business backgrounder | industry
“ If you make regulation inhospitable , businesses will leave .”
— Bob Battles , General Counsel and Government Affairs Director , AWB
In recent years , Battles has seen more proposals — so far unsuccessful — to provide for PRAs to workplace issues including workplace safety , wage and overtime provisions , and privacy protection . Bills introduced in 2020 , 2021 , and 2022 failed to advance . But Battles believes the effort to create new PRA avenues will continue .
For small business owners , litigation can be costly in dollars , time , and reputation . That ’ s also true for large corporations when a multi-million-dollar class action lawsuit is in play . Imagine that anyone who walks into your place of business can initiate a lawsuit for a perceived violation of state regulations .
We don ’ t have to imagine . The evidence from California , which adopted a PRA law years ago , shows what ’ s at stake . The California Private Attorneys General Act of 2004 ( PAGA ) established a private right to action similar to that proposed here . The results have not been good for workers or employers . A 2021 report prepared for the CABIA Foundation ( California Business and
Industrial Alliance ) found :
• lower payouts for workers : The
average payment a worker received from a case decided by a state agency was 4.5 times greater than one decided by
a court .
• higher costs for employers : “ Even though workers are
receiving high awards from [ agency-decided ] cases , employers are paying out 29 % less per award .” That ’ s likely because the
agency-decided cases don ’ t award attorneys ’ fees .
• lawyers take a big cut : “ Attorneys who file PAGA cases
are compensated with fees that represent 33 % or more of the workers ’ total recovery , coming to more than $ 372,000 per case on average .” The lopsided distribution of the rewards is demonstrated in a 2020 release , in which the California Chamber writes , “ In a PAGA lawsuit against a transportation company in 2018 , individual drivers received just $ 1.08 . The attorneys made $ 2.3 million .”
Speaking on AWB ’ s Capitol Focus program , attorney Dan Spurgeon , who previously practiced in the Golden State , told Battles , “[ PAGA ] resulted in a drastic increase in litigation ... In the short run it ’ s the employers who pay for it because they are compelled to settle these cases at whichever price is asked of them . In the long run , though ,
In California , a PAGA lawsuit against a transportation company in 2018 , individual drivers received just $ 1.08 .
The attorneys made
$ 2.3 million . the employers and the employees pay for it because businesses leave the state , they reduce the number of employees , or they go bankrupt .”
Privacy claims — data breaches and data usage — bring other challenges , particularly for small employers , Battles says , offering one example .
“ You go to your little coffee shop on the corner . They ask , do you want to be part of our email list for free coffee on Wednesday ?”
You say yes , then change your mind and ask to opt out . They don ’ t remove it for a few weeks . Under a PRA , he says , the coffee shop might face a lawsuit . Battles says the PRAs amount to regulation by litigation , meaning lawsuits are driving policy . It ’ s a clumsy way to handle what in many cases are simply mistakes that can be resolved by the agencies working with employers to promote safe and fair workplaces . The processes at L & I are working . As we ’ ve seen in California , he says , “ if you make regulation inhospitable , businesses will leave .”
Sixty percent of AWB members have fewer than 10 employees . They don ’ t have staff attorneys , Battles notes . Establishing a private right of action subjects them to abuse . The CABIA report points out that in California “ employers are vulnerable to being pressured into settling in response to demand letters threatening legal action under PAGA .”
There ’ s a better way to handle these cases . Fortunately , it ’ s already in place in Washington .
52 association of washington business