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At the start of the year, California made it easier and more lucrative for employees to sue employers. The experiment�the first in the nation�is to see if deputized employees can take over the job of enforcing workplace rules. Plaintiffs’ attorneys are starting to file the first of the suits that give the law its teeth, and while no overall statistics are available, so far the flood of lawsuits the business community predicted has not materialized. For example, an informal survey of Seyfarth Shaw’s three West Coast offices�in Los Angeles, San Francisco and Sacramento, Calif.�shows that the Chicago-based firm’s sizeable employment law practice is defending a dozen suits that cite the new law, the Labor Code Private Attorneys General Act. “It’s not Chicken Little time,” said Brian T. Ashe, a Seyfarth partner who is representing employers in two suits. “But as a proportion of the lawsuits our firm has gotten since Jan. 1, it is significant.” Dubbed the “sue your boss bill” and “a hunting license” by opponents, the new law creates a private cause of action to sue over any alleged labor code violations that have not already been addressed by the state labor commissioner. A litigant can go directly to court, with no waiting to exhaust administrative remedies. If there is no stated civil penalty for a particular labor code violation, employers can be fined $100 per employee per pay period and $200 for each subsequent violation, in addition to attorney fees and costs. The prevailing employees will receive 25% of these penalties. (Half goes to the state’s general fund and the remaining quarter to the state Labor and Workforce Development Agency.) Streamlined states Supporters say it was needed because staffing levels for state labor law enforcement agencies have declined over the last decade. Opponents, including the governor, say it makes an already business-hostile climate worse and will drive jobs out of state. A number of other states have adopted streamlined causes of action for workers in limited areas, such as construction disputes, said Mark Schacht, deputy director of the California Rural Legal Assistance Foundation, who drafted the legislation. “What’s unique is that this statute is global,” noted Schacht. The statute covers a hot area-wage-and-hour obligations, including overtime and minimum wage laws-as well as employee classification issues, drug and alcohol rehabilitation requirements, state law governing layoffs, public works, occupation safety and health, and many other conditions of employment, from absences to the zoning of labor camps. For example, even if the California Occupational Safety and Health Administration does not cite a grocery market for a purported safety violation, workers at that market can now sue for themselves and other workers and, if they prevail, get a portion of the penalty-a privilege once reserved for a commissioner. But the defense side doesn’t talk about safety violations. Rather, they say the new law elevates minor technical violations that are beneath the notice of the commissioner. Some lawyers have done the math to show how the open-ended penalties could combine with a minor posting violation to literally bankrupt a hapless company. Schacht scoffed at this. “We have a line of cases in California going back 30 years that strike down disproportionate penalties as a violation of due process,” he said, referring to the state Supreme Court’s opinion in Hale v. Morgan, 22 Cal.3d 388 (1978). But Scott Dunham of O’Melveny & Myers, who is defending one of the new suits, isn’t reassured. “The law is very specific about having open-ended penalties,” Dunham said. “Is he saying his law isn’t enforceable because it’s unconstitutional?” At least some of the new suits do bolster the defense bar’s concern that the law aims at “ticky-tacky violations that haven’t hurt a soul,” as Charles Barker of Los Angeles-based Sheppard, Mullin, Richter & Hampton put it. Barker is defending a Los Angeles Superior Court suit, Waters v. Vivendi, which alleges that Vivendi, the corporation that owns Universal Studios, failed to post a hotline phone number for would-be whistleblowers as required at the start of the year. The suit also alleges failure to file an application for a form with the Division of Labor Standards Enforcement “that in the past has never done anything with the applications or the forms,” according to Barker. The same two complaints, plus three others also relating to relatively obscure provisions of the labor code-coupled with a demand for the penalties provided-appear in a second lawsuit, Umbrasas v. Amgen, defended by Dunham and filed in Ventura County, Calif., Superior Court. Wider ramifications Both Barker’s and Dunham’s technicality-centered suits were filed by plaintiff’s attorney Allen W. Graves of Pasadena, Calif.’s Graves & Associates. He is unapologetic. While the whistleblower law he cited may be new this year, “many of these posting requirements have been on the books 30 years and employers have thought they could ignore them,” said Graves. Some violations appear minor but have wider ramifications, added plaintiff’s attorney Michael A. Gould of Garden Grove, Calif.’s Gould & Associates. For example, one of four suits he’s filed under the new law, Martinez v. Autozone in Los Angeles Superior Court, alleges a failure to provide an itemized pay statement to employees. “That suddenly becomes very important if the worker has to show a detailed pay stub to a third party, like when applying for a mortgage,” Gould said. A tacit acknowledgement that minor technicalities could be a problem comes from a half-day seminar “Understanding and Using the New Labor Code Private Attorneys General Act,” offered by the California Employment Lawyers Association. While CELA declined to provide program materials, CELA Chairman Phil Horowitz confirmed that one segment was “ethical considerations in filing lawsuits under the act.” That concerned “not overusing the law through nitpicking and citing technical violations,” Horowitz explained. He said frivolity would be “posting examples,” in contrast to a substantive claim that “workers aren’t being paid overtime.” Schacht added, “I expected the law to be used responsibly, but we’re mindful of litigation abuses and . . . prepared to amend the statute if it’s needed.” A second possible trend seen in the earliest of the suits is the pairing of labor code allegations with causes of action outside the statute. For example, the suit against Autozone includes a common law complaint that the company pays bonuses from which it deducts business losses, such as theft of inventory, which the worker may have no control over. It also includes a failure to provide meal breaks under a statute passed four years ago that has become a popular class action. The new law is providing “throw-ins” to “increase the pressure on the employers, with those penalties,” asserted Lindbergh Porter Jr., who is defending four of the cases. Porter said hardly a day goes by that his San Francisco office of Los Angeles firm Allen Matkins Leck Gamble & Mallory doesn’t hear of another suit incorporating labor law allegations filed in San Francisco Superior Court.

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