Quick Hits

• California’s governor recently signed two bills to reform PAGA to enable workers to sue their employers or former employers over California Labor Code violations.
• The new legislation caps penalties on employers that “quickly take steps to fix policies and practices, and make workers whole, after receiving a PAGA notice, as well as on employers that act responsibly to take steps proactively to comply with the Labor Code before even receiving a PAGA notice.”
• The laws also institute higher penalties on employers that “act maliciously, fraudulently or oppressively in violating labor laws.”

Newly enacted Assembly Bill (AB) 2288 and Senate Bill (SB) 92 allow an employee to bring PAGA claims only for Labor Code violations the employee “personally suffered” within the statute of limitations. Here are several highlights of the new legislation. According to a statement from the governor’s office, the laws:

• Require employees to “personally experience the alleged violations brought in a claim.” Therefore, an individual will not have standing to sue on behalf of others who were allegedly harmed.
• Cap penalties on employers that take immediate action to remedy “policies and practices, and make workers whole, after receiving a PAGA notice,” as well as employers that take proactive steps to comply with the Labor Code before receiving a PAGA notice.
• Impose increased “penalties on employers [that] act maliciously, fraudulently or oppressively in violating state labor laws.”
• Increase the amount of penalty money allocated to employees from 25 percent to 35 percent. (The remaining 65 percent will go to the state’s Labor and Workforce Development Agency (LWDA).)
• Provide a “more robust right to cure process through the [LWDA] to reduce litigation and costs.”
• Permit courts to limit the scope of claims presented at trial to ensure cases are manageable.
• “Allow courts to provide injunctive relief to compel businesses to implement changes in the workplace to remedy violations.”
• “Give the California Department of Industrial Relations (DIR) the ability to expedite hiring and fill vacancies to ensure effective and timely enforcement of employee labor claims.”

The new changes will not be retroactive and will apply to only lawsuits arising from PAGA notices that were submitted on or after June 19, 2024.

In light of the reform legislation, the proponents of a statewide ballot initiative to repeal PAGA recently withdrew their measure, so it will not be presented to voters in November.