Business group calls for PAGA claim moratorium amid pandemic

The California Business and Industrial Alliance called for Gov. Gavin Newsom to issue a moratorium on Private Attorneys General Act claims during the coronavirus pandemic.

“Right now, we’re seeing unprecedented times. This is a day that we all need to come together,” said alliance president Tom Manzo. “The last thing we need are these strict regulations that are just going to hurt some of these companies.”

However, Robins Kaplan LLP’s resident PAGA expert Glenn A. Danas said he doesn’t think Newsom will sign an executive order limiting one specific kind of lawsuit serving a business interest group.

“I think that it’s one thing to say all types of litigation of a certain type can be pushed out, but to prevent people from filing one narrow kind of suit certainly would be unfairly privileging business interests in a very particular kind of way that I don’t think is called for,” Danas said.

Fisher & Phillips LLP labor and employment partner Shaun J. Voigt said a moratorium could prove beneficial to businesses trying to respond to shelter-in-place orders, new regulations and unprecedented disruption.

“There is a lot that businesses are responding to and dedicating resources to trying to keep themselves afloat and keep employees employed,” Voigt said. “I think that to the extent that there was a 90-day moratorium just simply on the filing of these claims so that businesses could focus on the urgent issue at hand, I think that that would certainly be beneficial to businesses and employees alike.”

Danas commented that PAGA is an important deterrent for employers looking to take shortcuts and putting a moratorium on it would not be effective for any party. “Part of the deal of operating in California is that there are additional statutory protections for workers that employers are subject to, and that’s just part of the trade-off from their perspective,” Danas said.

The business group’s letter, sent to Newsom’s office Wednesday, said 167 PAGA claims were filed last week, including several against medical facilities, including Cedars-Sinai Medical Center, Alliance Healthcare Services Inc. and Atria Senior Living. Medical facilities frequently targeted by these claims were already struggling to provide the resources to fight the coronavirus pandemic and now must face disruptive and expensive litigation, Manzo said.

“It’s shameful that trial attorneys are targeting our state’s hospitals and health care services,” Manzo wrote in the letter. “These businesses and their employees are working hard to keep us all healthy and safe. They should not be rewarded with financially crippling PAGA suits.”

PAGA suits allow employees who face Labor Code violations to recover civil penalties on behalf of themselves and other employees, essentially pursuing these cases as an enforcement body. Voigt said even if the moratorium temporarily suspended attorneys from filing PAGA claims, labor laws would still be in place to protect workers from businesses.

“It wouldn’t necessarily be a license for companies just to flout the law or not follow the labor code provisions that are in place,” Voigt said.

Newsom’s office did not respond by press time Thursday to requests for comment.