West L.A.’s Professional Security Consultants provides guards for upscale events such as Elton John’s Academy Awards party, and it expects its uniformed guards to show up looking sharp.
But those expectations came at a price: $475,000.
That’s what the company had to pay a couple of years ago to settle claims that it allegedly violated labor laws by not reimbursing employees for the cost of cleaning their uniforms.
Traditionally, such a regulatory enforcement action would be brought by the state attorney general. But in PSC’s case, it was brought by employees and their lawyers under 2004’s Private Attorney General Act.
PSC is certainly not alone. Thousands of California companies have faced similar actions under the act. Businesses, which have long complained that the act is widely abused, might be pleased that the state act could be gutted by the U.S. Supreme Court. But in the meantime, lawyers are rushing to beat any decision by the high court – resulting in a rash of actions under the act, often called PAGA.
Todd Scherwin, managing partner at the downtown L.A. office of Fisher & Phillips who defends employers, said he’s certainly seen the surge.
“In the last 90 days, I would say I’ve had eight to 10 PAGA claims that I’m handling right now,” he said. “It’s probably the most hotly contested or litigated issue now, or certainly the most popular wage-and-hour claim.”
The law, businesses argue, is a clear path for workers to amplify any disputes they might have against their employers, and there’s little oversight. What’s more, the law allows employees to file complaints on behalf of larger groups without the hassle of obtaining a class-action certification.
Stung by the frequency and potential exposure they see in claims brought under PAGA, employers years ago began asking workers to sign arbitration agreements, requiring them to settle disputes through mediation or arbitration rather than filing costly lawsuits.
But that didn’t work.
The California Supreme Court ruled in June that employers cannot legally use arbitration requirements to prevent workers from filing PAGA lawsuits.
“Because PAGA is the Private Attorney General Act, these plaintiffs stand in the shoes of the attorney general,” said Kenneth Sulzer, president of the L.A. chapter of the Federal Bar Association. “You can’t bind the attorney general to arbitration. That’s the logic the state court used.”
But federal district court justices in four other PAGA disputes have taken another view, all ruling that the Federal Arbitration Act protects employers’ rights.
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