What’s the difference between the Mafia and the state of California? It’s way smaller than you might think.
The Mafia is famous for shaking down legitimate businesses and demanding payoffs if they want to keep their doors open.
Turns out, California does the exact same thing.
The Mafia is a bunch of amateurs compared to California, which legalized shakedowns of legitimate businesses more than 20 years ago. More than 10,000 California businesses have suffered these totally legal, government-protected extortion plots. Thousands of those companies have coughed up a total of $5.6 billion to keep the government from coming back for more.
That’s why the Mafia looks like a cuddly crime crew compared with the crooks who run the Golden State.
Here’s how the scam works, and my fear is that other states will read about it and get in on the same action. In 2004, California launched the Private Attorneys General Act, known as PAGA. This allows individual workers to masquerade as the state Attorney General and sue their employers, typically forcing a settlement that runs into the millions of dollars.
What triggers a legitimate complaint under PAGA? A mistake on a timecard or mailing address. The lunch truck arriving late to the job site. That’s right. You get your pulled pork 20 minutes after the lunch whistle blows and you can sue and collect millions.
In The Godfather, the Mafia had a consigliere, the Irish attorney, Tom Hagen, but he was just one man. In California, a phalanx of job-destroying attorneys specialize in bringing PAGA actions against legitimate businesses. Three such firms have each filed more than 1,500 cases over the last 20 years.
Employers know that if they go to trial, the judgment against them could be so high that they would be forced out of business. So practically every business owner settles, paying out seven-figure settlements in exchange for the guarantee that they will not be hit with a PAGA complaint for at least four years.
Where does the money go? A third goes to the trial lawyers bringing the PAGA cases, who have pocketed almost $2 billion out of the $5.6 billion in fees, and the state of California, which has added almost $2.5 billion to its coffers since 2004.
Yet only a pittance goes to the actual employees. The lead plaintiff in a PAGA action might get a $5,000 bonus for putting his name on the lawsuit. But the average payout to an employee is typically around $800.
Now let’s say you’re an entrepreneur. You do plumbing, HVAC, or construction. You’ve worked really hard for decades to build a business in California, and you’ve got, say, 100 people working for you.
That means you’re putting food on the table for 300 to 400 Californians, contributing to the public good, and paying California state taxes, the highest in the nation.
But you’re not done paying out. When your 100-person company, an entirely legitimate business, gets hit with a PAGA notice, you’ll shell out on average $300,000 to make the shakedown go away.
Three hundred thousand smackers! The Mafia can only hang its head in shame.
If the state of California were a country, it would have the fourth-largest economy on planet Earth, trailing only the United States, China, and Germany. California also has the best weather. Its civic leaders half a century ago bequeathed to the state futuristic freeways, two outstanding university systems, low crime, good governance, and a way of life so attractive that people poured in from everywhere.
Today, the Democrats running the state have run it into the ground. Homelessness and crime are off the charts. The cities are crumbling. The highway system badly needs repair. Tens of billions of dollars have been squandered building a high-speed rail line from nowhere to nowhere, with countless more billions poised to be thrown away over the next 14 months. Criminally negligent fire and water management results in entire neighborhoods burning down, costing homeowners billions and causing insurers to leave the state. Gas is taxed at a higher rate than anywhere else in the U.S.
And on top of all that mismanagement and neglect, you have PAGA.
To its credit, the state did reform PAGA slightly in 2024. Even so, more than 1,000 new PAGA cases are filed each year, which adds up to roughly 34 new notices to employers every single business day of the year.
Business owners commiserate with one another, but there’s nothing they can do, aside from hiring a lawyer and negotiating a six-figure or seven-figure settlement.
I PROMISED A RED WAVE — TRUMP BLEW IT
Indeed, the Mafia and the state of California have far more in common than anyone might’ve imagined.
The only surprise is that when it comes to organized crime and shaking down legitimate businesses, the Mafia’s got a lot to learn from the so-called Golden State.
Michael Levin is a two-time New York Times bestselling author. His next novel, 2028, A Political Thriller, will be published by Morgan James in April.