If you received a Private Attorney General Act (PAGA) notice, you are facing a significant legal challenge that requires prompt, strategic action. While it might seem easier and less costly to adopt a reactive approach—waiting until issues arise to investigate and hoping for a positive outcome—a proactive approach can ultimately save time and resources, while protecting the company from additional exposure and negative publicity. To avoid unnecessary expenses and reputational damage, a proactive and precise defense is essential. Here’s an overview of what you can expect when defending against a PAGA claim.
Understanding PAGA and Its Implications
PAGA allows employees to file lawsuits on behalf of themselves and similarly affected employees for violations of California’s labor code, if the state declines to investigate the allegations within 65 days of the PAGA notice. Employees and their lawyers can pursue the case and receive a share of the penalties recovered for the state. Steep penalties can quickly add up over every affected pay period in the past year, continuing until the case is resolved.
In addition, the same allegations may also lead to a wage and hour class action, further multiplying exposure. If the claimant is not bound by an enforceable arbitration agreement, they may seek to represent a class of similarly-situated employees, in addition to their PAGA case. Class claims can extend back as far as four years. The extensive potential liability necessitates a comprehensive legal strategy.
Initial Steps: Assessing Your Risk
1. Calculate PAGA Deadlines
California law gives employers as little as 33 days to respond to a PAGA notice. Missing early opportunities to cure or remedy alleged violations can forfeit potential defenses and reductions in PAGA penalties. Take prompt action to evaluate the allegations and respond appropriately within the statutory deadlines.
2. Implement a Litigation Hold
If you anticipate or receive a PAGA notice, initiate a litigation hold. This ensures that all relevant documents are preserved and prevents key evidence from being destroyed or altered.
3. Retain Counsel to Review Company Policies and Investigate the Allegations
Work with an experienced California wage and hour attorney to develop a plan to protect attorney-client privilege while gathering relevant facts and documents. An investigation can uncover weaknesses in the plaintiff’s claims, as well as identify potential compliance issues that could affect your defense strategy.
4. Evaluate Potential Exposure
Determine the scope of the alleged violations and how many employees are impacted across the relevant timeframe. The potential exposure can be millions of dollars even for inadvertent compliance errors. By accurately assessing the risks and potential penalties your business may face, you can make informed decisions about litigation strategy to resolve the matter.
The Importance of PAGA Expertise
Defending against a PAGA lawsuit requires expertise in California’s complex labor laws and the nuances of PAGA litigation. An experienced PAGA lawyer will:
- Navigate procedural deadlines and requirements
- Identify effective defenses to minimize liability
- Help avoid common pitfalls that could jeopardize your case
The right counsel will work with you to develop a response strategy that protects your business from unnecessary exposure and risk. Someone unfamiliar with the specific requirements of PAGA may miss critical filing deadlines, fail to raise key defenses, or overlook opportunities to minimize penalties. The procedural complexity and constant changes in PAGA law mean that even small errors can lead to costly mistakes, increased liability, and weakened defenses.
Developing a Legal Strategy
Case Assessment and Planning
Begin by working closely with your attorney to uncover all the key facts. This not only strengthens your defense but also reveals potential weaknesses in the plaintiff’s claims.
Evaluate Claim Viability
Assess the extent to which any of the claims have merit. Create a timeline of events to identify inconsistencies or areas where the case can be disputed.
Creating a Game Plan
Set clear objectives. Whether you aim to settle quickly or vigorously defend against the claims will influence your strategy.
Weigh Alternatives Like Mediation or Arbitration
In some cases, alternative dispute resolution can help you avoid lengthy litigation and reduce costs. This should be explored as an option early on.
Consider Early Settlement
Depending on the circumstances, if opposing counsel is open to settling early, it can be more cost-effective than prolonged litigation, even if you ultimately would be vindicated in court. Defense costs and reputational harm are factors to weigh.
The Cost of Litigation
Legal battles can take years and cost hundreds of thousands of dollars or more. Costs to anticipate include:
- Initial Costs: Preliminary investigations, legal consultations, data analysis experts, and potential early mediation costs.
- Pleadings: Challenging and answering the complaint.
- Discovery: Serving and responding to written discovery, preparing and reviewing document productions, and taking and defending witness depositions.
- Class Certification: Preparing expert reports, researching and drafting the opposition brief, and arguing against class certification.
- Summary Judgment: Researching arguments, drafting briefs, and arguing at the court hearing.
- Trial Preparation: Expert witnesses, exhibits, and the necessary preparation to take the case to trial.
- Post-Trial: Post-trial motions and appeals can prolong the litigation even after the trial is over.
- Administration: Sending notice and payments to the employees.
Conclusion
Fighting a PAGA lawsuit is a complex process that requires careful consideration and proactive planning. By acting proactively and developing a clear, effective strategy, you can position your business to navigate this challenging landscape.
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