I'm often asked by our clients to assess their litigation risks, and I have a confession to make. I have suggested on more than one occasion that they tread very carefully when doing business in California. While the Golden State has wonderful weather, spectacular landscapes, and attractions that lure travelers year-round, its litigation climate is anything but inviting for businesses. And thanks to our friends at Ogeltree Deakins, recent data bears this out. 

In each of the past six years, employment class action filings have increased, roughly doubling over the period from 2,555 (2017) to 5,117 (2023). The data for Private Attorneys General Act (PAGA) notices filed with the California Labor and Workforce Development Agency is even worse. In 2023 over 7,800 notices were filed, over 2,000 more than in 2022. Much of this can be attributed to recent rulings from the California Supreme Court, which have been decidedly pro-plaintiff. It also appears that there has been a paradigm shift in the plaintiff's bar. Instead, of bringing a smaller volume of cases against “big” deep-pocketed defendants, more plaintiffs' firms are bringing a higher volume of cases against medium- and even smaller-sized businesses in the state.

But all may not be lost. In November of this year California voters will consider a ballot measure that would repeal PAGA and replace it with increased enforcement tools for the Labor and Workforce Development Agency. This would take enforcement of the labor code out of the hands of plaintiffs’ lawyers and remove the threat of attorneys’ fees as an incentive for filing claims. If this ballot measure passes, my advice about doing business in California may change. If it doesn't; well …