Newsom, business and labor groups strike deal to fix troublesome labor law

Business groups sought an overhaul to the Private Attorneys General Act, which has led to a bevy of lawsuits against small business across the state.

Business and labor groups have come to an agreement on new legislation to fix issues they have with the Private Attorneys General Act. 

Once the new legislation is passed, backers of a ballot measure to repeal and replace the Private Attorneys General Act have agreed to withdraw it from the ballot. 


The backstory: The Private Attorneys General Act became law in 2004 and allows employees to effectively act as private attorneys general and sue businesses for labor code violations. 

  • People do not have to have suffered the alleged violation themselves and can bring forward a lawsuit for someone else. 
  • Business groups have pushed for a ballot measure that would remove the law and expand Labor and Workforce Development Agency processes to resolve employee claims faster and provide more restitution. 

The big picture: California Gov. Gavin Newsom announced Tuesday that labor and business groups have agreed to reforms on the Private Attorneys General Act that strengthens worker protections, encourages employer compliance and streamlines litigation processes to avert the ballot measure. 

  • The new legislation will cap penalties on employers who quickly move to fix policies and practices. 
  • It will also create new and higher penalties on employers who act maliciously, fraudulently or oppressively in violating labor laws, and it increases the amount of penalty money going to employees from 25 percent to 35 percent. 

Go deeper: Further, the new legislation expands which labor code section can be cured to reduce the need for litigation, which will speed up the process for employees. 

  • Small employers will be protected with a more robust right to cure process through the Labor and Workforce Development Agency to reduce litigation and costs. 
  • Courts will have the authority to limit the scope of claims presented at trial to ensure cases can be managed effectively. 
  • The new legislation will also allow courts to provide injunctive relief to compel businesses to implement changes in the workplace to remedy labor law violations, and it requires that employees need to have personally experienced the alleged violations brought forward in claim. 

What they’re saying: “We came to the table and hammered out a deal that works for both businesses and workers, and it will bring needed improvements to this system,” Newsom said. “This proposal maintains strong protections for workers, provides incentives for businesses to comply with labor laws and reduces litigation.”

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