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Labor Code Violations and New “Sue Your Boss” Law

Labor Code Violations and New ‘Sue Your Boss’ Law

Question: How does SB 796, the “sue your boss” law, work?

Answer: Senate Bill 796, which was signed into law as California Labor Code Sections 2698 and 2699 in January 2004, expands the grounds by which current or former employees can take action against an employer for Labor Code violations.

Prior to its implementation, most penalties in the Labor Code could only be enforced by the Labor Commission and its division of Labor Standards Enforcement. Now, employees are allowed to sue to enforce Labor Code provisions in court.

What this means: This new law authorizes every employee of every California employer to bring a lawsuit based on any violation of the California Labor Code, no matter how small, without the need to show that the employee was actually harmed or suffered damage.

How it works: An employee can seek the mandated penalty of a provision of the Labor Code, or, if no penalty currently exists, the law establishes a $100 penalty for a first violation and a $200 fine for each subsequent violation of each provision. Such penalties may be calculated on a per-employee, per-pay-period basis.

For example, assume a minor Labor Code violation anything from failure to provide required information on pay stubs, to failure to post updated workplace regulations in a public area occurs in a small business. If the employer has 40 employees, he is subject to a one-time $4,000 penalty (40 employees multiplied by $100 per employee). If the violation continues over a one-year period, and the employees are paid weekly, the civil penalties against the employer could total more than $400,000; the $200 penalty multiplied by the number of employees, multiplied by the remaining 51 pay periods in the year. In addition, any employee who prevails in any such action is entitled to an award of reasonable attorneys’ fees and costs.

Where does the fine go? Penalties recovered through such lawsuits must be shared with the State of California as follows: 50 percent to the General Fund, 25 percent to the California Labor and Workforce Development Agency (to educate California employers and employees), and the remaining 25 percent goes to the “aggrieved employees.”

Written by Madeline Clark Cahill, an employment and business law attorney and shareholder at Sullivan Hill Lewin Rez & Engel in San Diego.

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