Sacramento Report

California Budgets Come and Go, But...

by David K. Milton

The governor and the legislature have reached a budget accord, and despite a month-long delay, they did agree on significant changes to laws affecting California’s employers. Urged by an employer coalition in which the California Apartment Association (CAA) actively participates, the state’s “sue your boss law” and punitive damage laws were significantly modified.

“Sue Your Boss” Law Modified
First, some background. The “sue your boss” law was signed by Governor Davis in 2003. Officially titled the Labor Code Private Attorneys General Act, it was contained in SB 796 (D-Dunn). CAA was one of the employer organizations that actively opposed that bill.

This year, as urged by CAA and other members of the employer coalition, Governor Schwarzenegger and the Republican Caucus demanded changes to this law as part of the budget negotiations. As a result, the Labor Code Private Attorney Generals Act was modified and went into effect immediately upon the governor’s signing it in August. The changes are as follows:

Employers who inadvertently fail to post labor disclosures or who fail to adequately file reports that are required under the Labor Code, except for mandatory payroll and workplace injury reports, will not be subject to “bounty hunter” type lawsuits as previously allowed under the 2003 labor law. This prohibition is retroactive to January 1, 2004.
Court review and approval of all settlements is required, and courts are given discretion to reduce penalties.
A lawsuit is barred if the state’s Labor Agency and/or Cal/OHSA cite an employer, and the employer cures or abates the cited violation.
Specific procedures are established for an employer and an aggrieved employee to follow before a lawsuit can be filed.
Employers are required to receive advance notice of alleged violations prior to a lawsuit being filed.
Enhanced enforcement resources are provided for the Labor and Work Place Development Agency and/or Cal/OHSA investigations, inspections and abatement process in order to assist employers in resolving health and safety issues.

Punitive Damages Awards will go to State’s General Fund—Not Trial Lawyers’ Pockets
As part of its membership in the Civil Justice Association of California (CJAC), CAA played an active role to ensure that California’s punitive damage laws were amended as part of the budget negotiation process. Understanding the abuses that have been played out in the trial lawyer community, the legislature agreed to the following amendments to the law:

Any punitive damage award paid pursuant to a judgment (not settlements) shall be paid 75 percent to the State of California and 25 percent to the plaintiff; (none of the state money can be used to fund court or judicial programs). The plaintiff’s attorney is entitled to claim, as fees, 25 percent of the state’s share, which the state must pay in the next fiscal year.
A jury cannot be informed that any portion of an award will go to the state.
These provisions apply only to cases filed after August 3, 2004, (the day the governor signed the 2004-05 Budget into law) and that are finally adjudicated before the sunset date—June 30, 2006.

The opinions expressed in this article are those of the author and do not necessarily reflect the viewpoint of the SFAA or the San Francisco Apartment Magazine. David K. Milton is the legislative and regulatory affairs counsel for the California Apartment Association. Copyright © 2004 by the San Francisco Apartment Magazine. All rights reserved.