Opinion: California’s ‘job-killer’ PAGA law under pressure from Supreme Court and ballot initiative


A conference on Monday at the United States Supreme Court could decide whether San Diego's Luke Wilson can make his illegal search argument.
A conference on Monday at the United States Supreme Court could decide whether San Diego’s Luke Wilson can make his illegal search argument. Image via supremecourt.gov

On October 12, 2003, five days after California voters decided he should be ousted as governor, Gray Davis signed Senate Bill 796 into law, a valuable gift to unions, lawyers and other groups. who supported him in the recall election.

The measure created the Private Attorneys General Act, which opened the door to lawsuits against employers for alleged violations of state laws governing wages and working conditions.

California is the only state with such a law and nearly two decades later, PAGA, as it is known, is the subject of a potential ballot measure and further skirmishes in the Legislative Assembly while that the United States Supreme Court is considering whether it should be struck out because it conflicts with federal law.

Davis was able to sign SB 796, despite the October 7, 2003 recall vote, as he remained governor until the election results were certified and successor Arnold Schwarzenegger took office five weeks later.

At the time, only the state Industrial Relations Department was authorized to investigate labor law complaints and impose fines. Unions and labor lawyers argued the state agency was overworked and employers could easily evade punishment by requiring their workers, as a condition of employment, to agree to any disputes being submitted. arbitration rather than litigation.

PAGA allows lawsuits even when employees have agreed to submit disputes to arbitration.

In the 18 years since the PAGA Act went into effect, thousands of cases have been filed and many have been settled, but the state Chamber of Commerce and other business groups companies claim that although it has been a lucrative source of lawyers’ fees, workers have received little economic benefit.

The current list of “job killers” released by the Chamber of Commerce includes two bills that would expand PAGA. One, Senate Bill 1044, would allow employees to refuse work if they deem it unsafe to do so. The other, Senate Bill 1162, would require employers to file detailed reports on their workers’ wages, broken down by ethnicity, gender and other criteria.

The business groups filed an initiative vote measure to repeal the PAGA. Meanwhile, the U.S. Supreme Court last month heard oral arguments in a lawsuit that could convict PAGA because it allows lawsuits even when employees have signed arbitration agreements.

The case, Viking River Cruises, Inc. v. Moriana, stems from a lawsuit filed by Angie Moriana, a former sales representative for Viking, alleging the cruise line violated California labor laws, even though she signed a arbitration agreement.

Moriana’s lawsuit applies not only to her case, but to other Viking employees, creating the possibility of significant damages awards. State courts ruled in favor of Moriana, and the state Supreme Court declined to hear the case because it had previously ruled, in a 2014 ruling, that PAGA rendered arbitration agreements unenforceable. .

However, the United States Supreme Court had overturned the state Supreme Court in that case, so Viking took his argument to federal court.

Viking, backed by the Chamber of Commerce and other business interests, argues that PAGA violates the Federal Arbitration Act of 1925, which sanctions arbitration as an alternative to litigation in commercial disputes.

During oral argument, members of the Supreme Court’s conservative majority said little, while liberal justices appeared to go along with Moriana and California’s assertion that PAGA is a legitimate tool.

If PAGA is overturned, the immediate effect would be on California, the only state with such a law, but if PAGA survives, it could spark efforts to enact similar laws in other blue states where unions have strong political power.

Dan Walters is a columnist for CalMatters, a public interest journalism company committed to explaining how the California State Capitol works and why it matters.

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