CA recently collected $1,460,556.75 from a single PAGA lawsuit settlement-Some say PAGA hurts small businesses the most


The California Private Attorneys General Act (PAGA) has become a significant concern for many businesses registered in Orange County. As PAGA lawsuits continue to affect companies in Orange County, it's crucial to understand their impact on employers and employees. In addition, settlements for PAGA violations can range from $500,000 to over $3.5 Million, which can be a significant financial burden for businesses.

Settlements for PAGA Violations: A Financial Burden for Businesses

Employers have recently faced PAGA lawsuits which have resulted in settlements, sometimes for minor violations. Examples of such employers include Sonic Drive-In, Laser Eye Care of California, Ambry Genetics Corporation, and Covenant Care California. The settlements have ranged from $500,000 to over $3.5 Million.

To avoid PAGA claims, employers must comply with labor laws. These include wage and hour compliance, employee classification, pay stub compliance, and meal and break time compliance. Seeking the help of civil defense attorneys can also guide employers regarding workers' rights and tips to avoid PAGA claims.

Watch the short video below for more on PAGA

Common Violations Accused Against Employers

Employers have been accused of several violations. These include:

- Not providing meal and rest breaks

- Not paying overtime

- Not paying wages on time after an employee is terminated

- Not paying wages during employment in a timely manner

- Not providing complete and accurate wage statements and payroll records

- Not reimbursing necessary business-related expenses and costs.

California employment and wage and hour laws are complex, with over 100 labor statutes and additional codes and orders. To prevent or reduce the impact of California PAGA claims, employers can seek the help of civil defense attorneys.

The Controversy Surrounding PAGA: Is it Causing More Harm than Good?

However, some, like Tom Manzo, the president of Timely Prefinished Steel Door Frames in Los Angeles and founder of the California Business and Industrial Alliance, believe that PAGA is causing more harm than good to small businesses. He claims that PAGA enables employees to file thousands of frivolous lawsuits annually, leading to negative results such as reduced bonuses and a less flexible work environment for remaining employees.

Manzo claims that PAGA lawsuits can be detrimental to small businesses. This could include reduced bonuses and a less flexible work environment for employed employees. This results in fewer rewards for deserving employees and reduced benefits, thus harming businesses overall.

PAGA lawsuits have become a significant concern for employers in Orange County. The penalties and settlements resulting from PAGA claims can be severe, resulting in financial losses for businesses.

Critics of PAGA have raised concerns. They claim that the law provides an easy opportunity for lawyers to exploit both employees and employers. In many cases, attorneys receive the largest share of any settlement while the workers make substantially less.

Furthermore, PAGA-related court proceedings are lengthy and expensive, especially for small businesses and nonprofits. Even employers with good intentions are losing money. This is because settling is usually more affordable than going to court. They have not wronged their workers or failed to pay them properly.

Recent PAGA Lawsuits Against Covenant Care California, LLC and Settlements Reached

A 10th PAGA lawsuit was filed against Covenant Care California, LLC, in April 2023. Lawyers for Justice, PC, represents Alexandria Perkins in this case. Covenant Care California is registered in Aliso Viejo. Orange County. It does business across California under numerous names, including Capital Transitional Care, Capital Transitional Care, and Care La Jolla.

View the full complaint below.

Covenant Care California recently reached a settlement of over $3 million in a PAGA lawsuit that was settled in May 2021. This included payments of $33,500 for administrative costs, $1,088,500 for attorneys' fees, $28,091 for litigation costs, and Service Enhancement Payments of $7,500, $2,500, and $2,500 to fund improvements to the court system as ordered by the court.

After all the above-referenced payments were made, $1,947,409 remained. Of this amount, 75% was allocated to the California Labor and Workforce Development Agency (LWDA). This amounted to $1,460,556.75.

The remaining 25% was to be divided equally amongst the three plaintiffs who brought the lawsuit against Covenant Care California. This means each plaintiff's settlement equaled roughly $162,284. Over $3 Million awarded, and the employees only see 5% of it? That seems unreasonable.

View the entire settlement agreement below.


Do you think PAGA negatively impacts small businesses?


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