On July 1, 2024, Governor Newsom signed legislation that makes significant changes to California's notorious Private Attorneys General Act (PAGA) to become effective immediately as an urgency measure.  While the new provisions provide some welcome relief to employers, they did not repeal PAGA and only apply to PAGA lawsuits predicated on a PAGA notice letter submitted on or after June 19, 2024.

Here are key takeaways for employers with California employees:

• The plaintiff may only pursue PAGA penalties for the plaintiff and others who experienced the same alleged violation that the plaintiff personally experienced within the one-year statute of limitations period.  Sadly, PAGA plaintiffs represented by most non-profit legal aid organizations and similar legal services organizations can still pursue penalties based on alleged violations they did not experience themselves, although the one-year limitation still applies.    
• Courts have explicitly been given the authority to determine manageability and limit both the scope of claims and evidence presented at trial.
• There are incentives for an employer that can demonstrate that it took all reasonable steps to be in compliance before receiving the plaintiff’s request for employment records or a PAGA notice, i.e., the maximum civil penalty is capped at 15% unless this lesser penalty would be unjust or arbitrary.
• There are also incentives for an employer that can demonstrate that it took all reasonable steps to be in compliance with the alleged violations within 60 days after receiving notice, the employer did not receive findings or a determination within the prior five years that its policy or practice giving rise to the alleged violation was unlawful, and the conduct giving rise to the violation was not malicious, fraudulent, or oppressive, i.e., the maximum civil penalty is capped at 30%, unless this lesser penalty would be unjust or arbitrary.
• The civil penalty for certain wage statement violations is limited to $25 per violation.  The civil penalty for certain other violations that occurred for the lesser of 30 consecutive days or four consecutive weekly pay periods is $50 per violation.
• Employers whose regular pay period is on a weekly basis will have their potential civil penalty cut in half.
• There is no “stacking” of certain purely derivative violations.  Whether the courts will interpret this as tacitly allowing stacking of non-derivative penalties (e.g., meal-break violation and an overtime violation in the same pay period) remains to be seen.
• Employers have an expanded ability to “cure” alleged violations and prevent a civil penalty, although the process requires that the employee make all affected employees “whole,” including not only unpaid wages identified in the PAGA notice for the three years prior to the notice, payment of 7% interest and liquidated damages, and a “reasonable” lodestar attorney’s fees and costs to be determined by the LWDA or the court.  There is a somewhat more collaborative procedure for employers with fewer than 100 employees in the year prior to the PAGA notice.  In some cases the employer must also give written notice of the cure to each aggrieved employee.
• Although the procedures are complex, employers have the right to an automatic stay and early neutral evaluation of the claims.  It is unclear whether invoking these procedures will be treated as a waiver of an arbitration agreement.