Gavin Newsom Targets Labor Law That Cost Businesses $10 Billion

By: Georgia | Published: Jun 13, 2024

For twenty years, California’s labor laws have allowed employees to take huge corporations to court, leading to massive settlements like Uber’s $20 million and Google’s $27 million payouts. 

Now, Governor Gavin Newsom is stepping in, spurred by big business to tweak these laws that they claim are too costly.

Newsom's Quiet Moves

Under the radar, Governor Newsom has started discussions on reshaping the controversial Private Attorneys General Act (PAGA).

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Governor Gavin Newsom in a formal setting, engaged in a serious discussion while seated at a desk with a laptop in front of him

Source: Wikimedia Commons

This is after hearing complaints from California’s business giants about how progressive policies are thinning their profits.

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The Clock is Ticking

With a June 27 deadline looming, the pressure is on to amend PAGA before Californians vote on potentially repealing it. 

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Interior of a richly decorated courtroom in the California State Capitol, featuring marble walls and classical architectural details

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The stakes? Avoiding the heavy financial toll of a ballot fight.

Who's at the Negotiating Table?

The California Chamber of Commerce and the Labor Federation, representing both big business and workers, are hashing out a deal

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Front view of a Walmart store building, showing the brand's logo and entrance with shopping carts lined up outside

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Everyone from Walmart to small business owners has a say, hoping to dodge a costly showdown this November.

The Compromise Dilemma

Both sides prefer a compromise over a ballot war.

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Close-up of a judge's gavel resting on a wooden desk

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They have hinted at possible reforms to PAGA that could reduce frivolous lawsuits without stripping workers of their rights to challenge unfair practices.

Big Money on the Line

Business groups are not holding back, with over $31 million poured into campaigning for PAGA’s amendment. 

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This includes everything from gathering signatures to an all-out advertising campaign.

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Newsom's Business Balancing Act

Governor Newsom, no stranger to the business world, aims to keep both California’s workers and its business moguls satisfied.

Gavin Newsom speaking at a podium with the California state seal, an American flag beside him

Source: CAgovernor/X

This is a tricky balance given the state’s strong progressive streak.

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The Power of PAGA

Jennifer Barrera, president of the California Chamber of Commerce, said, “PAGA is a California-only issue that businesses in California are subjected to, and it adds a huge layer of costs for them.” 

Nighttime aerial shot of Los Angeles showing brightly lit city streets and skyscrapers

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This reflects the business community’s perspective on the financial burdens imposed by the current law.

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Seeking Fewer Lawsuits, Ensuring Fairness

The potential reform of PAGA could lead to a reduction in the number of lawsuits, particularly those based on minor violations of the state labor code.

A formal courtroom setting with judges seated behind a long bench, listening to a lawyer speaking at a podium

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Labor leaders are open to reforms but insist on preserving the ability for workers to use PAGA claims to circumvent forced arbitration.

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What Workers Want

Lorena Gonzalez, head of the California Labor Federation, emphasized the dual objectives of the negotiations.

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She said, “We’re willing to work on reforms that do two things: one: change the working conditions that are illegal. Two: make the worker whole.” 

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A Growing Trend Against Forced Arbitration

The use of PAGA has become increasingly popular among workers, especially as forced arbitration clauses have become more common in employment contracts. 

A worker dressed in protective gear carrying a box through a foggy agricultural field

Source: Tim Mossholder/Unsplash

This trend is reflected in the growing number of PAGA settlements, which have seen a significant increase over the past few years.

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The Future of Worker Protection in California

While some see PAGA as a benefit for lawyers more than workers, its defenders argue it’s essential for holding businesses accountable. 

View of a bustling San Francisco street with cable cars, cars, and pedestrians

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As discussions continue, the fate of California’s labor landscape hangs in balance.

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