Pulling Back On The Reins Of The Private Attorneys General Act: New Steps To Curb The Latest Trend In Lawsuits
- Written by Kevin Cleveland
California Governor Jerry Brown’s latest budget proposal contains important provisions which would make significant changes to the way litigation is conducted under The Private Attorneys General Act (PAGA). In recent years, wage and hour litigation has seen an increase in PAGA claims. PAGA allows “aggrieved” employees to recover civil penalties for California Labor Code violations which previously could only be collected by the Labor and Workforce Development Agency (LWDA). In effect, PAGA allows current or former employees to enforce labor code violations through lawsuits against employers. If found liable, employers face thousands of dollars in penalties per employee, per pay period, up to one year and 33 days prior to filing their complaint. As a result, PAGA lawsuits can quickly represent penalties in the millions of dollars for large companies despite what may be relatively minor technical violations.
Luckily for employers, Brown's 2016-2017 state budget proposal seeks to create a “PAGA unit” to review claims and settle them out of court when possible. This would hopefully reduce the amount of PAGA litigation and also lead to the early settlement or rejection of non-meritorious claims. However, under the proposal, the PAGA unit can object to PAGA court settlements and all PAGA settlements would have to be approved by the Court which could complicate settlements or prevent settlements which are overly beneficial to employers.
- Written by Greg Blueford
In the case Resilient Floor Covering Pension Trust Fund v. Michael’s Floor Covering, Inc., the Ninth Circuit recently reversed a lower court’s ruling and outlined a test for determining successor liability for contributions to pension plans. The Multiemployer Pension Plan Amendments Act (“MPPAA”) states that if an employer completely withdraws from a multiemployer pension plan, the employer is liable for the amount of unfunded benefits that have already vested. This is known as withdrawal liability.
The Ninth Circuit held that a successor employer, like Defendant Michael’s Floor Covering, Inc. (“Michael’s”), can be subject to withdrawal liability under the MPPAA so long as: 1) the successor took over the business with notice of the liability; and 2) there is “significant continuity in the business operations” between the original company and its successor. The second factor is by far the most important factor to the analysis. However, the MPPAA provides an exception from liability for employers in the building and construction industries if they have ceased operations entirely for at least five years.