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Thursday, Mar 28, 2024

CEOs Stage PAGA Protest

Business owners don’t usually stage sidewalk protests, but a San Fernando Valley business organization recently took that step to create awareness about a state law it says harms companies. The California Business & Industrial Alliance opposes the Private Attorney General Act, or PAGA, a law that allows workers to sue their employees over labor law violations. The group contends that it mainly benefits the lawyers filing the suits. On Dec. 13, the group staged its first protest outside the Encino offices of law firm Kingsley & Kingsley on Ventura Boulevard. Kingsley is California’s second-most prolific filer of PAGA lawsuits, according to the business group. Although it is very rare for business people to protest in public, Tom Manzo, the founder and president of the alliance, said that raising awareness through pickets is the most important thing the group can do. “I just wish more people had an understanding of what is going on,” Manzo said in an interview with the Business Journal. “I think like a lot of the legislators, they just don’t get it.” Attempts to reach a representative of the law firm were not successful. However, in a video posted at the alliance’s Facebook page shows law firm co-founder Eric Kingsley confronted by Manzo and other picketers outside the building. Manzo asks Kingsley if allowing employees to eat their lunch later than five hours after they began their workday warranted a $1 million fine. “I reject the premise of your question,” Kingsley responds. “Most people don’t want to eat late.” Manzo is president of Timely Prefinished Steel Door Frames in Pacoima, which got hit with a PAGA lawsuit because some employees took their lunchbreaks later than five hours after they started their shifts in violation of state labor law. Even though the employees wanted to delay their lunchbreaks so they could eat with colleagues who worked later shifts, it still cost Manzo’s company more than $1 million, he said. The Private Attorney General Act became law in 2004 and allows employees to sue their employer for breaches – such as missed lunchbreaks, unpaid overtime to minor violations such as failing to print an address on employee paychecks – even if he or she wasn’t directly affected by them. Financial penalties under PAGA are divided. Seventy-five percent goes to the state for education and outreach on the labor code, while 25 percent goes to the employees and their attorneys, who typically take approximately 30 percent. However, employers have said that settlement deals may be negotiated outside the official PAGA lawsuit, which results in the state getting relatively little money while the lawyers get much more. It was the attorneys who incited the wrath of the 14 picketers who came to protest outside the Kingsley law offices. One placard read “Some Sharks Wear Suits,” referring the law firms. Others read “It’s my livelihood, not your legal fee” and “Employees are not protected by PAGA.” Joann Roth-Oseary, a catering-business owner in Tarzana, said she was moved to protest out of anger and frustration. “California is driving us into the dirt,” she said, “with its plethora of labor laws… “PAGA is an abomination,” she continued. “It has created an industry of extortion for a group of attorneys.” Manzo said that labor law violations should be enforced by the state, just as Occupational Safety and Health, or OSHA, violations are and not be handled by outside attorneys. “If there is a labor law violation, they should follow that same concept,” Manzo said. “You wouldn’t be having people take advantage of things like that and the state would be more reasonable than a trial attorney who is only looking out for their best interests.” Unconstitutional? The alliance is also challenging the state law in Orange County Superior Court with a lawsuit that contends it is unconstitutional. The legal action was filed Nov. 28 on behalf of member businesses against California Attorney General Xavier Becerra. The suit seeks to prohibit Becerra from enforcing PAGA and asks the court to strike down the law. “We want it to be heard and not thrown out of court,” Manzo said. “We want to go the distance with this. We want to take this to the (state) supreme court.” The 54-page complaint lays out in detail allegations that PAGA denies equal protection under the state and federal constitutions, violates the Eighth Amendment prohibition against excessive fines and violates the state’s Separation of Powers Doctrine. The suit also takes aims at the attorneys who file PAGA claims against employers. “The complete lack of oversight by the legislative, executive and judicial branches of the California State government has allowed PAGA to become a tool of extortion and abuse by the plaintiffs’ bar, who exploit the special standing of their PAGA plaintiff clients to avoid arbitration, threaten business-crushing lawsuits and extract billions of dollars in settlements, their one-third of which comes right off the top,” the lawsuit reads. The lawsuit follows by three months the alliance’s attempt at crafting legislation to reform PAGA. That attempt hit a snag when talks with the California Labor Federation broke down. “We had a lobbyist and they were negotiating with labor and that fell apart,” Manzo said. “Once that fell apart, we didn’t have anybody to do anything with it.” Business Journal Publisher Charles Crumpley contributed to this story.

Mark Madler
Mark Madler
Mark R. Madler covers aviation & aerospace, manufacturing, technology, automotive & transportation, media & entertainment and the Antelope Valley. He joined the company in February 2006. Madler previously worked as a reporter for the Burbank Leader. Before that, he was a reporter for the City News Bureau of Chicago and several daily newspapers in the suburban Chicago area. He has a bachelor’s of science degree in journalism from the University of Illinois, Urbana-Champaign.

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