Governor Acts to Limit Litigation, Maintain Fiscal Prudence

JobCreatorA California Chamber of Commerce-supported job creator bill that will help limit frivolous, costly litigation against employers was signed by the Governor this month.

The Governor’s continued attention to fiscal prudence led to vetoes of two job creator bills that contained tax credits and a third job creator bill whose purpose the Governor said could be achieved by other means less burdensome to the state.

Private Attorneys General Act

Signed by Governor Edmund G. Brown Jr. on October 2 was AB 1506 (R. Hernández; D West Covina), which provides employers with a limited opportunity to cure technical violations in an itemized wage statement before being subject to costly and devastating litigation.

The bill received unanimous support in both houses as it moved through the Legislature. By allowing the employer a limited time period to fix technical violations on an itemized wage statement that does not create any injury to an employee before any civil litigation is pursued, AB 1506 will enable an employer to devote its financial resources to expanding its workforce.

AB 1506 contains an urgency clause and thus went into effect immediately upon being signed.

The Labor Code Private Attorneys General Act (PAGA) allows an employee to file a “representative action” against an employer for any violation of the Labor Code and subjects an employer to statutory penalties ranging from $100 per employee per pay period to $200 per employee per pay period, as well as attorney’s fees.

Labor Code Section 226 sets forth the categories of information that must be included in an itemized wage statement. The section is one area in which employers have seen an increase in frivolous litigation regarding technical violations that do not harm or injure the employee.

AB 1506 will help curb this type of frivolous litigation under PAGA with regard to only two parts of Labor Code Section 226—226(a)(6) and 226(a)(8) by allowing an employer 33 days to cure any alleged technical violation.

If the employer cannot cure the violation, then the employee still would be able to file a civil action and obtain any unpaid wages, penalties and attorney fees. This reform will provide the appropriate balance of allowing an employer to correct unintentional errors without the threat of a multimillion-dollar lawsuit that could put the employer out of business, while still protecting the employee’s ability to obtain accurate information.

Tax Credits Vetoed

On October 10, Governor Brown vetoed AB 35 (Chiu; D-San Francisco) and SB 251 (Roth; D-Riverside).

AB 35 would have promoted affordable housing by expanding the existing low-income housing tax credit program, making the state better able to leverage an estimated $100 million more in Federal Tax Credits.

SB 251 would have limited frivolous litigation and claims regarding construction-related accessibility violations by providing businesses that have proactively sought to become compliant with the Americans with Disabilities Act with an opportunity to resolve any identified violations as well as provide a tax credit for such improvements.

In his veto message on these bills, Governor Brown said that “Despite strong revenue performance over the past few years, the state’s budget has remained precariously balanced due to unexpected costs and the provision of new services…Given these financial uncertainties, I cannot support providing additional tax credits that will make balancing the state’s budget even more difficult.”

Enhanced Driver Licenses

Also vetoed was SB 249 (Hueso; D-San Diego), which would have encouraged international trade and tourism by authorizing the Department of Motor Vehicles to issue enhanced driver licenses to U.S. citizens to expedite legal traffic at the border.

In his October 9 veto message, the Governor stated that while he supports the purpose of SB 249, he believes that “there are other means, such as the U.S. Passport Card, that achieve the same goal without imposing new burdens on the Department of Motor Vehicles.”

Previously Signed

In July, Governor Brown signed job creator AB 323 (Olsen; R-Modesto), which streamlines infrastructure development by extending until January 1, 2010 the current California Environmental Quality Act (CEQA) exemption for certain roadway repair and maintenance projects.

More Information

For more information on the 2015 CalChamber job creator list, visit