Commentary: Rewrite California’s outrageous wage and hour laws
Wage and hour laws are intended to protect workers, including some of the most vulnerable and lowest-wage earners, from getting short-changed for their labor.
Unfortunately, instead of a shield to protect workers, predatory personal injury lawyers have been using these laws as a sword to hold up small businesses.
One business owner in Long Beach was sued for more than $2 million in damages for alleged violations of California’s wage and hour law. The suit was so large because the trial lawyers did not sue for one particular grievance from an employee. Instead, they threw the proverbial book at him and sued for every possible violation in hopes they would catch the company in a technical violation.
Like many of these lawsuits, the business owner was given no opportunity to defend himself, to explain the policies put in place, correct any violations, or simply make it right with his employees.
Instead, he was forced to settle the lawsuit to avoid hundreds of thousands of wasted dollars in legal fees, with the trial lawyers receiving more than one-third of the settlement amount. The victims, the employees, received but a pittance.
California has some of the most onerous wage and hour laws in the country. Violations of California wage and hour laws often give rise to individual and class-action lawsuits under the Private Attorneys General Act of 2004 (PAGA). These suits seek civil penalties that would otherwise be collected by the state enforcement agency — known as the Labor and Workforce Development Agency. PAGA lawsuits increased more than 400% from 2005 to 2013.
Prevailing plaintiffs also recover attorney’s fees and costs. Violations of wage and hour laws often give rise to “stacking” claims for other violations. For example, an employee alleging shortened or missing meal periods might also claim incorrect wage statements for the same period, invoking separate penalties for the same incident. This “stacking” causes the damages to skyrocket against the small business for what common-sense suggests is just one violation of the law.
Stacking up higher damages is great for the lawyers, but terrible for small businesses. It’s also outside of the spirit of wage and hour laws, which is to help employees recover wages, not get a windfall that puts their employers out of business.
These types of lawsuit abuses are outrageous. Along with California Citizens Against Lawsuit Abuse, I am sponsoring Assembly Bill 1948 in the California Legislature, a bill to reduce these abusive wage and hour lawsuits by prohibiting stacking of complaints.
Under the bill, the penalty is the extra hour of pay owed to the employee, not some “stacked” additional damage. This change will not only continue to hold employers accountable for violations, it will fairly compensate employees for what they actually lost while also allowing employers to pay one penalty, stay in business, and avoid costly shake down stacking claims.
The bottom line is that abuse of our legal system is hurting the small businesses that drive our economy, and we need to stop it. So many of California’s laws, like the current wage and hour law, put targets on the backs of small business owners. Too many small businesses have had to lay off workers or even shut down altogether because of lawsuit abuse.
I believe that this bill is just one way that we can work to address laws and regulations that negatively impact our businesses and communities and work to prevent trial lawyers from taking advantage of small business owners.
I remain hopeful that our current legislature will begin to address this issue through legislation like AB 1948. If we don’t listen to each other and work together, California will continue to wear the label of the nation’s worst judicial hellhole and not be a welcome place for business.
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State Assemblyman DON WAGNER’s district office is located in Tustin.
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FOR THE RECORD
1:37 p.m. April 20: A previous version of this post incorrectly said Assemblyman Don Wagner’s district office was in Corona del Mar. It is in Tustin.
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