In California, lawmakers go out of their way not to offend anyone – unless they own a business.
The California Labor Department is more than willing to take part in smearing business owners as thieves committing “wage theft” if they make even the smallest, good-faith error under California’s complex 1,100-page labor code.
Most Californians would agree that it is unfair to call someone a thief for making a typo or taking a break at a different time than usual, but California regulators have smeared businesses throughout the state for making such minor violations of state code.
If the state really cared about protecting workers, it would work with businesses to ensure they fully understand each policy and how to correct any mistakes. They would simplify regulations that trip up employers to ensure both employers and workers can thrive under the policies.
Instead, they’ve skipped that and rushed right to stigmatizing allegations. They’ve left businesses to fend for themselves knowing that even the slightest error could have them judged as thieves in the court of public opinion.
So why is it that California regulators have allowed state businesses to be smeared for “wage theft” instead of stepping up to support them?
The derogatory label of “wage theft” has been promoted by the California Strategic Enforcement Partnership (CSEP), a group of “worker centers” that has been advising state regulators. Worker centers are unofficial groups that exist in a gray area of labor law. Many of them are financially backed by major labor unions, but because they are not formal unions, they can skirt union regulations while promoting Big Labor’s agenda.
CSEP’s worker centers have made it clear that they do not care about ensuring that businesses have the support they need to comply with the state’s confusing labor code. Instead, they want to further divide workers and employers, making it easier for unions to organize a workplace and collect union dues. That’s why they’ll rush to accuse struggling businesses of “wage theft” instead of advocating for policies that simplify California’s labor code.
This behavior isn’t surprising from Big Labor’s worker centers. But one would think California officials wouldn’t latch on to the anti-business smears, too. Yet they have.
California’s anti-business policies are driving out every small and mid-sized business in the state.
The massive tech firms in Silicon Valley can afford a deep bench of Ivy League attorneys to help them navigate the complexities of the state’s 1,100-page labor code so they can avoid being smeared as thieves. But your local mom-and-pop shop doesn’t have that luxury.
California’s reliance on unelected outsiders to regulate businesses has been disastrous. And outsourcing wage policing to Big Labor-backed worker centers is only the tip of the iceberg.
Under the Private Attorneys General Act (PAGA), California also outsourced much of the enforcement of its labor laws to trial attorneys. PAGA allows trial attorneys to sue employers on behalf of workers for even the most minor offense. These lawsuits can cost businesses millions.
While trial attorneys love PAGA, both workers and employers are worse off.
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A study from my organization, the CABIA Foundation, revealed that PAGA cases took twice as long as cases decided by the state Labor and Workforce Development Agency (LWDA). The average PAGA-decided case left workers with awards of just $1,300 while LWDA-decided cases left workers with $5,700. On the other end, the average PAGA lawsuit costs employers $1.1 million while the average LWDA-decided case costs employers $790,000. The trial attorneys earn an average of $372,000 per case.
On the whole, California businesses are trying to do right by their employees and customers. They shouldn’t be dubbed wage thieves over good-faith misinterpretations of a complex, 1,100-page labor code.
It’s well past time for California regulators to stop allowing PAGA attorneys and special interest groups to take advantage of well-meaning employers. Support California businesses. Don’t smear them.
Tom Manzo is the president and founder of the California Business and Industrial Alliance (CABIA).