Supreme Court Limits CA Labor Law, A Blow To Vulnerable Workers

The U.S. Supreme Court Wednesday placed limits on a state labor law that allows private lawsuits on behalf of groups of workers.

The Private Attorneys General Act, (PAGA), has allowed employees to pursue civil penalties for labor code violations as proxy for the state of California, according to a statement from Rob Bonta, California Attorney General.

It’s played an important part in ensuring fair treatment of vulnerable workers, such as those in retail or fast food.

Under yesterday’s decision, workers will only be able to pursue their individual PAGA claims through arbitration, rather than doing so with other impacted workers.

George Azadian, an L.A. employment attorney, said the ruling was disappointing.

“Basically, a lot of labor code violations may not add up to a whole lot for any one individual person, maybe a few hundred to a few thousand dollars in some cases for things like missed meal periods, missed rest periods, or noncompliant wage statements,” Azadian said.

“But when you are able to aggregate those with many individuals, all of a sudden it turns up the stakes and gets employers to actually have to do the right thing or face the consequences.”

PAGA was passed in 2004 to protect the rights of workers. Azadian said the Labor Workforce Development Agency didn’t have the resources to go after employers violating the labor code, and gave private attorneys like him the ability to sue an employer, not just for the individual's own behalf, but for other employees too.

The California Business Industrial Alliance, (CABIA), a coalition of California employers, supported the ruling claiming the law has been used excessively. On its website, it has a list of attorneys it believes are abusing PAGA, pointing to more than 5,000 PAGA complaints in 2016, a 1440% increase from when the law first went into effect.

Consequences For Vulnerable Workers

Daniel Flaming, president of the Economic Roundtable, a Los Angeles research group that focuses on economic, social and environmental issues, said his organization was following this case closely because of the impact it would have on the state’s most vulnerable workers, especially those part of the informal gig economy.

“It's about economically desperate workers,” Flaming said. “There's a lot of people who are economically desperate, and because of that are vulnerable to exploitation, and are being cheated.

“Wage theft is a term you hear a lot, which is not getting overtime rates when you work overtime, not getting paid for all of the hours of work, or not getting your last paycheck when you leave the job,” he said.

Flaming said these types of workers typically have smaller claims, which means employment attorneys are less likely to take on these types of cases.

“As I understand, over a half of the judgments around labor law violations go uncollected,” Flaming said.

“One of the ways to get legal representation is for lawyers to be able to bundle these cases because it's not worth the lawyer's time for one small case. But if you get 500 of those cases or 1,000 of those cases, it becomes a significant judgment,” he said.

Flaming said arbitrations can be more favorable for the employer, leaving the California’s labor commissioner’s office as workers' only recourse.

“They don't have field investigators to go out and check out cases,” Flaming said. “They don't have hearing officers to hear cases once they're filed. So even though, in theory, the state has an enforcement mechanism for labor law, the reality is that it's a very meager resource for most workers.”

Azadian said there is a glimmer of hope.

“The good news about the case is California can fix the statute to just change the standing requirement of who could bring PAGA action in state court on behalf of everybody else,” Azadian said, adding that Justice Sotomayor's concurring opinion lays out how to do it.

“That's a relatively quick fix that California legislators can do.”

California Attorney General Rob Bonta issued a statement that every worker is entitled to dignity and respect on the job.

“For decades, PAGA has been a critical part of the state’s efforts to help make that a reality,” the statement read. “Whether it’s protecting overtime pay or taking on unsafe working conditions, PAGA strengthens California’s ability to tackle labor violations.

“While today’s decision is disappointing and adds new limits, key aspects of PAGA remain in effect and the law of our state. Workers can continue to bring claims on behalf of the State of California to protect themselves and, in many instances, their colleagues all across California. At the California Department of Justice, we will continue to stand with workers to fight for their rights everywhere.”