Frivolous lawsuits represent a real threat to Merced County’s small businesses

There finally appears to be light at the end of the tunnel. After more than a year of navigating a global pandemic, businesses are reopening, and the economy is beginning to bustle again. However, as a business owner, I know there is another hidden enemy targeting businesses across California. This enemy is lawsuit abuse, and it is responsible for the bankruptcies and closures of countless small businesses.

Make no mistake, lawsuit abuse does not only affect wealthy corporations. In fact, those most at-risk from lawsuit abuse are small businesses who don’t have the legal teams or extra funds to fight unwarranted lawsuits. As a result, these companies are forced to terminate employees, many of which are minimum-wage workers.

One example of such abuse in California is the Private Attorneys General Act (PAGA). Nicknamed the “Sue Your Boss” law, it allows any “aggrieved” employee to file a lawsuit against their employer on behalf of themselves, colleagues, or the state. The language of the law is vague and incentivizes frivolous lawsuits for errors as minor as pay stub typos or missing addresses on paychecks.

In the twisted search for a settlement, trial lawyers encourage workers to exploit this law and target their employers. Attorneys routinely take advantage of a worker’s frustration against a former employer and use PAGA claims to score a quick paycheck for themselves. What’s worse, these often become class-action cases where plaintiffs themselves only receive pennies, even for legitimate claims. Meanwhile, their attorneys walk away with hefty winnings.

For lawyers, the trick is to craft a vague enough lawsuit that forces businesses to make the difficult decision between paying a settlement and paying for a lengthy court battle that they could win but couldn’t pay for.

Simply put, PAGA claims kill off small businesses who cannot afford to fight them.

As a proud owner of the company that operates the Madera Speedway, I know how strenuous the last year has been on businesses and more importantly, the people who depend on them. The “Sue Your Boss” law has real consequences on real people in our state. Laws like these are why California is ranked the 3rd worst “Judicial Hellhole” in the nation, according to the American Tort Reform Foundation (ATRF). The reputation of California’s lawyers and legal system is in peril. Without action from state lawmakers, lawyers acting in bad faith will continue to abuse our legal system and destroy our cherished small businesses.

Californians are tired of lawsuit abuse, and almost 60 percent of residents believe lawmakers are not doing enough. Lawmakers’ on PAGA loopholes and other misguided laws such as Proposition 65 and COVID-19 liability show that their “pro-worker” priorities are just a farce.

As we are finally able to lift our masks and breath in the air, we must remember that the struggle for vulnerable workers and small businesses is not over. The last year has closed business doors and drowned many in inescapable debt. As we return to a sense of normalcy, we should reflect on the lessons learned and enact targeted tort reforms that build up our economy.

We must think beyond the intentions of our laws and about the real people they impact. PAGA lawsuits are just one of many tools greedy lawyers use to target vulnerable businesses. Tangible steps by lawmakers can unclog our court systems and help free small businesses from the burdens of lawsuit abuse. I hope 2021 is the year of change.

This story was originally published July 17, 2021 at 5:00 AM.