In a landmark decision on January 18, the California Supreme Court ruled that trial courts lack the inherent authority to dismiss claims under the state’s Private Attorneys General Act (PAGA) simply because they are deemed unmanageable.
The ruling is a significant setback for business owners and corporations who had hoped for a decision that would curtail the numerous PAGA claims filed daily in California. Lawsuits under PAGA, often initiated due to minor infractions of California’s labor code, have become a significant nuisance for employers, including those in the agricultural sector. These employers find themselves compelled to agree to substantial settlements to sidestep legal costs and the risk of heftier penalties, even in cases where the proof of illegal behavior is questionable or completely lacking.
The question before the California Supreme Court was whether trial judges have the inherent authority to strike PAGA claims solely because they wouldn’t be manageable at trial. The court’s ruling resolves a split of authority between two courts of appeal that came to opposite conclusions. The Supreme Court has clarified that trial judges do not have this authority.
The ruling has the potential to impact all businesses that have employees in California. Such businesses are interested in compensating their employees properly and setting valid employment policies without incurring undue settlement pressure from being forced to litigate unmanageable representative actions.
To sum up, the verdict of the California Supreme Court reinforces the entitlement of employees to lodge PAGA lawsuits against their employers, irrespective of the intricacy or feasibility of these claims. It seems that unless the electorate approves The California Fair Pay and Employer Accountability Act in November, employers will persistently be troubled by predatory shakedown lawsuits. This proposed legislation would return the adjudication of labor disputes to an impartial authority by authorizing the Labor Commissioner to enforce labor laws and levy fines.