What happened?

On July 1, 2024, Governor Gavin Newsom signed Private Attorneys General Act (PAGA) reform into law, making improvements to the system for both workers and businesses following an agreement reached between labor and business groups.

What are the details?

On June 27, 2024, Governor Gavin Newsom, in partnership with legislative leadership and business and labor groups, announced an agreement on needed reforms to the PAGA that avoids a contentious ballot measure campaign. The law (at the time proposed bills) in California introduced stricter plaintiff requirements, simplified PAGA litigation, reformed penalties, and strengthened state enforcement.

Newsom’s signature on these two bills represents a successful conclusion to months of hard work and compromise among all parties, and these changes aim to benefit employers while maintaining worker protection.

Key Bites for Employers

• Background
• Standing

• Changes in Penalties
  • Penalty Structure
  • When Are Heightened Penalties Permitted
  • Prohibition Of Stacking
  • Increased Penalties And Hurdles For Employers
• Strengthening State Enforcement
• Opportunities For Cure
• Empowering Courts To Limit Scope Claims Prior To The Trial
• Separate Cure Processes For Small And Large Employers

For a good breakdown click here

For the updated PAGA FAQs: here

Business Considerations

• Employers should adapt their compliance strategies to align with the new regulatory landscape. This includes taking proactive steps to comply with the Labor Code and cure any violations they become aware of.
• Employers should keep themselves updated about the latest labor laws and regulations, including changes to PAGA. They should review their company’s policies and practices to ensure they comply with these laws.
• Employers should maintain open lines of communication with their employees. They should encourage employees to bring any concerns or potential violations to their attention before they resort to legal action.
• Employers should keep accurate and comprehensive records of employee hours, wages, and other relevant information. Good record-keeping practices can help protect against unfounded claims.
• Employers should ensure that pay stubs are accurate and comply with all requirements. PAGA claims often start when a terminated employee reaches out to an attorney who finds a mistake in the employee’s pay stubs.
• Employers should consult with a legal professional to provide them with advice tailored to the specific circumstances of the business and how they can adapt to the changes.

Source References

• PAGA Reform: Assembly Bill 2288 and Senate Bill 92
• Governor Newsom & legislative leaders announce agreement on PAGA reform

Resources

• California Breaking News: 10 Biggest Potential Changes for Employers if PAGA Reform Becomes Law (Fisher & Phillips LLP.)
• PAGA Reform Bills Approved in California Legislature and Awaiting Governor’s Signature (Conn Maciel Carey)

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