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PAGA reforms are a step in the right direction for California small businesses – Daily Bulletin

PAGA reforms are a step in the right direction for California small businesses – Daily Bulletin

PAGA reforms are a step in the right direction for California small businesses – Daily Bulletin

As a member of our local community and a decades-long advocate for meaningful legal reform in California, I am optimistic about the negotiated reforms that Governor Gavin Newsom signed into law this week.

As the Southern California Regional Director of California Citizens Against Lawsuit Abuse (CA CALA), our grassroots organization has long advocated for the need to reform the Private Attorneys General Act (PAGA). We have also advocated for meaningful legal reforms to address abuses linked to the Americans with Disabilities Act (ADA) and other tort reform initiatives that would improve the business climate in our state.

In the years leading up to the enactment of these critical reforms, we heard from local small business owners about the direct challenges of operating a business associated with frivolous lawsuits tied to PAGA.

PAGA was originally enacted by Governor Gray Davis in 2004 to provide employees with the means to sue their employers for labor code violations. However, PAGA became an abusive policy with systematic misuse and exploitation through the courts.

In essence, bad actors and the trial lawyers who took on their cases were able to sue small businesses and profit from the settlements even when the lawsuit seemed suspicious at best. Many small businesses that were sued under PAGA did not have the financial means to defend themselves in court. Many chose to settle so as not to risk losing their business. Many small business owners who chose to fight were later forced to close their doors when court fees eventually became too expensive to continue operating.

The legislative reform signed into law by Governor Newsom on July 1 is a step in the right direction for California’s local small business economy. These reforms address the need for certainty that small businesses need to survive and address some of the most serious problems with PAGA.

Employers need to know that they can operate in a fair and competitive business environment, not one in which the law restricts them. These reforms help do just that by leveling the playing field. In the past, a PAGA lawsuit filed against a small business could be a death sentence. Many of those that didn’t close left the state, taking good-paying jobs with them.

In the agreed upon reforms, we see many of the solutions that CA CALA has long advocated for. The newly enacted law aims to reduce the burdens placed on small business owners. The changes in the agreed upon reform package appear to be much better for both the employer and the employee. It also gives employers an incentive to comply with PAGA policies. What a novel concept!

The reforms also establish a statute of limitations for filing a lawsuit and a reasonable requirement that the plaintiff personally suffered each of the alleged violations. Both are key reforms that will limit the possibility of filing frivolous lawsuits.