California Amends Private Attorneys General Act

Recently enacted amendments to California’s Private Attorneys General Act (PAGA) are seen as a compromise between business and labor groups. According to  Mara Curtis and Tanner Hendershot of Reed Smith, it obviates a previously pending ballot measure aimed to repeal PAGA altogether in the November 2024 election.

California Governor Gavin Newsom called the amendments a reform that was decades in the making, and “a big win for both workers and business. It streamlines the current system, improves worker protections, and makes it easier for business to operate.”

The amendments apply to any civil actions brought on or after June 19, 2024, unless the allegedly aggrieved employee submitted a letter evidencing their intent to bring a PAGA action before that date. Below are some major changes.

New Private Attorneys General Act standing requirements: To have standing an aggrieved employee must now have personally suffered the alleged Labor Code violations, and the violations must have occurred in the last year.

New “cure” provisions: An employer can remedy wage statements in many ways, and there is now a cure for claims for unpaid wages.

Employees will recover a greater share of penalties: Civil penalties are now distributed 65 % to the Labor and Workforce Development Agency, and 35% to the aggrieved employees. Previously the split was 75/35.

New caps on penalties: Employers get multiple safe harbors when they take “all reasonable steps” to comply with the Labor Code’s requirements. For example, available penalties are capped at 15 percent if such steps are taken. If they are taken within 60 days after receipt of a PAGA notice, penalties are capped at 30%.

“All reasonable steps” as defined in the Labor Code can include actions such as payroll audits, training on Labor Code and Wage Order compliance, and taking corrective action regarding supervisors, among others.