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On July 1, 2024, Governor Gavin Newsom signed legislation to reform the Private Attorneys General Act (PAGA).
This comes on the heels of negotiations between business and labor groups in an effort to bolster worker protections, spur on employer compliance, clarify the litigation processes, and avoid an extremely contentious ballot measure.
Governor Newsom said, “This reform is decades in the making — and it’s a big win for both workers and businesses. It streamlines the current system, improves worker protections, and makes it easier for businesses to operate. I want to thank labor and business groups for coming together to hammer out this deal, and our legislative partners for getting these bills to my desk.”
Assembly Bill 2288 was authored by Assemblymember Ash Kalra (D-San José), and Senate Bill 92 was written by Senator Tom Umberg (D-Santa Ana). The two bills were signed into law by the Governor after proponents of the PAGA ballot initiative withdrew their measure; As a result, it will not be presented to voters in November.
The California Legislature passed the bills by near-unanimous vote on June 27th.
The Reform Law has significant changes and clarification to the 20-year-old law. It reconciles previously ambiguous interpretations of the law and adds new provisions that will have a dramatic impact on PAGA litigation.
What Will the PAGA Reform Law Do?
Standing
The new PAGA strengthens standing requirements for employee plaintiffs. This changes the prior practice. Now, courts are permitted to provide injunctive relief to compel businesses to implement changes in the workplace to remedy labor law violations. In addition, the law requires the employee to personally experience the alleged violations brought in a claim.
Under the old rules, an employee who was “aggrieved” under PAGA (i.e., had suffered a California Labor Code violation of any kind) could sue under PAGA on behalf of themself and other current or former employees who’d suffered the same or any other kind of Labor Code violation. Now, an aggrieved employee can only sue on behalf of themself and other current or former employees against whom a violation of the same Labor Code provision was committed.
Penalties
The new law will change the PAGA penalty structure by encouraging compliance with labor laws. The law aims to achieve this by capping penalties on employers who act quickly to remedy policies and practices, and make workers whole, after receiving a PAGA notice, as well as on employers that act responsibly to take steps proactively to comply with the Labor Code before even receiving a PAGA notice.
There will now be higher penalties on employers who act maliciously, fraudulently or oppressively in violating labor laws. Plus, more of the penalty money will go to employees by increasing the amount allocated to employees from 25% to 35%.
Reducing and Streamlining Litigation
The law broadens those Labor Code sections that can be cured to decrease the need for litigation and make employees whole quickly. It also protects small employers by providing a strengthened right to cure process through the Labor and Workforce Development Agency (LWDA) to cut down on litigation and costs.
Finally, the new PAGA Law provides that a court may limit the scope of the claims presented at trial to make certain that cases can be managed effectively.
Enforcement
The law will strengthen state enforcement by providing the Department of Industrial Relations (DIR) with the ability to expedite hiring and fill vacancies to ensure effective and timely enforcement of employee labor claims.
Timing
Note that the new requirements apply to PAGA civil complaints filed after June 19, 2024, and also involve a PAGA notice to the LWDA sent on or after June 19th. For all other actions, the prior PAGA” rules will apply (For those currently pending or based on LWDA notices provided before June 19th.).
Bottom Line
The recently-passed PAGA legislation includes several important changes, such as who can bring a PAGA action. California employers.