Compromise on Law Limiting Employees’ Suits Suits Both Sides

By CHRIS CZIBORR

Orange County Business Journal

The reviews are generally positive on all sides for legislation limiting workers’ ability to sue employers recently signed into law by Gov. Arnold Schwarzenegger.

Joseph Farrell, a litigation partner out of the Costa Mesa office of Latham & Watkins LLP, calls the new law, which revised earlier legislation, a partial win for business.

“It certainly doesn’t solve all the problems created by SB 796, but it addresses a few things,” he said, referring to a law that took effect Jan. 1 that allowed workers to sue their employers for violating the state labor code and spurring what some considered frivolous suits.

Under the new measure, SB 1809, workers can still sue over serious violations but only after the employer is notified and state officials investigate the charges. Also, workers can sue only under certain instances for not posting workplace rules notices.

The new law is retroactive, stopping dozens of suits launched under SB 796. It also gives courts discretion over the amount of penalty awarded. “If the judge were to find that the violation was minor and technical in nature and that no significant harm had occurred, the judge could exercise discretion to impose a very minor penalty,” Farrell said.

Businesses and Republicans had wanted the law scrapped entirely. Democrats, including state Sen. Joe Dunn, D-Santa Ana, who wrote the old law, wanted the thrust of it to remain intact. Labor groups and trial lawyers had opposed making changes.

But the revisions seem to have won the approval of all sides, at least publicly.

Republicans could “gracefully quit their idea that they would get the bill totally repealed,” said Dunn.

Labor unions, which saw the power of the original “sue your boss” law diluted in the new version, also expressed support if a bit tepid for the new version.