Post-PAGA reform rulemaking proposals are underway
We have been keeping our readers apprised of the Private Attorney’s General Act (PAGA) legislative reform process, which in 2024 and 2025 culminated with California Governor Gavin Newsom’s signing of two companion measures, Assembly Bill 2288 and Senate Bill 92. The Governor’s negotiation efforts led to a successful agreement between business and labor groups to strengthen worker protections, encourage employer compliance, streamline litigation processes, and avert a contentious ballot measure.
2026 is now the year where the agency charged with implementing PAGA reform, the California Labor and Workforce Development Agency (“the Agency”), is moving forward with its proposed rulemaking to provide better guidance and clarity to employees and employers concerning their respective rights and obligations under PAGA, including as it relates to new administrative early resolution, or “cure,” procedures enacted by the above legislation.
Background on PAGA:
The California Labor and Workforce Development Agency (Agency) administers PAGA, codified at Labor Code section 2698 et seq. PAGA was enacted in 2004 to augment the state’s limited staffing and resources to increase enforcement for violations of employment and workplace requirements. The law achieves this goal by allowing employees to file lawsuits against their current or former employers for Labor Code violations on behalf of the state to recover civil penalties that otherwise would be recoverable only by the state. Any civil penalties recovered by an employee under PAGA are divided between the Agency and the aggrieved employees, which are allocated with 65% going to the Agency and 35% to the aggrieved employees.
Before an employee may file a lawsuit against their current or former employer under PAGA, certain administrative notice requirements must be met and several administrative processes may follow before an employee is allowed to file a PAGA lawsuit in court. And, even after an employee is authorized to file a PAGA lawsuit, certain administrative reporting obligations continue to apply to safeguard the Agency’s role in monitoring PAGA actions to protect the interests of both the state and the other aggrieved employees on behalf of whom such actions are brought. There currently are no regulations implementing these administrative notice, procedural, and reporting requirements. The current proposed regulatory action intends to address this.
Proposed rulemaking areas of focus:
1. Prelitigation Administrative Notice Requirements
As noted earlier, before filing a PAGA lawsuit an employee first must provide written notice both to the Agency and employer describing the Labor Code violations the employee alleges the employer committed, a “PAGA notice.” The notice must specifically identify the Labor Code sections allegedly violated and describe “the facts and theories” supporting the violations alleged. It has been described as an “administrative exhaustion” requirement.
In the absence of administrative guidance, courts have described PAGA’s notice requirement as “minimal” and subject to a low standard of “nonfrivolousness”. These notice requirements have become more important since the legislative reforms to PAGA because (1) proper notice is necessary to ensure proper functioning of new early resolution procedures, and (2) new standing rules limit the types of claims a person may allege under PAGA. Trends and practices have developed over time that frustrate and impede the purpose of PAGA’s administrative notice requirement. Thus, the rulemaking intends to address the PAGA notice filing problems by:
· standardizing the required format and content of PAGA notices;
· clarifying the content required in PAGA notices, including as it relates to the facts and theories supporting the violations alleged; and
· introducing certain safeguards to protect against and deter abusive filing practices that undermine or frustrate the intent and proper administration of the law.
2. Prelitigation Administrative Procedures
During the notice period before an employee may file a PAGA lawsuit, there are several administrative processes that may occur. Currently there are no regulations governing these processes. This proposed regulatory action addresses this problem by implementing the procedures described in statute and providing clearer guidance to parties in proceedings before the Agency.
a. Investigations
The proposed regulatory action provides guidance to parties in PAGA cases regarding the procedures by which alleged violations may be investigated. The proposed rulemaking also provides guidance regarding the respective rights and obligations of employees and employers during an investigation conducted by the Labor Commissioner’s Office or the Division of Occupational Safety and Health (Cal/OSHA).
b. Cure Procedures
a. Small Employer Cure Procedures (§ 2699.3, subd. (c)(2)): the proposed regulatory action will provide increased transparency into the Agency’s cure procedures and result in greater efficiency in the processing of employer cure proposals.
b. Wage Statement Cure Procedures (§ 2699.3, subd. (c)(3)): this proposed rulemaking will provide increased transparency into the procedures by which the Agency reviews employer wage statement cure notices. The proposed rulemaking also will result in improved efficiencies in these matters by clarifying the parties’ respective rights and obligations during wage statement cure procedures.
3. Litigation Reporting Obligations (§ 2699, subd. (s))
The proposed regulatory action will aid the Agency’s role in monitoring PAGA actions by providing clearer guidance and requirements for parties regarding their litigation and settlement reporting obligations to the Agency. In particular, this proposed rulemaking provides clear direction regarding the materials required to be submitted to the Agency to facilitate its review of proposed settlement agreements consistent with PAGA’s framework and intent. In doing so, the proposed rulemaking further will enable the Agency to comment or object to proposed agreements in a more meaningful and effective manner in situations where a proposed agreement is not fair and reasonable to the state or other aggrieved employees or when other issues exist.
Now that you have taken a quick glance at some of the regulatory proposals in the works, we will continue to monitor the situation in this new era of PAGA reform. If you have any questions about how this might affect your workplace practices, do not hesitate to contact Rosasco Law Group APC for all of your labor and employment needs.
