Opinion Columns & Blogs

Here’s the rest of the story on Labor Code lawsuits

We should assume that Stanislaus County Supervisor Kristin Olsen is not an apologist for businesses which cheat their employees through outright wage theft, failure to pay overtime, or by requiring them to do errands “off the clock.” But she does seem to complain that the cure for such conduct is worse than the disease.

She wrote a piece (Oct. 15, Let’s stop attorneys who take advantage of California labor laws) decrying the use of the Private Attorney General Act (PAGA) against employers because it generates significant fees for plaintiffs’ attorneys. It does, no doubt about it. But, there is more to the story.

Historically, state regulators were underfunded and could not, as a practical matter, enforce provisions of the Labor Code designed to protect workers from unscrupulous employers. This was the disease: employers cheating employees.

The cure could have been to fund the Labor Department so it could investigate employee complaints. Instead, the Legislature empowered employees to hire attorneys to press claims for themselves and for other employees. It was the ability to press claims for additional employees that made actions viable. After all, the one employee who was forced to work “off the clock” wouldn’t have enough of a claim to make litigation practical. Ten might, or hundreds, or even thousands.

Michael Williams filed a claim against Marshalls and sought records for all fellow employees. Not just those in Costa Mesa store where he worked, but statewide. The California Supreme Court agreed with him despite protestations by employer groups. He wanted to show the prohibited conduct happened in all Marshalls stores.

Williams intended to prove that Marshalls understaffed stores so that hourly employees had to work without pay during meal breaks, then had managers erase violations from time records. Employees also were not paid for making “bank runs” for the store off the clock, according to Williams.

Are these minor violations? Not for the hourly employee who had to work through lunch without pay. Systemwide, the benefit to the employer would not be minor. An employer who does this just steals a little bit, but from a lot of people. Volume!

Olsen mentioned a well documented case in which attorneys received more than $2 million and each plaintiff received only $1.08. She did not detail the case. Each of the more than 1 million Uber drivers did get that small sum. But, the lion’s share of the $7.5 million settlement went to the state.

You see, when a PAGA action produces what amounts to a civil penalty for employer malfeasance, the state gets a share. Before any such claim can be filed the employee has to give notice to the state which can then decide to pursue it, or let the employee go ahead using private attorneys who can get a contingent fee if successful. From any verdict or settlement the state gets 75%. This money funds other enforcement actions.

Here’s a point she didn’t mention: although each driver got only a bit more than a buck, Uber was stung for the full $7.5 million. Whatever they did to each driver, bet Uber won’t do that again. You can also bet other employers take note of such penalties. The money paid by the offending business is a civil penalty, not exact compensation to the employee.

The disease v. cure analogy holds. A healthy regard for the Labor Code prevents catching the disease. The Labor Code isn’t written in invisible ink, or in Latin.

Some businesses complain that temperature regulations for bathrooms are unnecessary. Ask those who can’t relieve themselves standing up whether a warm accommodation is unnecessary.

Olsen hit all of the talking points put out by employer groups who don’t like lawsuits for Labor Code violations. How many of her constituents have the same perspective?

Steve Ringhoff is a Modesto attorney. He wrote this for The Modesto Bee.