Employers To Multimillion-Dollar Lawsuits Bounty-Hunting Private Attorneys Benefit At The Expense Of California Businesses, Jobs
"California's 'Sue Your Boss' law could potentially cost our state's employers their livelihood and force them to hand over the keys to their business for as small a violation as not having the right size type font on a poster. Employers predicted that multimillion-dollar frivolous lawsuits would be filed under this law, and to date they have unfortunately been proven correct." - Senator Chuck Poochigian SB 796 - "SUE YOUR BOSS" LAW OVERVIEW The "Sue Your Boss" law, SB 796 (Dunn), was rammed through the Legislature last year and was signed into law by Governor Gray Davis five days after he was recalled from office. The highly controversial law allows any current or former employee to hire an attorney to sue his employer for any Labor Code violation. As was predicted, this law was the start of a spate of frivolous claims against the state's employers. California has one of the most complex regulatory systems in the nation, with thousands of Labor Code sections, providing a virtual gold mine for meritless lawsuits. SB 796 provides for a penalty of $100 per employee for each pay period during which there was a violation if there is no administrative penalty for a specific Labor Code violation. For a subsequent violation, the penalty increases to $200 per employee, for each pay period. Lucrative incentives are given to "private attorneys general" to encourage employees to sue their employer under the new law for any perceived violation by the employees' eligibility to keep 25% of the assessed fines and penalties, and their attorney's ability to collect fees. Prior to the "Sue Your Boss" law, Labor Code enforcement was the sole responsibility of the Labor and Workforce Development Agency. SB 796's proponents showed no evidence indicating that the agency, nor any of its divisions, were not properly enforcing the law. Under the "Sue Your Boss" law, the requirement that claims first be filed with the Labor Commissioner or state agencies tasked with enforcing labor law to ensure validity was eliminated. Rather than imposing reasonable fines on businesses that may have violated the Labor Code, SB 796 can be used to seek huge monetary judgments against employers for even trivial and unintended infractions. This law leaves employers vulnerable to a wide array of new civil lawsuits, including new incentives for Business and Professions Code Section 17200 lawsuits.The costs that businesses must incur to defend against such claims can far exceed the costs of coming into compliance with the alleged labor law violation. There is also no remedy that allows employers to recoup attorneys' costs for unfounded suits. Although the new "Sue Your Boss" law went into effect just six months ago, a number of California companies are already finding themselves under attack. Lawsuits using the new law have been filed against major motion picture studios, biotech companies, office supply stores and others. Any successful verdict could prompt even more "Sue Your Boss" suits filed against virtually any employer in the state.
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