California In Motion: Changes Expected for Law Allowing Employees to Sue Employers

An Essential Reformation in California’s Labour Law

In what can be viewed as a landmark decision affecting California’s labor and business sectors, Governor Gavin Newsom announced a proposed modification for a law which has been a source of tension between workers and employers for the last 20 years.

Primarily, the law known as the Private Attorneys General Act (PAGA), established in 2004, allowed workers to take legal recourse against employers for workplace violations. While the Act served as a protective measure for the labor force, it has financially drained businesses due to numerous litigations, costing them billions of dollars since its implementation.

Collaborative Discussions and Agreements

The significant update on this legal instrument came as a result of an intensive discussion with business leaders and the powerful California Labor Federation, leading to a consensus on necessary changes for PAGA. “We came to the table and hammered out a deal that works for both businesses and workers, and it will bring needed improvements to this system,” Mr. Newsom shared in a statement.

The Impact Since the Inception of PAGA

Bearing the financial burden of the Act, a study by a coalition opposing the Act identified it had cost businesses around $10 billion since 2013. The escalation in these figures can be attributed to an alarming surge in proposed settlements under the law, witnessing a tenfold increase from 2016 to 2022.

Constructive Adaptations to the PAGA Law

In an attempt to bring a fair balance between labor protection and curtailing excessive litigation, a series of modifications within the law were agreed upon. These amendments will not just escalate penalties imposed on employers disregarding labor laws but also guarantee an increased amount of penalty money — now 35% up from 25% — being allocated to the employees significantly affected by the violations.

Responses from the Business and Labor Community

Jennifer Barrera, President of the California Chamber of Commerce, expressed her support for the proposal, stating, “This package provides meaningful reforms that ensure workers continue to have a strong vehicle to get labor claims resolved, while also limiting frivolous litigation that has cost employers billions without benefiting workers.”

Adding to the chorus of approval, Lorena Gonzalez, the leader of the California Labor Federation, quoted, “PAGA is an essential tool to help workers hold corporations accountable for widespread wage theft, safety violations and misclassification.” She expressed her satisfaction with how the reformations ensure abusive employer practices are addressed and workers are compensated quicker.

Anticipating Future Progress

This latest political compromise to update the Private Attorneys General Act can be perceived as a significant stride towards a more balanced labor law structure in California. With the business community agreeing to withdraw their measure to repeal the law from November’s ballot once the modification legislation is enacted and signed, it’s hopeful that a more harmonious business-labor environment is on the horizon.