The PAGA Saga continues
We have been periodically updating our readers on PAGA (the Private Attorneys General Act) developments, particularly as new reforms were moving through the Legislature last year. PAGA, a 2004 law signed by then Governor Gray Davis, created a private right of action allowing aggrieved employees to sue their employers on behalf of the state over labor law violations. These labor law violations have typically involved wage and hour disputes, which include failure to pay minimum wage and overtime pay, missed meal and rest period premiums, failure to pay final wages on time, incorrect wage statements, and neglect to repay necessary business expenses.
Civil penalties assessed and collected under PAGA help deter unlawful conduct and encourage compliance with labor protections. Civil penalties recoverable under PAGA are separate from other remedies to which employees may be entitled based on the types of violations alleged. Claims under PAGA may be combined in a lawsuit with other types of claims seeking remedies in addition to PAGA civil penalties, such as unpaid wages, damages, and statutory penalties for certain Labor Code violations.
Last year, Governor Newsom’s negotiation efforts on PAGA reform led to a successful agreement between business and labor groups to strengthen worker protections, encourage employer compliance, streamline litigation processes, and skirt a contentious ballot measure.
PAGA is administered by the Labor and Workforce Development Agency (LWDA). And due to the complexity of the PAGA laws, the LWDA has now published a series of FAQs and flowcharts to assist employees and employers alike.
Let’s work through some of the key features:
· Who can bring a PAGA lawsuit?
o Employees can bring an action to recover civil penalties under PAGA on behalf of themselves and other current and former employees.
o For PAGA notices filed on or after June 19, 2024, any current or former employee who has experienced each of the Labor Code violations alleged may file a PAGA lawsuit. An employee represented by a non-profit legal service organization that litigated PAGA actions in court for at least five years before January 1, 2025, may file a PAGA lawsuit if the employee experienced at least one of the violations alleged.
o For PAGA notices filed before June 19, 2024, a PAGA lawsuit may be filed by a current or former employee who experienced at least one of the alleged Labor Code violations.
· Remedies
o An employee bringing a PAGA lawsuit can recover civil penalties on behalf of the LWDA, a portion of which is distributed amongst the aggrieved employees. For PAGA cases where the notice and lawsuit are filed on or after June 19, 2024, a court also may order the employer to stop its unlawful conduct.
o The amount of civil penalties available in a PAGA lawsuit depends on the type of violation. Penalties allocated to the LWDA fund enforcement of labor laws and education of employers and employees about their rights and responsibilities under the Labor Code. Penalties are divided between the LWDA and employees as follows:
§ For PAGA notices filed before June 19, 2024: 75% of the recovered penalties go to LWDA and 25% go to the aggrieved employees.
§ For PAGA notices filed on or after June 19, 2024: 65% of the recovered penalties go to LWDA and 35% go to the aggrieved employees.
o For PAGA notices filed on or after June 19, 2024, an employer may reduce the amount of civil penalties recoverable against it by taking all reasonable steps to comply with the law. If an employer already is taking all reasonable steps to comply with the law before receiving a PAGA notice, but a violation still occurred, the maximum civil penalty is 15% of the penalty sought. If the employer is not taking all reasonable steps at the time it receives a PAGA notice but begins taking all reasonable steps to be prospectively in compliance with the law within 60 days after receiving a PAGA notice, the maximum civil penalty is 30% of the penalty sought. Certain exceptions apply.
· An employee files a PAGA notice with LWDA – now what?
o LCO may investigate any PAGA notice alleging wage and hour violations.
§ If LCO intends to investigate a PAGA notice, LCO will notify both the employer and employee within 65 days of the PAGA notice. If no notice to investigate is provided within this 65-day period, the employee is authorized to file suit in court.
§ If LCO provides notice it will investigate, it has 120 days to complete its investigation. If LCO does not file suit or issue a citation within 120 days of its decision to investigate, the employee is authorized to file suit in court.
§ If LCO does file suit or issue a citation during its 120-day investigation period, the employee may not file a PAGA lawsuit based on the same facts and theories contained in the LCO’s citation or lawsuit.
o In certain circumstances, an employer may seek to cure a violation during the notice period and avoid civil penalties and litigation costs. If LWDA determines an alleged violation has been cured, the employee may not file a PAGA lawsuit asserting that violation. See below for more information on the cure processes.
o Cal/OSHA must investigate any PAGA notice alleging health and safety violations and can issue a citation within six months of the alleged violations. If a citation is issued, the employee cannot file a PAGA lawsuit. If Cal/OSHA does not issue a citation within the prescribed period, an employee may challenge that decision in court or file a PAGA lawsuit.
o Within 10 days after filing a PAGA lawsuit in court, the employee must provide a file-stamped copy of the court complaint by submitting online using the PAGA Filing Portal.
· Employer response to a PAGA notice
o An employer may, but is not required, to respond to an employee’s PAGA notice. Any response must be submitted to the LWDA using the PAGA Filing Portal . There is a $75 filing fee when submitting an employer response. Please note a “response” to a PAGA notice is not the same as a cure proposal or notice of cure. An employer intending to propose to cure alleged violations or providing notice it has cured a wage statement violation must do so using the appropriate link available on the PAGA Filing Portal.
· How can an employer cure, or correct, violations alleged in an employee’s PAGA notice?
o PAGA provides employers an opportunity to cure, or correct, certain violations during the notice period or at the beginning of a lawsuit to avoid litigation and potential penalties. For notices filed on or after June 19, 2024, the PAGA reform legislation expands the types of violations that can be cured to include claims for minimum wage, overtime, meal and rest breaks, necessary business expense reimbursement, and all requirements for itemized wage statements, among others. Employer cure proposals are treated as confidential settlement proposals and may not be used to prove the validity of any claim or as an admission of liability.
o After the 2024 PAGA reform legislation, the following cure processes are available as of October 1, 2024:
§ Small Employer Administrative Cure Process: An employer that employed less than 100 employees total during the one-year period before a PAGA notice was filed may submit to LWDA a confidential proposal to cure certain types of alleged violations.
§ Wage Statement Administrative Cure Process: Employers of any size may cure violations of the wage statement itemization requirements described in Labor Code section 226 through an expedited process if this is the only type of violation the employer seeks to cure. An employer may cure a wage statement violation using this process by giving written notice to LWDA and the employee that it has cured the violation.
§ Judicial Early Evaluation Conference: For lawsuits based on PAGA notices filed on or after June 19, 2024, employers that employed 100 or more employees during the one-year period before a PAGA notice was filed may file a request with the court for an early evaluation conference. Smaller employers who wish to avail themselves of the process also may request it. Please note this is a court-administered process after a lawsuit has been filed, and LWDA does not administer these procedures.
o An employer may not use the cure provisions more than once in a one-year period for the same violations.
· Available Cures for Employers
o Wage Statement Violations (Labor Code section 226): There are two types of cures available for violations of wage statement itemization requirements.
§ If the violation involves a failure to include the correct name and address of the employer on the wage statement, an employer may cure that violation by giving written notice of the correct information to all employees affected. The employer is not required to issue corrected wage statements for past pay periods, but the notice to employees must give the correct information and identify all pay periods in which the correct information was not included.
§ If the violation involves any of the other itemization requirements, the employer must provide corrected wage statements containing all required information to each affected employee for each pay period during which the violation occurred going back three years from the date of the PAGA notice. The employer can provide employees access to an electronic version of their corrected wage statements if the employer typically provides wage statements to employees in an electronic format.
o Other Types of Cures (Including Wages): Generally, a cure requires the employer to correct the violation alleged by the employee, be in compliance with the underlying Labor Code sections identified in the PAGA notice, and make each aggrieved employee whole. An employee owed wages or business expenses is made whole when the employee has received:
§ All payments owed under the applicable Labor Code sections going back three years from the date of the PAGA notice;
§ 7% interest on all payments;
§ Any liquidated damages required by law; and
§ Reasonable attorney’s fees and costs as determined by the LWDA.
Employers should be aware that this is just a sampling of the new information that LWDA has provided regarding PAGA. To aid in understanding the process step-by-step, LWDA has also published flow charts regarding (1) PAGA Notice and Investigation Procedures for wage and hour claims; (2) PAGA Notice and Investigation Procedures for safety and health claims; (3) Small Employer Administrative Cure Procedures; and (4) Wage Statement Cure Procedures. In addition, PAGA questions can be sent to [email protected], and specific questions about the PAGA cure process can be sent to [email protected]. As an employer, you may be feeling a bit overwhelmed with these latest intricacies. As always, Rosasco Law Group is here to help guide you in the off chance the need arrives.
