Last week, Governor Newsom signed Assembly Bill (AB) 2288 and Senate Bill (SB) 92, which amended California’s Private Attorneys General Act (PAGA). Since 2004, PAGA has created challenges for California employers because it allows employees to seek substantial civil penalties on behalf of the state, no matter how minor, isolated, or inadvertent an employer’s alleged wage and hour violations were. The recent amendments to PAGA should provide some relief to employers, but it remains essential for employers to act quickly and examine their wage and hour practices as soon as they receive a PAGA notice.
The new law applies to PAGA notices sent to the LWDA on or after June 19, 2024. Some of the key changes include a stricter standing requirement for plaintiff employees, expanded cure opportunities for employers, and reduced penalties for employers who act in good faith to comply with the Labor Code. Previously, any employee who personally experienced one type of Labor Code violation could still seek PAGA penalties on behalf of others who experienced entirely different violations. Now, plaintiffs can only seek PAGA penalties on behalf of other employees if they suffered the same violations. Because plaintiffs can no longer pursue penalties for wage and hour violations they did not personally experience, this may limit the scope of future PAGA lawsuits.
The new law also allows employers to more broadly cure prior wage and hour violations, whereas before, they could only cure wage statement violations. In addition, there are increased opportunities for early settlement and resolution of PAGA claims under the new law. As of October 1, 2024, small employers may submit confidential proposals to the LWDA to cure alleged violations, and large employers may request early evaluation conferences in superior court once a PAGA lawsuit is filed.
In addition, the new law reduces certain PAGA penalties, which may vary depending on the type of violation, the frequency and duration of the violation, the employer’s efforts to comply with PAGA, its intentions and awareness of the violation, and its efforts to cure any violation. The law also modifies the percentage of any penalties awarded to employees and the state. Before, 75% of PAGA penalties were paid to the state and 25% of penalties were paid to employees. Now, 65% of penalties go to the state, and 35% go to employees.
While many of the amendments to PAGA were intended to benefit employers, their practical effects remain to be seen. If an employer receives a PAGA notice, it should still act promptly and assess whether it can cure any potential PAGA violations to limit its exposure to civil penalties. Of course, employers should also regularly and proactively review their wage and hour policies, including both their formal written policies and informal day-to-day practices, in an effort to continue preventing PAGA and other wage and hour claims as much as possible.
[View source.]
