For more than a decade, use of California’s Private Attorneys General Act (PAGA) against conscientious employers – holding many up for civil suit ransom as the better choice to business closure – has grown to pandemic proportions with little benefit to the workers the law was designed to protect.

“Since 2013, employers have been forced to pay nearly $10 billion in PAGA court case
awards, but because of the class-action nature of many claims and heavy lawyer
commissions, workers receive only a small portion of these awards.” California’s Private Attorneys General Act of 2004: An Assessment of Outcomes and Recommendations for a More Effective Alternative (February, 2024).

With credit to such advocacy, the legislature has just passed and the governor will soon approve a PAGA overhaul. Key provisions in revised Labor Code 2699 include:

• Scope of Claims Significantly Reduced: The plaintiff employee must have personally experienced the alleged violations;
  
• Greater Employer Ability to Cure Violations: On written PAGA notice from the state, the employer may promptly cure a greater range of technical violations without penalty;
  
• Greater Employer Share in Proceeds: Employees will receive 35% of any PAGA settlement or judgment, up from 25%;
  
• Pre-Notice Cap on Penalties: For employers which take steps to comply with the Labor Code before receiving a PAGA notice, the maximum penalty is 15% of the applicable maximum amount;
  
• Post-Notice Cap on Penalties: For employers which promptly take steps to fix policies and practices after receiving a PAGA notice, the maximum penalty is 30% of the applicable penalty amount;
  
• Additional Penalty Reductions Possible: An employer may receive a penalty reduction for an alleged violation of minimum impact, for example for a pay stub violation that did not cause employee confusion or economic harm; and
  
• Court Discretion to Limit Claims at Trial: The judge may limit at trial the scope and evidence of claims in the interest of justice

Take-Aways:

PAGA as modified places a premium on an employer’s responsibility for workplace compliance while providing significant incentives for rapid correction of violations. An employer that does not heed its obligations to comply despite PAGA notice can only point to its inaction as the cause of the severe economic consequences, even business closure.

For more information, please contact Tim Bowles, Cindy Bamforth or Helena Kobrin.

See also:

• PAGA Monster Grows More Legs – Best Protection Against Potentially Devastating Group Labor Claims is … Prevention (February 2, 2024)
  
• PAGA Monster Quelled … For Now – Appeals Court Overturns Wal- Mart’s $102 Million Penalty and Damages Judgment (July 2, 2021)
  
• The PAGA Monster Is Hungry – Non-Compliant California Employers at High Risk under Special Law (May 14, 2021)

Tim Bowles
June 28, 2024