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August 2004SCHWARZENEGGER KNOCKS SOME TEETH FROM THE “SUE YOUR BOSS” LAWCalifornia employers won partial relief from the so-called
“Sue Your Boss Law,” when Governor Schwarzenegger signed Senate Bill 1809
into law as part of the state budget deal. Codified at Labor Code section 2699, the “Sue Your Boss”
law, which took effect January 1, 2004, allowed employees to bring civil
actions against their employers to recover penalties for petty violations of
the Labor Code if the Labor Commissioner did not do so. Although many employer groups were
hoping that the legislature would repeal this law in its entirety as part of
California’s recent budget negotiations, the amendments obtained by Governor
Schwarzenegger provide some significant relief to employers from the most
draconian features of this law.
As an urgency measure, the bill will take effect immediately. This Alert summarizes key provisions
of the new law. Violations Of Insignificant Labor Code Sections Excluded From LawAs a critical victory for employers, the amendments
expressly provide that employees may not bring an action
under this law for certain technical Labor Code violations involving posting,
notice, agency reporting, or filing requirements, except where the filing or
reporting requirement involves mandatory payroll or workplace injury
reporting. Employees Must Satisfy Reporting Procedures
Enumerated ViolationsThe amendments establish new procedures that an aggrieved employee must follow prior to bringing a civil action to recover penalties for certain enumerated violations of the Labor Code (including violation of specified provisions regarding overtime, wage payment, meal and rest periods, child labor, and certain other laws ). The employee, prior to bringing suit, must first provide written notice of the specific code section alleged to have been violated, including the facts and theories relied upon to support the alleged violation to both the Labor and Workforce Development Agency (LWDA) and the employer. The aggrieved employee may pursue a civil action only if the LWDA fails to investigate the complaint, or investigates but does not issue a citation. Health and Safety ViolationsWith respect to violations of health and safety laws (Cal OSHA), aggrieved employees are now first required to give written notice to the LWDA and the employer of the specific provision alleged to have been violated, including the facts and theories supporting the alleged violation. If the LWDA investigates and issues a citation, no civil action may be brought by the employee. If the LWDA fails to issue a citation within a specified time, the employee may challenge that decision in court. All Other ViolationsWith respect to all other violations of the Labor Code,
the aggrieved employee must give written notice to the LWDA and the
employer of the alleged violation.
The employer may then cure the alleged violation within a specified
time. If the violation is cured, the employee may not file a lawsuit. If the employee does not believe that
the alleged violation has been cured, the employee may ask the LWDA to review
the actions taken by the employer.
Thereafter, the employee may only bring a civil action if the LWDA
fails to respond or determines that the violation has not been cured. If the LWDA determines that the
violation has been cured, and the employee disagrees with that conclusion,
the employee may challenge that determination in court. Greater Judicial Oversight
The amendments provide for greater judicial scrutiny. As you may recall, the original “Sue Your Boss” law allowed employees to recover specific penalty amounts expressly set forth in the Labor Code – including up to $5,000 or more – for certain Labor Code violations. Also, to the extent that a Labor Code section did not expressly provide for a penalty, Labor Code section 2699 provided that employees could recover $100 for each aggrieved employee per pay period for the initial violation of those sections and $200 for each aggrieved employee per pay period for each subsequent violation. The amendments authorize a court to award a lesser amount than the maximum civil penalty amount allowed if to do so otherwise would result in an award that is “unjust, arbitrary and oppressive, or confiscatory.” Moreover, the courts are required to approve any proposed settlements to ensure that they are at least as effective as the protections provided by state and federal law. New Retaliation ProvisionThe amendments also add new employee protections, adding an anti-retaliation protection for employees that makes it unlawful for any employer to take any action against an employee for initiating any action, sending any notice, or participating in a charge or lawsuit under this law. Practical ConsequencesAlthough these amendments knock several teeth out of the “Sue Your Boss” law, employers still face significant penalties for a number of Labor Code violations, including wage-and-hour violations. Employers are strongly encouraged to audit their wage-and-hour practices and other similar policies and practices to avoid civil penalties under this Act as well as general damages and other penalties set forth in the Labor Code. Click here to view the full text of the bill |
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