A controversial ballot initiative going before California voters in November would, if successful, eliminate the state’s Private Attorneys General Act (PAGA) that has been used to hold employers accountable and replace it with new legislation that will hurt workers’ rights and benefit employers.
The move would leave enforcement entirely to a state agency that has proven ineffective in the past. Law360 reports that the proposed law, the California Employee Civil Action Law Initiative, is backed by a pro-business political action committee and is on the Nov. 5 state ballot.
What the New PAGA Replacement Legislation Means
Should it pass, the new law would replace California’s PAGA, enacted in 2004. PAGA created a private right of action allowing wronged employees to sue their employers on behalf of the state over labor law violations.
PAGA essentially allows workers to act on behalf of the state in collecting civil penalties for labor violations by employers against their employees.
To prevent employees from being held accountable, the ballot initiative seeks to limit enforcement of this to the state and prevent attorneys, which would decrease the number of employees who can find an attorney willing to hold employees accountable for their repeated law violations.
The most controversial provision requires that the California Division of Labor Standards Enforcement be a party to all labor complaints, making the statute ineffective and meaningless.
Employees’ Rights Will Be Negatively Affected
If this new legislation replaces PAGA, there is no question that employees’ rights in California will be adversely affected. As it is, employees have very limited options to hold their employers accountable for labor law violations.
This is partly because arbitration provisions and class action waivers are becoming increasingly common in employment, including those hidden in employment handbooks, onboarding documents, and otherwise being hidden from employees (including the consequences of them) when they begin their employment.
While some provisions in the ballot initiative may seem worker-friendly, this is really not the case, mainly because the proposed law requires DLSE to be a party to a complaint. PAGA was enacted because the state’s labor enforcement agency did not have sufficient resources to enforce the state’s numerous labor laws. That has not changed.
PAGA also addressed this rising trend of employers limiting workers’ ability to hold them accountable by including class action waivers and arbitration provisions in their employment contracts.
However, the California Supreme Court has held that representative actions under PAGA can proceed despite any arbitration agreement. The initiative is just another way for employers to try and avoid this accountability, knowing the state agency will not be able to enforce the labor code sections fully. That arbitration will then make any complaints (to the extent employees even try to bring them) individual cases that will not change an employer’s practices.
In addition, opponents note that a recent state Legislative Analyst Officer report clarifies that this initiative would cost California more than $100 million annually in increased enforcement costs while decreasing labor law enforcement revenues by tens of millions of dollars.
Employers and employer-related organizations (who are backing the ballot initiative) claim this will help employees when all it does is attempt to allow employers to avoid their own legal obligations.
Wage Theft is a Problem in California
Wage theft in California has been a significant concern, impacting low- and high-wage workers across various industries. Statistics show California workers lose billions of dollars annually due to wage theft, including unpaid overtime, minimum wage violations, and off-the-clock work.
A study by the Economic Policy Institute estimated that in 2019, California workers experienced wage theft amounting to approximately $8.4 billion.
Industries most affected by wage theft include agriculture, construction, hospitality, and retail. Arbitration clauses and class action waivers significantly impact the ability to hold employers accountable for this, as mentioned above.
Immigrant workers, particularly undocumented immigrants, are disproportionately impacted due to fear of retaliation and lack of awareness about their rights. Despite California’s robust labor laws to protect workers, enforcement remains a challenge, with many cases going unreported or unresolved.
UCLA Labor Center and other advocacy groups have issued their own reports that, without these private lawsuits, the state’s Labor Commissioner’s office cannot take on thousands of new complaints involving wage theft, which is a massive problem in California.
Proponents of the ballot initiative also claim there are too many PAGA lawsuits (which are just employers unhappy that they are being held accountable) and that they affect the economy by hurting employers.
However, the UCLA Labor Center’s report on California’s Hero Labor Law found no evidence of a flood of frivolous litigation or any empirical evidence that PAGA hurts California’s economy. In fact, it found that PAGA helped vulnerable workers fight wage theft and increased employer compliance with the laws.
Repealing PAGA Will Hurt Workers
Repealing PAGA in California would significantly affect workers’ rights and protections. PAGA empowers employees to act as private attorneys general to enforce state labor laws for themselves and other aggrieved employees.
By allowing workers to bring representative actions against employers for labor violations, PAGA is a crucial deterrent against wage theft, discrimination, and other workplace abuses.
Without PAGA, workers would lose a vital tool for holding employers accountable for California’s labor law violations. Individual employees often lack the resources and leverage to challenge unlawful practices independently, especially against larger corporations with legal teams.
PAGA enables collective action by pooling resources and strengthening workers’ ability to seek justice and recover unpaid wages, penalties, and damages.
Repealing PAGA could also lead to decreased enforcement of labor standards, as state agencies cannot often investigate and pursue every violation effectively. As addressed above, PAGA was enacted because the state agency did not have sufficient resources to enforce the state’s numerous labor laws, which is still the case in California.
Taking away PAGA, which allows such enforcement by employees, will enable employers to further take advantage of employees without repercussions (including due to arbitration agreements and class action waivers). This could embolden unscrupulous employers to cut corners, exploit workers, and flout labor laws with impunity.
Repealing PAGA would weaken workers’ rights, diminish accountability for employers, and undermine efforts to maintain fair and equitable workplaces in California.
Top-Rated Employment Attorneys
We have recovered millions of dollars for workers whose rights have been violated. Our team handles cases involving wage and hour violations, wrongful termination, hostile workplaces, denial of meal and rest breaks, and overtime issues, among others. Contact our top-rated California employment lawyers today for a free consultation if you have a case.
Ian Silvers
With a strong background in employment law, Ian Silvers is passionate about defending and upholding workers' rights. In a variety of situations involving discrimination, harassment, retaliation, and wage and hour issues, he represents workers. Silvers works in the class action litigation department at Bisnar Chase, which is responsible for managing wage and hour class actions.
