California HR

Labor Code Violations: New Legislation Softens Blow of Last Year’s Bounty Hunter Law, but Employer Caution Still Required

The Labor Code Private Attorneys General Act, dubbed the “bounty hunter” or “sue your boss” law, went into effect on Jan. 1, 2004. The controversial law gave employees in California almost unlimited rights to sue their employers for just about any Labor Code violation—and to recover the statutory penalties and attorney’s fees.

Many bounty hunter lawsuits have been filed so far this year, seeking millions in penalties. But now, in a victory for California employers, the law has been severely restricted as part of the recent budget compromise between Gov. Schwarzenegger and the state Legislature. The changes should give employers more protections against potentially frivolous lawsuits that the bounty hunter law authorized.


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Original Bounty Hunter Provisions

Under the original version of the law, employees could file lawsuits, including class action lawsuits, against their employers to enforce Labor Code provisions—even for minor technical violations, such as the typeface size on workplace posters—when the Labor Commissioner didn’t enforce them. Employees didn’t have to exhaust administrative channels of enforcement first, such as by filing a complaint with the Labor Commissioner.

The law provided that employees could seek the statutory penalties for the particular violation. If the Labor Code didn’t specify penalties, the bounty hunter law subjected employers to civil penalties of up to $200 per day (per employee per pay period). For a large employer, the penalty amounts could add up to a staggering sum.

Penalties recovered were to be divided between the employees (25 percent), the Labor and Workforce Development Agency (LWDA) (25 percent), and the California general fund (50 percent). Employees could also recover attorney’s fees and costs.

Drastic Revisions Mean Good News for Employers

Now, the law’s severe impact on employers has been softened. Here are the key revisions, which take effect immediately:

  • Employees may not file lawsuits over a violation regarding workplace postings or notices, or in connection with agency reporting or filing requirements, unless it involves mandatory payroll reporting or workplace injury reporting. This provision is retroactive to Jan. 1, 2004.

     

  • Courts have discretion to award less than the specified penalties for a violation. In addition, a court must approve any settlement of a lawsuit filed under this law.

     

  • Penalties recovered will be distributed to the LWDA (75 percent) and the employees (25 percent).

     

  • The employee and the LWDA must follow specified procedures before a lawsuit may be filed under the bounty hunter law. For certain serious violations, including wage and hour violations, the employee must provide written notice to the LWDA and employer of the violation, and provide the LWDA (or Cal/OSHA, if applicable) with a chance to investigate. For less serious violations, the employee must provide the LWDA and employer notice of the violation, and give the employer an opportunity to cure or abate the problem. Note that an employer can’t avail itself of this “notice and cure” provision more than three times in a year for any violation, regardless of the worksite.

Other Changes

These two changes were also made to the law:

  1. No retaliation. An employer may not retaliate against an employee for filing a lawsuit under the bounty hunter law.

     

  2. Job application filing requirement repealed. Under another law, Labor Code Section 431, employers had to file the job application form they use with the Labor Commissioner. That provision was repealed when revisions were made to the bounty hunter law.

Caution Still Required

Although the law’s changes will provide employers some welcome relief from the original bounty hunter law, they don’t completely undo the risk of a lawsuit. You must still be vigilant about complying with the Labor Code—including everything from wage and hour provisions and employee uniform requirements to recordkeeping rules and provisions regarding the employment of minors. To avoid being the next target of a bounty hunter lawsuit, now is the time, if you haven’t recently done so, to undertake a comprehensive audit of your employment practices and policies.

Also, if you receive a notice from an employee or the LWDA regarding a potential Labor Code violation, it’s a good idea to seek expert advice regarding how to proceed. But be sure to act immediately, because depending on the problem, you could have as few as 33 days to cure the violation and respond to the employee and the LWDA.