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Note From Larissa for Donna... This week we have a special guest writer Jaime Orendac, SPHR-CA and SHRM-SCP of https://myohr.com There is no one better suited to talk about the PAGA act and it's impact on your business. If you feel like your business is non-compliant we highly recommend reaching out to Jamie as soon as possible!
The Private Attorneys General Act (PAGA) was enacted in California in 2004. PAGA
allows employees to file lawsuits against their employers for Labor Code violations on
behalf of themselves, other employees, and the State of California. Essentially, it
deputizes employees to act as private attorneys general, enabling them to enforce labor
laws in a way that supplements state enforcement efforts.
However, over the years, PAGA has become a controversial topic. Critics argue that it
has led to an explosion of litigation, with many lawsuits resulting in substantial costs for
businesses, particularly small and medium-sized enterprises. Supporters contend that
PAGA is essential for holding employers accountable for labor law violations. Several
bills have been introduced in the California Legislature aimed at reforming PAGA.
PAGA includes:
1. Employee Enforcement: Under PAGA, an employee can file a lawsuit not only
for their own claims but also for violations affecting other current or former
employees. This creates a type of "representative action" that can involve
significant penalties for the employer.
2. Civil Penalties: PAGA imposes civil penalties for labor law violations. Typically,
these penalties are $100 for the first violation and $200 for each subsequent
violation per pay period, per employee. The penalties can add up quickly,
especially in large organizations with many employees.
3. Division of Penalties:
a. 75% to the State: Of the civil penalties collected through a PAGA action,
75% goes to the California Labor and Workforce Development Agency
(LWDA).
b. 25% to the Employees: The remaining 25% is distributed among the
affected employees.
4. Labor Code Violations Covered: PAGA can be used to address a wide range of
Labor Code violations, including unpaid wages, meal and rest break violations,
failure to provide accurate wage statements, and more.
5. Notice Requirement: Before an employee can file a PAGA lawsuit, they must
provide written notice to both the employer and the LWDA of the specific labor
code violations. The LWDA then has 65 days to decide whether to investigate. If the agency declines or takes no action, the employee can proceed with the
lawsuit.
There have been several legislative efforts and court cases aimed at reforming or
clarifying aspects of PAGA. These include efforts to limit the types of claims that can be
brought under PAGA, as well as proposals to require more administrative steps before
litigation.
Governor Gavin Newsom signed legislation to reform the Private Attorneys General Act
(PAGA), following efforts to reach an agreement between business and labor groups.
This legislation will strengthen worker protections, encourage employer compliance,
streamline litigation processes, and avert a contentious ballot measure.
PAGA Plaintiffs can only Represent Aggrieved Employees for Violations They
Suffered
PAGA claims are now locked into a one-year statute of limitation (which is one
year and 65 days before the PAGA claim is filed)
PAGA reform cements that a good-faith dispute eliminates PAGA penalties for:
(1) failure to pay all wages due and owing upon separation [or within three days
of separation for unexpected resignations] (known as “waiting time penalties”);
(2) failure to timely pay wages; and (3) wage statement violations that were not
willful or intentional [but not where a wage statement was not provided at all].
The PAGA reform permits courts to reduce “stacked” penalties for violations
arising from the same payroll/policy error for failure to timely pay wages upon
separation, failure to timely pay wages during employment, and derivative wage
statement violations.
Penalties are reduced and subsequent liabilities are limited. Wage statement
penalties are capped.
Employers can “cure” violations on certain claims.
Employers with fewer than 100 employees may submit a confidential proposal to
the LWDA describing their plan to cure the violations alleged in the PAGA notice.
Starting immediately, employers with 100 or more employees who are sued under
the PAGA may file a request for an “early evaluation conference” and request a
stay of court proceedings prior to or simultaneous with the employer’s responsive
pleading or other initial appearance in the action (e.g., a notice of appearance).
The future of PAGA remains uncertain, with ongoing debates and legal challenges.
Employers and employees alike should monitor legislative developments and court
rulings to understand how these changes might affect their rights and responsibilities.
I would like to personally thank Jamie for providing us such a well crafted document! If you're interested in Jamie and more of her work find her below -- and follow her on social media! Thank you so much Jamie!
1515 Meridian Avenue Suite 204
San Jose, CA 95125
408-264-4710
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