BILL ANALYSIS
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|SENATE RULES COMMITTEE | SB 989|
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THIRD READING
Bill No: SB 989
Author: Hollingsworth (R)
Amended: 5/11/10
Vote: 27 - Urgency
SENATE LABOR & INDUST. RELATIONS COMMITTEE : 6-0, 5/3/10
AYES: DeSaulnier, Wyland, Ducheny, Hollingsworth, Leno,
Yee
SENATE JUDICIARY COMMITTEE : 4-0, 6/29/10
AYES: Corbett, Harman, Hancock, Leno
NO VOTE RECORDED: Walters
SUBJECT : Labor Code Private Attorneys General Act of
2004
SOURCE : Author
DIGEST : This bill requires an employee requesting court
approval of the settlement of a civil action brought under
the Labor Code Private Attorney General Act to serve a copy
of the courts final approval order and settlement agreement
to the Labor Workforce Development Agency within 20 days
after the order is made and the settlement is final.
ANALYSIS :
Existing law:
1. Provides that the Labor and Workforce Development Agency
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(LWDA) and its various departments, divisions,
commissions, boards, agencies, or employees may assess
and collect penalties for violations of the Labor Code.
2. The Private Attorneys General Act of 2004 (PAGA), allows
aggrieved employees to bring civil actions to recover
penalties for violations of the Labor Code if the LWDA
or its departments, division, commissions, board,
agencies, or employees do not do so. Existing law
establishes a civil penalty where one is not
specifically provided under the Labor Code of $100 for
each aggrieved employee per pay period for an initial
violation, and $200 for each aggrieved employee per pay
period for subsequent violations. The penalty is $500
per violation where the violator does not employ any
employees at the time of the violation.
3. Provides that the penalties collected in these actions
are distributed 75 percent to the LWDA to be
continuously appropriated for purposes of enforcement
and education of employers and employees about their
rights and responsibilities under the Labor Code and 25
percent to the aggrieved employee, except that if the
person does not employ one or more persons, 100 percent
of the penalties collected are distributed to the agency
by continuous appropriation.
4. Requires a court, in any action by an aggrieved employee
seeking recovery of a civil penalty pursuant to the
PAGA, to review and approve any penalties sought as part
of a proposed settlement agreement. Existing law also
authorizes a court to award a lesser amount than the
maximum civil penalty amount allowed if to do otherwise
would result in an award that is unjust, arbitrary and
oppressive, or confiscatory. For occupational safety
and health violations, existing law requires that the
provisions of a settlement be submitted to the division
(Division of Occupational Safety and Health) at the same
time that they are submitted to the court.
This bill:
1. Requires an employee requesting court approval of the
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settlement of a civil action brought under the Labor
Code Private Attorney General Act to serve a copy of the
court's final approval order and settlement agreement to
the LWDA within 20 days after the order is made and the
settlement is final.
2. Declares that it is to take effect immediately as an
urgency statute in order to address the existing
economic conditions in California by spurring new job
creation.
Prior Legislation
AB 2997 (Houston), 2005-06 Session, would have required the
parties seeking court approval of a settlement under the
PAGA to serve the LWDA a notice of the request not less
than 20 calendar days prior to filing the request with the
court. The bill would have further required a court to
award the LWDA reasonable attorney's fees and costs in any
proceeding in which the LWDA is adjudged to be entitled to
penalties under the PAGA. The bill was held in the
Assembly Judiciary Committee.
SB 1809 (Dunn), Chapter 221, Statutes of 2004,
significantly amended the PAGA by enacting specified
procedural and administrative requirements that must be met
prior to bringing a private action to recover penalties of
Labor Code violations. The bill passed the Senate Floor
(38-0) on July 29, 2004.
SB 796 (Dunn), Chapter 906, Statutes of 2003, enacted the
Private Attorneys General Act. The bill passed the Senate
Floor (21-17) on September 12, 2003.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No
Local: No
SUPPORT : (Verified 7/2/10)
California Association of Joint Powers Authorities
California Chamber of Commerce
California Framing Contractors Association
California Grocers Association
California Hospital Association
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California Independent Grocers Association
California Manufacturers and Technology Association
California Retailers Association
National Federation of Independent Business
ARGUMENTS IN SUPPORT : According to the author:
"Civil penalties sought under PAGA can be as high as $200
per aggrieved employee per pay period. Under PAGA,
awards of penalties in civil actions are to be
distributed between the aggrieved employees and the Labor
Workforce Development Agency - 25% to the employees and
75% to the LWDA. The money received by LWDA is intended
for labor law enforcement and education programs.
[emphasis omitted] ? LWDA must expend its own resources
to go after attorneys that file PAGA cases but refuse to
pay LWDA its entitled penalties. On at least one
occasion, LWDA has had to bring suit against an attorney
who refused to distribute to LWDA its share of penalties.
Unfortunately, in some cases the cost to LWDA to
litigate its right to its share of penalties exceeds the
potential recovery, making such litigation impractical.
"In order to uphold the educational and enforcement
intent of the PAGA, LWDA must be made aware of court
approved PAGA settlements. Having such necessary
information will permit LWDA to, among other things,
identify problem industries with high rates of
non-compliance and will also help expose attorneys
abusing the PAGA by filing lawsuits intended only to
garner high attorneys' fees and little in the way of
penalties for aggrieved employees."
PQ:mw 7/2/10 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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