In 2004, the Private
Attorneys General Act (PAGA)— also known as the Sue Your Boss law—went into effect,
permitting employees to sue their employers directly for any Labor Code
violation without first filing a claim with the labor commissioner. Previously,
only the labor commissioner had the right to enforce many of these Labor Code
provisions.
A year later, the
Legislature added some safeguards to PAGA when it became clear that the law had
paved the way for employees to file big lawsuits for even trivial code
violations. The new provisions require employees to file a notice of intent to
sue with the Labor and Workforce Development Agency (LWDA) and give the agency
a right of first refusal to investigate the claim. They also give employers
time to cure a violation before facing a lawsuit.
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Despite these
safeguards, employers can still get blindsided by a big wage and hour suit—without
prior notice. Why? A
appeals court recently ruled that, under certain circumstances, an employee can
bypass these added PAGA administrative requirements and head straight to court.
Employer Balks at
Wage-Hour Class Action
Omar Dunlap, a former
Bank of America, N.A., employee, filed a class action lawsuit seeking damages and
penalties on behalf of current and former bank employees for various Labor Code
violations, including: overtime compensation (Labor Code Sections 510 and 1198);
recordkeeping (Section 226); immediate payment of wages on discharge (Sections
201, 202); duty to pay wages semimonthly (Section 204); and mandated meal and
rest periods (Sections 226.7, 512(a)).
The bank asked the court
to throw out Dunlap’s claims for Labor Code penalties because he didn’t follow PAGA’s
procedural requirements, including first notifying the LWDA of the alleged
violations. Dunlap countered that he didn’t have to comply with PAGA because he
sought penalties that employees could recover before PAGA, and PAGA wasn’t
intended to erase employees’ existing private rights to sue for these penalties.
The trial court sided
with Bank of America, finding that Dunlap’s interpretation would make PAGA’s
safeguards “effectively meaningless.” Dunlap appealed.
PAGA Exhaustion Not
Always Required
Now a California appeals
court has given Dunlap the green light to pursue his wage-hour claims in court.1 The court explained that
PAGA imposes procedural requirements on suits that are seeking “civil penalties”—penalties
that before PAGA’s enactment were recoverable only by the labor commissioner
and not employees. In contrast, Dunlap was seeking “statutory penalties,” which
the Labor Code has always allowed employees to recover directly. Thus, Dunlap wasn’t
required to comply with PAGA’s prerequisites before filing a lawsuit for those
statutory penalties.
Case Impact
This ruling undermines
the procedural safeguards put in place under PAGA to discourage frivolous
suits. As the case makes clear, as long as employees had a right to sue on
their own to recover Labor Code penalties before PAGA, that right still exists
and PAGA administrative requirements don’t have to be followed before a lawsuit
may be filed. It therefore remains critical for employers to avoid lawsuits by
continually reviewing their policies and practices to ensure strict compliance
with wage and hour laws.
This case is online at
www.courtinfo.ca.gov/opinions/.
_
1 Dunlap v. Superior
Court,
Court of Appeals (Dist. 2) No. B185247, 2006