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New California Legislation Increases Penalties for Labor Code Violations and Steps Up Enforcement with Private Lawsuits

October 20, 2003

In one of his last acts before leaving office, Governor Gray Davis has signed into law the "Labor Code Private Attorneys General Act of 2004." The law, which takes effect on January 1, 2004, allows employees to bring suit on behalf of themselves and other current or former employees employers for violations of the state Labor Code. Prevailing employees are entitled to recover reasonable attorneys' fees and costs, and 25% of the penalties assessed against the employer. The law also establishes new civil penalties for all violations of the Labor Code which did not previously specify a penalty—$100 per aggrieved employee per pay period for the first violation and $200 per employee per pay period for each subsequent violation. Violators who are not employers (such as individual managers and other entities that do not meet the technical definition of "employer") are subject to a $500 fine.

The California Labor Code encompasses a broad range of substantive areas, including payment of wages, overtime and minimum wage requirements, employment of minors, workers' compensation and Cal/OSHA. Employers throughout the state should thoroughly review their operations before the end of 2003 for compliance with the myriad requirements of the Labor Code. The fee-shifting provisions and revenue-sharing structure of the Private Attorneys General Act will only increase the attractiveness of wage and hour lawsuits for plaintiffs' lawyers, and employers of all sizes can expect greater scrutiny of their business practices.