Might There Be an End in Sight to the Private Attorney General Act?
On November 28, 2018, a newly created association representing California-based employers called the California Business & Industrial Alliance filed a complaint for injunctive and declaratory relief against the California Attorney General seeking to enjoin the enforcement of the Private Attorney General Act (PAGA) and declare it unconstitutional. While PAGA took effect in 2004 – to purportedly provide a means to help employees right workplace wrongs when the state does not have the time or resources to do so, or where the Labor Code did not previously have a civil penalty or other sanction attached – what it has turned into is a tool used against all types of businesses to try to obtain huge settlements and judgments often arising from inadvertent payroll errors, without the burden of meeting the requirements for class certification and without being subject to arbitration agreements. The California Business & Industrial Alliance alleges that PAGA, as written and in practice, is unconstitutional, and the state should be required to enforce its own laws rather than transferring such power to private attorneys who operate for their own personal gain. As alleged by the California Business & Industrial Alliance, PAGA has become “a tool of extortion and abuse by the Plaintiffs’ Bar, who exploit the special standing of their PAGA plaintiff clients to avoid arbitration, threaten business-crushing lawsuits, and extract billions of dollar in settlements, their one-third of which comes right off the top.” Only time will tell how the court reacts to these allegations, but at least the fight to end PAGA has been initiated.