The California Private Attorneys General Act (“PAGA”) authorizes aggrieved employees to file lawsuits to recover civil penalties on behalf of themselves, other employees, and the State for certain Labor Code violations. Since its enactment in 2004, California employers have been rocked by costly PAGA claims, resulting in numerous business closures. And it’s no secret that the lawyers who pursue these claims are the real beneficiaries of the law, and not employees.
The California Fair Pay and Employer Accountability Act (the “Act”) recently qualified for the November 2024 statewide ballot. If approved by the voters, California’s costly PAGA will fade into the sunset.
Interestingly, the Act qualified for the 2024 ballot shortly after the United States Supreme Court’s decision in Viking River Cruises v. Moriana. You can read more about that decision here. In short, it allows employers for the first time to include representative PAGA actions in the scope of arbitration agreements.
The Act would change PAGA in a number of important ways, including:
- Employees could no longer sue in civil court on behalf of the State. Instead, they would file a complaint directly with the Labor and Workforce Development Agency (LWDA), which would have the sole right to enforce the Labor Code and impose penalties for PAGA violations.
- Attorneys’ fees would no longer be recoverable. Employees would recover 100% of any penalties, assessed (as opposed to 25% currently).
- The Labor Commissioner would have the authority to double penalties for “willful violations.”
- The LWDA would create a “Consultation and Publication Unit” to, among other things, consult with employers who have questions about Labor Code requirements, and allow employers to cure violations without penalties.
Of course, the Act will face staunch resistance from those who have benefitted from PAGA over the years. If you have ever wanted to be involved in the legislative process, now’s the time!