Agreement Reached to Reform PAGA

Important to know: This bill will now go before the legislature next week.  If the bill is passed and signed by the Governor by June 27, 2024, the November ballot measure will be withdrawn.

The core elements of the reform package are as follows:

Employee Share of Penalty

• Increases share employees receive from any penalty from 25% to 35%.

Standing

• Requires the employee (plaintiff) to personally experience the alleged violations brought in a claim.
• Alleged violations must have occurred within the last year (presently, there is no time limitation).

Penalty

• Caps Penalties: For employers who proactively take steps to comply with the Labor Code before receiving a notice, the maximum penalty that can be awarded is 15 percent of the applicable penalty amount.
• Caps Penalties: For employers who take steps to fix policies and practices after receiving a PAGA notice, the maximum penalty that can be awarded is 30 percent of the applicable penalty amount.
• Reduces the maximum penalty where the alleged violation was brief or where it is a wage statement violation that did not cause confusion or economic harm to the employee (i.e. misspelling of company name or forgetting to add “Inc.” on the pay statement).
• Levels the playing field for employers who pay weekly by ensuring a penalty is adjusted. Presently, such employers are penalized at twice the amount because penalties accrue on a per pay period basis.
• Addresses derivative claims.
• Creates a new penalty ($200 per pay period) if an employer acted maliciously, fraudulently, or oppressively.

Employer Right to Cure

• Expands which Labor Code sections can be cured, so employees are made whole quickly.
• Protects small employers by providing a more robust right to cure process through the state labor department (Labor and Workforce Development Agency) to reduce litigation and costs.
• Provides an opportunity for early resolution in court for larger employers.

Strengthening Enforcement Agency

• The Administration will pursue a trailer bill to give the California Department of Industrial Relations (DIR) the ability to expedite hiring and filling vacancies to improve and expedite enforcement of employee labor claims.

Judicial Discretion (Manageability)

• Codifies that a court may limit both the scope of claims and evidence presented at trial.

Injunctive Relief

• Allows for injunctive relief.