Outgoing Governor Gray Davis has signed the "Labor Code Private Attorneys General Act of 2004" (Senate Bill 796). The Act authorizes aggrieved employees to file lawsuits against employers who violate any provision of the voluminous California Labor Code, excluding matters governed by the workers' compensation system, and to recover attorneys' fees and receive a quarter of the civil penalties.
What the Act Says
Prior to this law, civil penalties for violations of the Labor Code were assessed and collected by the Labor and Workforce Development Agency and its subordinate agencies. The Act allows "aggrieved" employees to file lawsuits, on their own behalf and on behalf of other current or former employees, and to recover these penalties if the agency has not cited the employer for violation of the same Labor Code provision.
If an employee files a lawsuit under the Act and prevails, the employee is entitled to an award of reasonable attorneys' fees and costs as well as 25 percent of the civil penalty.
If the Labor Code provision at issue does not set forth a civil penalty, and the employer has one or more employees at the time of the violation, the Act imposes a civil penalty of $100 for each aggrieved employee per pay period for the first violation and $200 for each aggrieved employee per pay period for each subsequent violation.
The Act states that it does not change the exclusive remedy of the workers' compensation system for injuries arising out of and in the course of employment. Consequently, employees still cannot file lawsuits for workplace injuries governed by the workers' compensation system.
What the Act Means To California Employers
We anticipate that, because of the attorney fee provision in the Act, plaintiff's employment lawyers will aggressively seek to enlist employees to sue, on behalf of themselves and their coworkers, as private attorneys general. The voluminous California Labor Code, with its many obscure and complicated requirements, is a gold mine for plaintiff's employment lawyers under this new statute. Consequently, employers must be more vigilant than ever to assure compliance with the Labor Code. Wise preventative actions include ongoing human resource training, expert counseling and workplace audits.