My company, Timely Industries in Pacoima, was hit with a lawsuit in December under the Private Attorney General Act over meal periods that were taken more than five hours after the employees’ arrival due to our flexible schedule.
PAGA lawsuits are very expensive, and we wanted to reach out to Mayor Eric Garcetti and ask for his help as we had asked other politicians and lawmakers. Unfortunately, we never were able to reach our mayor. It appears he was too busy playing the piano during La La Land Day in Los Angeles along with his staff, who also ignored Timely and even stood us up.
Not every company in California can make movies, and sometimes you need to spend time with the manufacturing community, which is not as glitzy and glamorous, although we pay our taxes, too. Actually, the manufacturers in California pay more taxes since we don’t have the film industry’s tax incentives.
As you may recall, in 2014 Gov. Jerry Brown signed a $1.6 billion, five-year tax credit that benefits the studio titans of Hollywood. The idea was that if you give them cash, they will keep film and television production in the Golden State.
The tax credit was billed as self-sustaining because the extra film and television production would generate economic activity and jobs. But according to the state’s Legislative Analyst’s Office, “the state government receives far less revenue back than it spends on the tax credit.”
California’s tax-incentive fine print doesn’t specify that post-production work has to happen here, only that production does. That is a loophole, according to the Los Angeles Alliance for a New Economy. “The incentives are a bad investment,” said the study’s lead author, Michael Thom, an assistant professor at the USC Price School of Public Policy. “States pour millions of tax dollars into a program that offers little return.”
“We looked at job growth, wage growth, states’ share of the motion picture industry, and the industry’s output in each state,” Thom said. “On average, the only benefits were short-term wage gains, mostly to people who already work in the industry. Job growth was almost nonexistent. Market share and industry output didn’t budge.”
Where are our incentives?
Manufacturers, such as my business, and business owners in the San Fernando Valley are not asking for tax incentives like the entertainment industry. We are simply asking to stop the incentives given to trial lawyers from Beverly Hills to come and raid our companies like pirates.
Currently in California there are over 6,000 lawsuits against businesses brought under the PAGA. The act allows individuals to act as a regulator in some cases and sue companies that are allegedly in violation of some regulation or law. PAGA was intended to protect employees, but by the time attorneys sunk their greedy teeth into it, PAGA turned into a lottery ticket for trial lawyers.
Lawsuits like the one against our company can cost employers not a few thousand dollars but literally millions of dollars thanks to PAGA. It can put them out of business.
Most business people do not even understand what a PAGA lawsuit is until it is too late and they have been sued. For that matter, I do not think our lawmakers know what a PAGA lawsuit is, either, and how ruinous it can be. That does not surprise me since the California Labor Law Digest is 1,039 pages and growing.
We need our politicians to listen to the businesses in their communities and take action. Reform this law, or the ambulance-chasing attorneys will be the only ones left in California.
Along with the Hollywood titans, of course, so long as they are subsidized.
Tom Manzo is president of Timely Industries in Pacoima.