Governor Gavin Newsom today signed a CAPA-supported package that reforms the Private Attorneys General Act (PAGA). This California-only law allows employees to file class action-style lawsuits against employers for even minor Labor Code violations, such as a typographical error on a paycheck.
AB 2288 and SB 92 (both supported by CAPA) represent a compromise between all stakeholders interested in PAGA, including the business community, organized labor, and labor law attorneys that removed a ballot measure from the November 2024 ballot. It’s interesting to note that the day after the bills were announced, there were four times as many PAGA claims filed. However, the legislation states that any claims filed after June 19 will fall under these new laws.
This reform package will ensure that workers’ claims are resolved more quickly and that businesses and non-profits that comply with the law are not penalized. Employers will now have the means to better defend PAGA claims.
According to the California Chamber of Commerce, the reforms include:
- Standing Reforms:
- Supersedes holdings in Huff and Johnson decisions by requiring an aggrieved employee to have personally suffered the alleged violations within the one-year statute of limitations.
- Penalty Reforms:
- Provides higher share of the civil penalty recovered to employees;
- Caps the penalty for employers who have proactively taken steps to comply with the Labor Code;
- Caps the penalty for employers who take proactive steps to be in compliance after receiving a PAGA notice;
- Reduces the maximum penalty for a wage statement violation or a violation that was short in duration;
- Addresses derivative claims;
- Levels the playing field for employers who pay weekly by ensuring they are not penalized at a higher rate;
- Specifies that the $200 penalty applies only where a court or the agency issued a finding or determination against that employer or where the employer acted maliciously, fraudulently, or oppressively.
- Broadens Right to Cure:
- Expands which Labor Code sections may be cured, so employees are made whole quickly;
- Protects small employers by providing a more robust right to cure processes through the Labor and Workforce Development Agency;
- Provides an opportunity for early resolution in court.
- Judicial Discretion:
- Codifies that the court may limit evidence presented or the scope of the claim to ensure the claim can be tried effectively.
