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Default PAGA Penalties Not Recoverable Against Public Entity Employers
Mar 10, 2021

Default PAGA Penalties Not Recoverable Against Public Entity Employers

Topics: Court Decisions, Wage & Hour Issues

In Sargent v. Board of Trustees of California State University, 2021 WL 836135 (March 5, 2021), the First Appellate District Court of Appeal ruled that while public entity employers were not entirely exempt from liability for civil penalties under the Private Attorneys General Act (“PAGA”), they could be liable only where the Labor Code provisions at issue themselves provided for civil penalties.  They could not be liable for default penalties under Labor Code § 2699(f).  The Court therefore reversed a jury award of over $2.9M in PAGA penalties against California State University.  

The plaintiff in Sargent was a licensed asbestos consultant for the Sonoma State University’s (which is a part of the CSU system, and a public employer) environmental health & safety office.  Sargent alleged that he complained to his supervisor Dawson about his concerns of environmental hazards which were ignored, whereupon he informed governmental agencies about his concerns.  His alleged whistleblowing resulted in the issuance of a safety violation citation against the University.  Sargent alleged that he was subjected to a series of disciplinary measures in retaliation and was constructively discharged.  Sargent sued Dawson and the CSU for unlawful retaliation under various statutes (including on the basis that he was a whistleblower), violation of the Fair Employment & Housing Act (FEHA), and for civil penalties under PAGA premised mostly on Cal-OSHA violations.  

The Court concluded that public entity employers could be liable for civil penalties under PAGA, but only if the statute upon which the employee was suing itself provided for the recovery of civil penalties, under Labor Code § 2699(a).  The provision of “default” civil penalties (of $100 for an initial violation and $200 for subsequent violations under Labor Code § 2699(f)) was not available as against a public employer because public employers were not considered “persons” under PAGA.  Although Sargent did pursue some claims under Cal-OSHA that allowed for the recovery of civil penalties, the jury concluded that he personally did not suffer any injury from those alleged violations.  While Sargent was deemed to have standing to bring the claims on behalf of other aggrieved employees so long as he allegedly sustained injury from one Labor Code violation, the Court still reversed the entirety of the PAGA civil penalties award, for two reasons.  First, for the violations of the Labor Code that provided for civil penalties, the jury found that Sargent did not personally suffer from any violation of those recoverable statutes.  Second, for the violation under the Whistleblower Protection Act (under Labor Code § 232.5) upon which the jury found that Sargent did suffer injury, that statute did not provide for civil penalties.  Notwithstanding this reversal, because the Court affirmed other portions of the judgment relating to Sargent’s retaliation claims, the Court affirmed the attorneys’ fees award to Sargent for $7.8M.  This part of the decision emphasizes the fact that courts in California will award and uphold attorneys’ fees awards that may be substantially greater than the actual recovery received by the plaintiff.  The Sargent decision can be found here.
 

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Sacramento Office Managing Partner and Chair of CDF’s Traditional Labor Law Practice Group. Mark has been practicing labor and employment law in California for thirty years. His practice has a special emphasis on the representation of California employers in union-management relations and handling federal and state court litigation and administrative matters triggered by all types of employment-related disputes. He is also adept at providing creative and practical legal advice to help minimize the risks inherent in employing workers in California. He recently named “Sacramento Lawyer of the Year” in Employment Law-Management for 2021 by Best Lawyers®.
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