Governor Expected to Sign Reform of California Labor Code Private Attorneys General Act

On July 27, 2004, Governor Schwarzenegger announced that he had agreed with the California Legislature on a state budget deal that includes reform of the Labor Code Private Attorneys General Act of 2004, now codified in Labor Code § 2699. This statute, passed in the waning days of Governor Gray Davis’ administration, created broad new rights for employees to seek large monetary penalties against employers for violating the Labor Code. The statute encouraged ruinous lawsuits based on hypertechnical violations, leading detractors to label it the “Sue Your Boss” law. In particular, the original statute created civil penalties for Labor Code violations that did not previously trigger a penalty and empowered aggrieved current or former employees to sue for recovery of these penalties. The statute also gave employees the right to sue on a class basis without satisfying any requirement of a normal class action.