A law that wipes out flex time at work

Los Angeles Times - - OP-ED - BY KEN MON­ROE Ken Mon­roe is chair­man of the Fam­ily Busi­ness Assn. of Cal­i­for­nia and pres­i­dent of Holt of Cal­i­for­nia.

FOUR­TEEN YEARS ago, Cal­i­for­nia set up a new method for en­forc­ing its com­plex wage and hour laws.

The leg­is­la­tion, called the Pri­vate At­tor­neys Gen­eral Act, or PAGA, al­lows pri­vate at­tor­neys to sue em­ploy­ers on be­half of a class of com­pany em­ploy­ees.

The os­ten­si­ble mo­ti­va­tion be­hind the law was to pro­tect work­ers. But in re­al­ity, PAGA law­suits have made it more dif­fi­cult for fam­ily-owned busi­nesses like mine to be f lex­i­ble with em­ploy­ees.

Preda­tory trial lawyers take ad­van­tage of the law, us­ing as their play­book the more than 800 pages that make up Cal­i­for­nia’s la­bor code.

PAGA sets penal­ties for each la­bor code vi­o­la­tion, no mat­ter how mi­nor: $100 for each em­ployee per pay pe­riod for an ini­tial vi­o­la­tion, and $200 for each em­ployee per pay pe­riod for each sub­se­quent vi­o­la­tion, and other pos­si­ble penal­ties. Th­ese vi­o­la­tions can be stacked, with mul­ti­ple penal­ties for each statu­tory wage vi­o­la­tion.

As I learned the hard way, the penal­ties add up fast, eas­ily reach­ing hun­dreds of thou­sands of dol­lars for a small com­pany like ours (mil­lions for larger busi­nesses). The re­sult is that em­ploy­ers have to en­force oner­ous la­bor reg­u­la­tions that of­ten do not ben­e­fit em­ploy­ees, or risk get­ting sued.

For in­stance, we have em­ploy­ees who start their work day early and don’t nec­es­sar­ily want to stop for lunch at 10 a.m. They would rather wait un­til their friends take their lunch breaks, so that they can eat to­gether.

As a fam­ily-owned busi­ness, we wanted to take em­ployee de­sires into ac­count, so we used to let them wait to eat — even though state law re­quires that hourly em­ploy­ees take a halfhour meal pe­riod af­ter five hours of work, whether they want to or not.

Then, about two years ago, we were hit with a PAGA law­suit. A dis­grun­tled for­mer em­ployee had linked up with San Diego trial lawyers who spe­cial­ize in such suits. Like vir­tu­ally all com­pa­nies that find them­selves the tar­get of a PAGA or class-ac­tion law­suit, we ne­go­ti­ated a set­tle­ment rather than take the risk of los­ing in court and fac­ing the oner­ous max­i­mum penal­ties pre­scribed by the law.

In what was a pretty stan­dard ne­go­ti­a­tion, the at­tor­neys re­ceived 35% of the set­tle­ment, the state got 2%, the me­di­a­tor got 2% and the dis­grun­tled for­mer em­ployee got $7,500. The 300 em­ploy­ees that made up the class ac­tion each re­ceived be­tween $23 and a few thou­sand dol­lars.

Our em­ploy­ees did bet­ter than some plain­tiffs, at least. Google re­cently paid $1 mil­lion to set­tle a sim­i­lar law­suit. Its em­ploy­ees got $15 each, while the lawyers who brought the case walked away with more than $300,000. Uber driv­ers did even worse. They got $1.08 each, the lawyers got $2.3 mil­lion.

The law of un­in­tended con­se­quences has since kicked in at our com­pany. We have had to in­sti­tute strict rules about meal and rest breaks and the ac­cu­racy of time cards, to en­sure that we are al­ways in com­pli­ance with each of Cal­i­for­nia’s com­plex la­bor laws.

Now em­ploy­ees who want to work through their lunch so that they can go home early or eat with fel­low em­ploy­ees are sim­ply out of luck. We can­not legally ac­com­mo­date their rea­son­able re­quests. The com­pany can­not risk an­other PAGA law­suit.

We’ve re­ceived many complaints from our em­ploy­ees about our strict ad­her­ence to ev­ery clause on ev­ery page of the la­bor code, and we’re sorry to take away their flex­i­bil­ity. But our hands are tied. Mak­ing mat­ters worse, a Cal­i­for­nia ap­peals court ruled in Septem­ber that busi­ness own­ers can now be held per­son­ally li­able for cer­tain vi­o­la­tions.

Ask any hu­man re­sources con­sul­tant what em­ploy­ees want in the work­place and their an­swer is likely to in­clude re­spect, trust, recog­ni­tion, au­ton­omy and flex­i­bil­ity. Un­for­tu­nately, Cal­i­for­nia’s la­bor laws and reg­u­la­tions are mak­ing it in­creas­ingly dif­fi­cult for busi­nesses to pro­vide th­ese things.

Law­mak­ers de­feated two bills this year that would have given em­ploy­ers the right to fix prob­lems be­fore PAGA suits could be filed. The Fam­ily Busi­ness Assn. con­tin­ues to search for so­lu­tions.

In the mean­time, I en­cour­age state leg­is­la­tors to come by any of my com­pany’s lo­ca­tions, from Merced to Red­ding, and talk to em­ploy­ees who now can’t eat lunch with their friends or leave early to go to a doc­tor’s ap­point­ment.

Surely this isn’t what the au­thors of the Pri­vate At­tor­neys Gen­eral Act had in mind.

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