Major PAGA Reform Deal Announced

Update June 25, 2024

The text of the proposed legislation (namely, AB 2288 and SB 92) has been released, and it includes the most significant changes to PAGA since it went into effect in 2004. Please see the updated article Text of Major PAGA Reform Legislation Revealed

Governor Newsom, in partnership with legislative leadership and business and labor groups, announced an agreement to reform the Private Attorneys General Act, or PAGA. The proposed agreement includes sweeping changes to employees’ ability to bring PAGA claims, places caps on penalties, and expands employers’ ability to cure. If the legislation reflecting the agreement is passed and signed into law by June 27, proponents of a ballot initiative aimed at eliminating PAGA have agreed to withdraw the measure from the November 2024 ballot.

What changes will be included in the PAGA reform proposal?

PAGA permits workers to prosecute and enforce labor laws on behalf of the state. The proposed reforms reflect the most significant changes to PAGA since it went into effect in 2004. Though the text of the proposed reform legislation has not yet been released, published reports suggest that the changes will include the following:

• Standing
  • PAGA plaintiffs must have experienced the alleged violations personally.
• Limitations
  • Alleged PAGA violations must have occurred within the last year.
• Penalties
  • For employers who take steps to comply with the Labor Code before receiving a PAGA notice, penalties are capped at 15 percent.
  • For employers who take steps to comply with the Labor Code after receiving a PAGA notice, penalties are capped at 30 percent.
  • The proposed legislation creates a new penalty ($200 per pay period) if employers act maliciously, fraudulently, or oppressively.
  • Employers who issue weekly wage statements will be penalized at the same rate as those who issue wage statements at a longer cadence.
  • Employees’ share of penalties will increase from 25 percent to 35 percent.
• Employers’ Ability to Cure
  • The Labor Code violations that can be cured will be expanded.
  • Small employers will be provided a right-to-cure process through the Labor and Workforce Development Agency.
• Limitations on Presentation at Trial
  • Courts will be permitted to limit the scope of claims and evidence presented at trial.
• Relief
  • Injunctive relief will be available.

It is anticipated that the California Legislature will consider the proposed PAGA reform legislation this week—the deadline for measures to be withdrawn from the ballot is June 27, 2024. If passed, this reform will significantly alter the landscape of PAGA litigation. We will continue to monitor the proposed legislation and its potential impacts.

If you have questions about the proposed legislation or its applicability, please contact a Payne & Fears LLP attorney.