At CNCDA, our members empower us to serve as their voice in Sacramento and beyond. We wield that voice to effect change on those issues impacting California’s new car dealers. As a leader in business advocacy, many times the issues impacting our members are widespread throughout the business community. One of those issues that proves to be a perpetually hot item is PAGA. For nearly two decades this legislative act has struck at the nerve of businesses from mom-and-pops to global corporations. Now, with the leadership of CNCDA, relief is on the horizon.

First, what is PAGA?

PAGA, or the Private Attorneys General Act, was passed by the California State Legislature in 2004 to give employees facing Labor Code violations the power to act as their own private attorney general, bringing a case against their employer to recover compensation. What this means is that an employee can represent not only themselves, but also all aggrieved employees, and do so with the authority of the state.

After its inception, PAGA became a tool for trial attorneys across California to take advantage of employers through expensive lawsuits for minor infractions, often forcing defendants into settlement, rather than face potentially steeper penalties in court. Although technically not class action suits, PAGA penalties can still cost hundreds of thousands, if not millions, of dollars.

With a Labor Code of over 1,000 pages, lawyers take advantage of the most obscure violations to extort money from businesses, taking a large share of the payment themselves.

Why hasn’t anyone fixed it?

The simple answer is that there have been a number of attempts, but so far, no success. The biggest roadblock preventing reform is the strength of the trial lawyers and the hesitancy of the legislature to fix a law that purports to benefit employees. Trial attorneys have continued to frame PAGA as a labor protection, and lawmakers are especially unwilling to take up issues that are perceived as going against labor groups. This despite the fact that studies have shown employees’ payouts handled by the Labor Workforce and Development Agency — as opposed to those brought by private attorneys — amount to nearly double the recovery for employees, while costing businesses less than half of what they would pay in court. So, even though PAGA reform would likely improve outcomes for businesses and employees, alike, interest groups have successfully likened any PAGA reform to an attack on workers’ rights. Bills have been discussed, but unfortunately, California’s single-party rule creates a massive barrier to a legislative fix.

What’s CNCDA doing about it?

Right now, CNCDA is taking the lead to bring the issue directly to California’s voters. On Dec. 8, the attorney general released the official title and summary for a proposed ballot measure to replace PAGA with a system that is more fair to employees and employers. But there are many hurdles on the path ahead. First, we must gather over 620,000 valid signatures to secure its spot on the ballot. Then, once the signatures are certified, the campaign begins. This will not be an easy endeavor, and it will not be cheap. This initiative will depend on the backing of the entire business community and the support from our allies to get this across the finish line, and dealers must serve as leaders and examples for other businesses.

Over the past several years, CNCDA has worked to develop a strong coalition to push for a PAGA replacement that we believe can win at the ballot box. We have allied with CalChamber, the California Restaurant Association, and the Western Growers Association to lead this endeavor. We are working diligently to grow our coalition and secure additional financial backing, and the enthusiastic support of our members will be our greatest asset.