California to change law allowing workers to sue employers

A last-minute political compromise has sparked an effort to repeal a California law that allows workers to sue employers for workplace violations — a legal tool that has cost companies billions of dollars.

The compromise, announced Tuesday by Gov. Gavin Newsomfollowed meetings with business leaders and the powerful California Labor Federation about ways to amend the 2004 law, the Private Attorneys General Act.

The law, known as PAGA, allows employees to file civil complaints against companies on their own behalf and that of their coworkers, sometimes costing them tens of millions of dollars in settlements.

“We came to the table and struck a deal that works for both companies and workers, and that will deliver needed improvements to this system,” Mr. Newsom said in a statement Tuesday. “This proposal maintains strong protections for workers, incentivizes businesses to comply with labor laws, and reduces litigation.”

a study A report released in February by a coalition opposing the law found that it had cost companies about $10 billion since 2013. The same report found more than 3,000 proposed settlements under the law in 2022, a tenfold increase from 2016. (In most cases, the state records the settlement proposals, but not the amount ultimately paid.)

In 2023, Google settled for $27 million after employees used the law as a basis to accuse the tech company of unfair labor practices. And in 2018, Walmart employees won a $65 million settlement after accusing the retailer of not providing enough seating for employees.

Business groups got a repeal measure on the November ballot. They agreed to withdraw the measure once legislation reflecting the compromise is passed and signed into law.

Trade union organizations see the law as a necessary check on companies.

a recent report of the UCLA Labor Center found that the future ballot measure would effectively end “one of California’s strongest remaining tools for workers to prevent and correct wage theft and other workplace abuses,” said Tia Koonse, the center’s legal and policy research manager.

The compromise calls, among other things, for creating higher fines for employers who violate labor laws and increasing the amount of fines that go to employees from 25 to 35 percent. It also stipulates that all legal action must be taken by the employee who experiences the violations described in the lawsuit.

“This package provides meaningful reforms that ensure workers continue to have a strong tool to resolve employment claims, while also limiting frivolous lawsuits that have cost employers billions without benefiting workers,” said Jennifer Barrera, president of the California Chamber of Commerce, in a statement.

Lorena Gonzalez, the leader of the California Labor Federation, said in a statement that her group was pleased “to have negotiated reforms to PAGA that will better ensure that employer abuses are cured and workers are cured more quickly.”

“PAGA is an essential tool to help workers hold companies accountable for widespread payroll fraud, safety violations and misclassification,” she said.

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