California’s flawed legal system negatively impacts seniors and small businesses.
In California, the legal landscape for small business owners is becoming increasingly challenging, particularly with regard to lawsuits filed under the Private Attorneys General Act (PAGA). This law, originally designed to protect employees from significant violations, has evolved into a mechanism that often appears to prioritize the interests of trial lawyers over those of responsible employers. Many small businesses are finding it nearly impossible to defend themselves against PAGA lawsuits, leading to a default strategy of settling, even in the face of unfounded claims.
Since its inception in 2004, PAGA has been critiqued for creating an environment where minor compliance issues can escalate into significant legal challenges. Business owners like those operating in labor-intensive sectors, such as caregiving, face the daunting prospect of costly litigation over technical violations that do not harm employees. The founder of Cerna Homecare, a provider of caregiving services, illustrates this dilemma, explaining that his company has increasingly diverted resources from service delivery to legal defense—an issue echoed by many in the state.
Statistical trends further underscore the gravity of this situation. The cost of defending against these frivolous lawsuits has skyrocketed, with settlements averaging around 0,000 for companies with fewer than 100 employees. This alarming trend reveals a system that many argue has shifted away from supporting hardworking individuals toward enhancing trial lawyers’ profits. Even with recent PAGA reforms signed into law by Governor Gavin Newsom in 2024, which aimed to provide business owners with more opportunities to rectify mistakes before incurring penalties, the rate of PAGA filings has continued to soar. In 2025 alone, the number of filings hit a staggering 10,098.
Compounding these concerns, California has been flagged as one of the most lawsuit-friendly regions in the United States, with cities like Los Angeles recognized as significant sources of litigation abuse. This reputation reflects a troubling reality for employers in the state, where the daily operations of businesses are often overshadowed by the specter of litigation.
The financial repercussions of California’s legal environment extend beyond company balance sheets. According to recent findings, Californians face a “tort tax” which contributes ,567 annually to excessive legal costs, a figure that ultimately burdens consumers through higher prices and diminished wages. For small businesses, these hidden costs can severely hamper growth and service improvement initiatives, further straining resources meant for better care.
This legal battleground disproportionately impacts vulnerable populations, particularly the elderly who rely on caregiving services. In the span of over a decade, the monthly cost of around-the-clock care has escalated from approximately ,000 to nearly ,000—not as a result of advancements in care, but rather due to the financial stress brought by an overreaching legal framework.
While recent legislative efforts such as the PAGA reforms have offered a glimmer of hope, the road ahead remains fraught with challenges. Lawmakers must remain vigilant and proactive in advancing comprehensive legal reforms, such as Senate Bill 84, aimed at further preventing frivolous lawsuits targeting minor violations. As the battle against an impractical legal system continues, the focus must shift back to delivering care and services to those who need it most, rather than being embroiled in unnecessary legal conflicts.
The plight of small businesses in California calls for immediate and sustained attention from policymakers to reestablish a fair legal environment that truly serves the interests of both employers and employees alike.
