EMPLOYMENT CORNER

Due to a high influx of large Private Attorneys General Act (PAGA) settlements, California has reformed PAGA. PAGA was initially created as a tool for employees to file lawsuits against their employers that violated the California Labor Code. Through PAGA, enforcement of California labor law protections became easier by allowing workers to file on behalf of themselves, others, and the State of California for Labor Code Violations.

The reform will bring some important changes to PAGA:

• In an effort to minimize frivolous filings, the PAGA reform (the “reform”) will amend how penalties are calculated against employers as well as assess what portion of those penalties belong to the employees.
• The reform also expanded the range of violations that employers are entitled to cure by taking “all reasonable steps” in an effort to avoid costly litigation.
• The reform will include additional standing requirements on plaintiffs by only allowing employees to assert representative PAGA claims where the named plaintiff experiences the specific alleged labor code violation within one year of suing.
• The reform will also impose significant limits on PAGA penalties, capping workers to recovering only $100 per pay period for each violation and restricting the $200 penalty available to cases in which an employer’s conduct is malicious, fraudulent, or oppressive.
• Lastly, the reform will eliminate penalties for certain unintentional labor code violations that derive from other violations, like pay stub errors, such as meal or rest break violations.

While the reform addresses many concerns raised by employers, there are still uncertainties about how courts will interpret the new amendments. For example, litigation is predicted to establish what constitutes “all reasonable steps,” since the statute does not define the term. This reform appears to be a direct response to an earlier California Supreme Court ruling, which held that California courts cannot strike PAGA claims in effort to foster the efficient resolution of wage class actions. Although the reform aims to curb frivolous PAGA filings, all parties agree that PAGA litigation will not disappear but this reform will “make them more strategic.”