Employment Law News: Major Deal Reached to Reform PAGA in California
On June 18, 2024, California Governor Gavin Newsom and legislative leaders announced that they had reached a comprehensive deal to reform the Private Attorneys General Act (PAGA). This reform is, potentially, good news for employers in California—as PAGA liability has increased dramatically in recent years. Here, our California employment lawyer provides an overview of PAGA, explains the issues legislators want to address, and discusses the basic structure of the new deal.
What is the Private Attorneys General Act (PAGA)?
The Private Attorneys General Act (PAGA) is a state law that allows employees in California to file lawsuits against their employers for the full range of state-based Labor Code violations. In effect, the PAGA allows an individual worker to act as a private “attorney general.” PAGA is designed to empower workers to take proactive steps to enforce labor law violations. Under PAGA, aggrieved employees can recover civil penalties on behalf of themselves, their coworkers, and the state. If the employee is successful in recovering penalties, the state collects 75 percent of the penalties and the affected employees collect the remaining 25 percent.
PAGA Liability Has Exploded in Recent Years (Big Cost for Employers)
For employers in California, the PAGA—especially the way in which it has been used in recent years—can present a huge financial burden. Indeed, overall, PAGA liability has spiked dramatically over the past decade. Researchers determined that the increase in PAGA claims is largely due to a series of decisions by the highest courts in California that broadened the applicability of PAGA and restricted the use of arbitration agreements to limit such claims. PAGA liability is problematic for employers and is expensive to defend spurious claims.
An Overview of the Preliminary Agreement Reached by California Lawmakers
Employers, attorneys, and legislative leaders agreed that something needs to change regarding the PAGA in California. In June 2024, Governor Gavin Newsom, state legislative leaders, business representatives, and labor group representatives announced a major agreement that will significantly reform the Private Attorneys General Act (PAGA). A big part of the motivation for the reform is to limit the total cost to employers. Here are key points to know about the preliminary agreement reached by the governor, top legislators, and key stakeholders:
- The Penalty Structure Will Change: If employees bring a successful PAGA claim, employees will get 35 percent of penalties instead of 25 percent. The state’s share will drop to 65 percent.
- Employers Will Have More Options to “Cure” Minor Violations: The reformed PAGA aims to improve employer compliance and streamline litigation by allowing employers to cure minor violations and make the employee “whole” to eliminate their liability.
- The Reform Limits Standing: Now, only employees who personally endured harm will be allowed to pursue a PAGA claim. Previously, any party could initiate a claim without actual alleging personal harm.
Contact Our California Employment Lawyer for Legal Guidance
At Sloat Law Group, our California employment law attorney has the professional knowledge that employers can trust. If you have any questions about PAGA, we are here to help. Contact us today for a confidential initial consultation. Our employment law team works with businesses in Coachella Valley, Riverside County, and throughout all of California.
Source:
gov.ca.gov/2024/06/18/governor-newsom-legislative-leaders-announce-agreement-on-paga-reform/
