little response from Sacramento. 

California employers have it hard enough trying to get their businesses back on track. The least our legislators can do is take some advice from actual business owners, instead of the interest groups bankrolling their political campaigns.