California Governor Gavin Newsom, alongside business leaders, and legislators, announced a significant agreement to reform the state's Private Attorneys General Act (PAGA). PAGA, initially enacted to allow employees to stand in the shoes of the Attorney General and file lawsuits against employers for labor code violations, has been subject to immense exploitation in the filing of frivolous lawsuits seeking quick settlements. The recent agreement aims to address these concerns by introducing changes to foster a manageable and fair litigation process.

While the exact language of the amended law has not been revealed yet, key aspects of the new legislation have been published on the Governor’s website. First, penalties for potential violations will be capped for employers who quickly rectify policies and practices and make workers whole after receiving a PAGA notice. Relatedly, the reformed statute will expand the range of Labor Code sections that can be cured by employers. This encourages employers to take prompt and responsible actions to comply with labor laws, before a lawsuit is initiated and before the attorney fees for employees’ attorneys are triggered.

Additionally, courts will be equipped by statute to (1) strike PAGA claims that are unmanageable due to size or scope; and (2) require plaintiffs that bring a PAGA action to have personally experienced the Labor Code sections claimed to have been violated. The manageability and standing requirements will provide tools and defenses for employers to dismiss meritless claims.

Overall, the PAGA reform represents a potential first step towards a more balanced and equitable approach to labor law enforcement in California. The reform package has received support from business groups and labor organizations, highlighting its balanced approach. The capping of penalties, expanded ability to cure violations, and requirement of manageable claims that plaintiff themselves experienced, should reduce frivolous claims and litigation costs.

We will continue to provide updates as the language of the amended PAGA statute becomes available.