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SAN FRANCISCO � For national employers with workers in California, a single employee may now sue on behalf of all workers to recover state labor penalties for alleged wage and meal-break violations without having to qualify as a class action, a court has ruled. The results can be very costly for employers because the Labor Code imposes penalties up to $100 per employee for each violation, and $200 per employee for each pay period for continued violation. The law has been dubbed the “bounty hunter” law by employment lawyers because the employee who sues gets to keep 25% of the penalty recovered, with the state taking 75%. “The potential violation penalties can dwarf the wage liability,” warned Anthony P. Raimondo, attorney at Saqui & Raimondo of Salinas, Calif. “Ultimately, unless this is clarified or limited by the courts, it is potentially catastrophic for businesses.” Raimondo represents Angelo Dairy, a small Lodi, Calif., dairy sued for alleged failure to pay overtime and provide rest breaks and mealtime. Arias v. Super. Ct. of San Joaquin County (Angelo Dairy), No. C054185 (Calif. 3d Ct. App.). California’s 2004 Private Attorneys General Act (PAGA) allows an employee’s representative action to enforce California labor law in the manner of a private attorney general. That includes seeking penalties that previously only state agencies could recover. Justice Coleman Blease wrote that the language of the 2004 law and the intent of the legislature indicates “an aggrieved employee may bring an action on behalf of other employees without complying with the requirements of a class action.” Lawyers for the plaintiff, Jose Arias, could not be reached for comment. More ‘enticing’ Michael Kun, a labor law specialist in the Los Angeles office of New York-based Epstein Becker & Green, said PAGA initially allowed mechanical application of penalties with no opportunity for employers to cure the violations. That was quickly changed and made lawsuits less appealing, but Arias may change that, Kun said. “Simply, the fact that they do not need to go through the sometimes onerous class action procedures, including having to file a motion seeking to have a class certified, may make PAGA claims enticing to employees and their counsel once again,” he said. California voters cut back on perceived abuses of the state’s more frequently used Unfair Competition Law with passage of Proposition 64 in 2004, which mandated that suits must comply with class action requirements. That vote has no effect on the new Private Attorney General Act. “This means there is a very serious risk of the same abuses that lead to Proposition 64 will occur under the new law,” Raimondo said. Class action requirements allow for greater court oversight by making sure lead counsel is representative of the class, that the lead plaintiff is appropriate, that class members have a common interest and that settlement proposals get a fairness hearing. “I don’t think the court answered questions about why the class action requirement is not applicable,” Raimondo said. The suit by Arias alleged that Angelo Dairy failed to pay overtime and allowed for no meal periods or rest breaks during his shifts. He also alleged numerous Labor Code and regulatory violations, including that worker housing was not habitable. He sued on behalf of current and former dairy employees. Raimondo said that the owners of the small dairy have been trying to mitigate the cost of the litigation, and it is unclear if they can afford to appeal. “The goal was to enter negotiations to resolve the case, but the other side insisted on a classwide settlement. That left us at loggerheads,” he said.

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