Labor bills on tap: shift to private enforcement may make it easier to sue.

California entered the new fiscal year with an almost on-time budget. The governor signed the most quickly passed budget in five years into law July 11, clearing the way for a legislative summer break scheduled to begin July 15.

"The bipartisan $117.3 billion spending plan does not raise taxes, contains no new borrowing, pays down our debt and invests in education, transportation, health and safety," according to Gov. Schwarzenegger.

The Legislature will reconvene Aug. 15.

An Expanding Right to Sue?

In spite of California's improving economic outlook, state resources remain stretched. Organized labor and others are using the lack of sufficient state resources to justify shifting enforcement to private parties by expanding California citizen's right to sue to enforce compliance with state environmental and labor laws.

A tort reform group, the Civil Justice Association of California (CJAC) has alerted CalCPA to three bills that seek to erase some of the reforms contained in Proposition 64 that California voters adopted last year.

Proposition 64 limited the ability to file class-action lawsuits against businesses for unfair competition unless actual damage has occurred. It was adopted by an overwhelming majority of votes cast in November.

"Beneficial Interest"

AB 528 (Frommer et al) allows any person with a "beneficial interest" in the outcome to bring civil action to enforce laws regarding the protection or enhancement of public health or the environment.

CJAC points out that because "beneficial interest" is undefined, the bill would allow anyone to claim a beneficial interest, which would open the statute to use by trial attorneys interested in collecting the excessive fees. The bill is sponsored by several environmental groups and the author who argues, "The state's fiscal problems place the protection of our air, water, coastlines, wildlife, and natural resources in jeopardy as budgets are cut year after year to provide basic services. These limited enforcement funds seriously weaken government's ability to enforce laws passed to protect public health and natural resources. And unfortunately, in some cases government lacks the political will to enforce the law."

AB 528 is a two-year bill on the Assembly floor. It will be voted on in January 2006.

"Sue Your Boss" Proposals

CJAC is referring to two new proposals--SB 174 and AB 581--as "Sue Your Boss" bills.

SB 174 (Dunn), would authorize employees paid less than twice the minimum wage to file suit on behalf of themselves and any other current and former employees paid less than twice the state minimum wage. Existing law allows any employee to file a civil action to recover unpaid wages or overtime including interest, reasonable attorney's fees and costs of suit and under the Code of Civil Procedure 382 allows for class-action suits.

This bill is intended, according to the author, to allow private representative actions resembling the representative actions that the state Labor Department is authorized to bring. The Division of Labor Standards Enforcement has authority to bring cases without obtaining class certification of the action.

The DLSE determines who would be covered by the case and notifies them of the action and their right to recover. Employees are bound by the results of the litigation only if they participate as a party or accept payment under the terms of the settlement or judgment.

SB 174 expands on the theme of "regulation through litigation." The bill allows the employee to seek penalties, interest, costs of the suit, and attorney fees.

According to CJAC, "allowing private attorney generals to 'deputize' themselves and sue instead of seeking redress from the state labor agency will once again lead to excessive and costly litigation."

The sponsor of the measure, the California Rural Legal Assistance Foundation argues that "California's underground economy is thriving and much of the profit it generates is at the expense of low-wage workers. Decades of lax enforcement of labor law violations has resulted in widespread abuse."

The California Chamber of Commerce argues that "SB 174 provides new incentives to file lawsuits because the bill proposes to grant what is essentially class-action status to one worker's wage and hour claim without having to meet any of the current standards or scrutiny associated with a recognized court-supervised class action lawsuit."

In spite of massive opposition from business, SB 174 is expected to pass. It already has passed the Senate and the Assembly will vote on it in late-August.

AB 581 (Klehs) expands the litigation authority of joint labor management committees.

Such committees were originally intended to improve labor and management relationships by maintaining open communication between labor and management. Legislation enacted in 2001 allows the committees to file suit over wage violations.

AB 581 would allow lawsuits for violations of workers' compensation laws, scope of work and hours worked. Current law allows for judicial discretion as to who pays attorney fees, costs and expenses. This bill would require judges to award these fees to the prevailing plaintiff committee.

The bill also lengthens the statute of limitations for claims from 180 days for these committees to four years. The law already allows three years to bring a private wage and hour claim. AB 581 is in the Senate and is expected to pass.

Bruce C. Allen is CalCPA's director of government relations.