As reported in this column back in March 2015, California’s Private Attorney General Act (“PAGA”) provides an avenue for employees to enforce their rights under the Labor Code. Since that time, the number of PAGA lawsuits has dramatically increased.
Many employers in the Central Valley, which have operated their businesses in a particular manner for decades, have had their policies and rules challenged in PAGA lawsuits. Unfortunately, due to the “derivative penalties” which can attach to these claims (one violation of the Labor Code can result in multiple penalties, which can be attached to every single paycheck received), PAGA suits can be expensive and time-consuming, often with the bulk of settlement funds being paid to the state and private attorneys, rather to the employees involved.
I recently learned about and became a supporter of the California Business and Industrial Alliance (CABIA), which was formed earlier this year.
CABIA was formed by Tom Manzo, who is president of Timely Industries. Timely is a family-owned business that manufactures pre-finished steel door frames and has been doing so since 1971. Timely employs nearly 200 workers, including 52 immediate family members and 26 extended family members. Employees have worked there for an average of 24 years. One employee has 37 years of tenure at the company.
Timely had a flexible schedule to allow various start times, and also provided a safety-incentive bonus. Many employees voluntarily took their lunch after the end of the fifth hour of work, choosing to do so in order to eat with a friend or family member. Employees were not required to punch in or out for lunch.
“We trusted our employees to take their lunch breaks, and didn’t require that they specifically account for their time by clocking in and out for lunch,” Manzo said.
Employees were also provided with a regular bonus if safe working conditions were maintained.
About one year ago, Timely was served with a PAGA lawsuit alleging various wage and hour violations. It was told by its attorney that, in addition to defense costs, the settlement of this case could be more than $1 million.
Manzo was frustrated because employees had reported to him time and time again that they were genuinely happy with both the “late lunch” and safety bonus systems. These systems had been in place for many years, without a single complaint being received. Nevertheless, the company was subject to a PAGA claim and lawsuit.
After spending substantial sums defending against the claims, the lawsuit was settled, costing the Timely hundreds of thousands of dollars in the process.
After settling the case, Manzo looked into the issue further.
“I decided to talk to politicians, business owners and trade associations looking for understanding, help and solutions to PAGA,” Manzo said. “What I found out was many did not know, and many did not care. You will never understand the effect of a PAGA lawsuit unless you have been in one. The culture at Timely has changed for the worse, no flexible schedule, no incentives, no trust as punching in and out for lunch is now a requirement.”
In response, and after realizing that his story was not unique in California, Manzo decided to take action, creating CABIA.
CABIA was formed to help businesses all over California. Its stated mission is to be the voice of reason when it comes to labor laws, with the goal of educating legislators, employees, employers, and other trade organizations on PAGA and other labor laws that are having a direct impact on California businesses.
CABIA has enlisted the assistance of a team of employment law attorneys (including the author of this monthly column), along with a seasoned lobbyist. For the immediate future, the goal is to introduce and pass PAGA reform in the state legislature. CABIA’s efforts parallel many state ballot initiatives that are currently circulating, also seeking PAGA reform.
For more information on the California Business and Industry Alliance, you may visit CABIA’s website at www.cabia.org.