PAGA REFORM: WELCOME RELIEF FOR CALIFORNIA EMPLOYERS By Jason Resnick, Senior Vice President and General Counsel
Long-awaited changes to the Private Attorneys General Act (PAGA) bring much needed relief for California employers who take advantage of the opportunity. The Private Attorneys General Act of 2004 allows employees to sue their employers on behalf of the state for Labor Code violations, effectively deputizing private citizens to enforce labor laws. This unique mechanism has led to a significant increase in litigation, often resulting in costly settlements and judgments for employers. PAGA lawsuits have resulted in more than $10 billion in payments from employers since 2016, with a significant chunk going to lawyers. It is widely reported that PAGA has been abused by plaintiffs’ attorneys, resulting in frivolous lawsuits that burden businesses without significantly benefiting employees. Key Changes The reformed PAGA legislation introduces several changes aimed at addressing these concerns while maintaining protections for workers. Here are the most notable aspects of the new law:
1. Requirement for Personal Violations Under the new legislation, employees can only seek penalties for labor code violations they have personally experienced within the year before filing a notice. This change limits the scope of PAGA claims to individual grievances, reducing the likelihood of broad claims based on violations experienced by others. 2. Reduced Penalties • Wage Statement Violations: Penalties for wage statement errors are reduced to $25 per pay period if the employee can easily verify the required information or is not misled about employer identity. This adjustment significantly reduces potential liabilities for employers over technical errors. • Default Penalty Limits: For violations lacking
specified penalties, the default is capped at $100 per employee per pay period. This cap is lowered further in cases of isolated or minor infractions, potentially reducing penalties to $25 or $50 per pay period.
8 Western Grower & Shipper | www.wga.com September | October 2024
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