PAGA’s Real Winners: Not Workers

Google has been voted one of the best companies in the country to work for. More recently, it’s also been victim of California’s Private Attorneys General Act, commonly known as PAGA. Google’s story demonstrates why so many California employers – both for-profit and nonprofit – are clamoring for reform to this harmful law.  Some history: Enacted by the state legislature in 2004, PAGA authorizes aggrieved employees to file lawsuits to recover civil penalties on behalf of themselves and other employees for labor code violations. PAGA was originally enacted to help the state regulate its underground economy; the state didn’t have sufficient resources to go after all the bad actors, the thinking went, so why not empower employees to do the same?  Sounds good in theory. In reality, PAGA has become trial attorneys’ dream – and employers’ worst nightmare. Last year alone, over 8,000 new PAGA lawsuits were filed, with often-small businesses sued for millions of dollars over minor violations like late lunches, misclassified bonuses or an incorrect employee ID on a paycheck. The state’s Labor Law Digest is 1,060 pages, and even the tiniest violation can turn into a costly lawsuit – with most of the “winnings” going to lawyers and the state. Consider the PAGA case filed against Google. The company’s “original sin” stemmed from an unnamed product manager who felt he should have been able to discuss wages and working conditions on the company’s intranet. When asked not to complain about his boss on the company forum, the employee lawyered up. PAGA then allows the attorneys to dig into everything; in this case, the lawyers discarded the employee’s original complaint and settled on another. The employee’s job involved processing requests for removal of offensive content. As part of that job, Google required a liability release over exposure to “text, descriptions, graphics, pictures and/or other files commonly referred to as being ‘adult’ content” — sexual and violent material that Google workers had to sift through when processing removal requests. The suit alleged the confidentiality waiver violated state labor codes forbidding workers from reporting working conditions. Perhaps you’re thinking that this sounds silly. Of course, an employee who has been hired to remove offensive content will have to review that content first, and a certain amount of discretion and confidentiality is expected. No matter: The complaint went forward, covering all employees who signed this waiver – whether or not they’d actually had a complaint about it. Google’s required payout to make the complaint go away? Just over $1 million. Here’s the best part: Each aggrieved employee will only receive about $15. Yes, you read that right. Meanwhile, the state will receive $488,000, and the trial attorneys will take home $330,000.  The judge questioned the unusually high attorney’s fees; one of the attorneys defended their payout, claiming “we’ve turned down a lot of work to bring this case” and that the case required original and pioneering litigation. “Original” and “pioneering” are one way to put it; “scam” is the word I’d use. In the court documents covering Google’s settlement agreement, it states “the purpose of PAGA is not to compensate employees.” You can say that again – and I’m sure the trial lawyers would agree. Tom Manzo is the founder of the California Business and Industrial Alliance (CABIA.org), based in Pacoima.