California’s Private Attorney General Act (PAGA) allows a private citizen to pursue civil penalties on behalf of the State of California Labor and Workforce Development Agency, provided the formal notice and waiting procedures of the law are followed.
In the employment context, this means that employees are provided with a private right of action against an employer to collect penalties on behalf of the State. When enacted, the law was heralded as a boon to disgruntled employees who were, essentially, allowed to act as an attorney general.
When an employee brings an action against an employer under PAGA, it is on behalf of all the employees who suffered labor violations by that employer. PAGA requires that 75% of all penalties collected be paid to the LWDA, with the remaining 25% distributed to the aggrieved employees. An employee has one year from the ‘date of injury’ to bring a claim under PAGA.
PAGA groups violations into three categories. The first category relates to claims brought under Labor Code section 2699.5 and includes wage and hour claims. The second category of PAGA claims is for health and safety violations predicated on any section of Labor Code sections 6300 et seq. The third and final category, which is a catch-all of sorts, applies to violations of the Labor Code other than those covered by the first two categories.
A few years ago, the California Supreme Court held that an aggrieved employee who brings a representative action under PAGA may recover civil penalties without satisfying class action certification requirements. This led to an increase in the number of PAGA claims brought by employees, as well as an increase in the litigation budget of many California businesses.
Recently, however, Gov. Jerry Brown signed a bill that will allow California employers to resolve technical violations involving itemized wage statements within a limited time frame to avoid costly Private Attorney General Act suits. This bill appears to be in response to a 2013 law that made it easier for plaintiffs to show injury from pay stub violations and led to workers asserting the claim more aggressively. According to the new bill (Assembly Bill 1506), employers will have 33 days after receiving a notice from a potential PAGA plaintiff to fix errors that could otherwise result in the employer being dragged into court. It is important to note that under the law, an employer’s PAGA violation will only be dismissed if it can show it has provided a compliant, itemized wage statement to each affected employee and can only take advantage of this provision once in a 12-month period.
This bill is intended to avoid the type of “gotcha” litigation that was becoming all too prevalent in the wage and hour area of wage statements.
For more information on PAGA and your business, contact experienced business attorney Drew E. Pomerance today.
