California needs to make major progress when it comes to preventing abusive lawsuits. The state earned the title of “Judicial Hellhole” again this year, calling attention to the fact that California’s legal climate is out of balance, and things are getting worse each year.
California earned this title because of laws like the Private Attorney General Act of 2004 (PAGA), which allows employees to bring lawsuits directly against their employer for a variety of California Labor Code violations – no matter how trivial. No harm or damages must be shown in order for an employee to sue under PAGA, enabling trial lawyers to file expensive and abusive lawsuits against employers seeking quick settlements over trivial mistakes, such as typos on documents. These abusive lawsuits make California an even more difficult place to own and operate a business.
The current law allows trial lawyers to file multimillion dollar lawsuits over trivial paycheck violations, such as not listing the complete employer’s name and address on pay stubs properly. These minor mistakes have statutory penalties that can go back four years at a cost of $100/$200 per paycheck violation.
A handful of lawyers are currently making a killing finding minor mistakes on an employee’s paycheck stub to file multimillion dollar lawsuits. These lawsuits are not protecting the citizens of California as the law intended. Instead, the law benefits greedy personal injury lawyers who are jeopardizing California’s economy.
For instance, a recent story on KGET-TV in Bakersfield highlighted the case of B and L Casing, a local company that was hit with one of these lawsuits and settled for $1.5 million. The company is now planning to move out of California – taking jobs with it.
Thankfully, California has an opportunity to reverse some of the damage done by PAGA. AB 588 by Assemblywoman Shannon Grove would give businesses a chance to correct a paycheck error within 33 days before getting hit with a lawsuit. Currently, the law does not give businesses a chance to fix insignificant mistakes on their paychecks before getting hit with such penalties.
AB 588 is a reasonable and fair approach that would help stop shakedown PAGA lawsuits against California businesses while still encouraging them to fix issues of minor noncompliance with the California labor board. AB 588 will be heard in the Assembly Labor and Employment Committee on April 22nd.