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02/10/2020 | Combating Wage Theft, Forced Arbitration: A Corporate Attack on Workers’ Rights

California's Hero Labor Law: The Private Attorneys General Act Fights Wage Theft and Recovers Millions from Lawbreaking Corporations

    More than a century ago, before there was a national legislative consensus around paying workers a fair day’s wage, California took the lead to establish minimum wage and working conditions for workers. Since then, the state has remained a national standard bearer, enacting laws that help workers recover stolen wages, access paid leave from work, and enforce safe and humane working conditions.

    However, these rights fail to deliver economic security to working Californians unless accompanied by strong enforcement mechanisms. Workers lose an estimated $15 billion in minimum wage violations alone every year2 — far more than retailers lose to shoplifting. In just three cities, Chicago, New York, and Los Angeles, workers lose an estimated $56.4 million per week to wage theft violations when employers fail to pay minimum wage and overtime or provide meal and rest breaks.

    In addition, with the rapid expansion of forced arbitration by employers, workers’ ability to pursue justice in court through class-action lawsuits has been severely undercut. Two-thirds of non-union workers in California have already lost the right to sue, and the number is projected to grow. In this context, it is critical that the state has adequate capacity to investigate, prosecute, and monitor employers who skirt the law.

    Fortunately, when California enacted the Private Attorneys General Act (“PAGA”) in 2003, the state established an innovative model for enforcing workplace rights — a model that other states are now considering. The Private Attorneys General Act allows workers to bring a representative action in the name of the state and recover civil penalties for violations of the California Labor Code, even if they’ve signed a forced arbitration agreement. These cases also allow the state to collect millions of dollars in penalties from lawbreaking employers who would otherwise profit from exploiting workers. As this report details, in 2019, the state collected over $88 million in PAGA penalties.

    Through new data supplied by California’s Labor & Workforce Development Agency (LWDA), as well as assessments of practitioners, this brief explores PAGA’s impact on California’s workforce. While some employer-backed lobby groups have articulated strong concerns about PAGA, we find no evidence of a negative effect on the economy or a flood of frivolous litigation. Instead, PAGA has boosted the economy by helping California workers, especially those workers most vulnerable to workplace exploitation, fight wage theft. PAGA has demonstrably enhanced Labor Code compliance among employers, built enforcement capacity among state agencies, and ensured that violations of the law have a meaningful remedy. Download the report to learn more.