On June 27, 2016, Governor Jerry Brown signed the California budget for the upcoming fiscal year. This budget, approved by the legislature on June 15, 2016, makes a number of significant changes to the California Labor Code’s Private Attorneys General Act (PAGA) of 2004. Since the early months of 2016, Governor Brown emphasized publicly that he intended to use his budget proposal to “stabilize and improve the handling of PAGA cases,” in light of a recent surge in such actions. According to the Governor’s administration, Brown hoped to expand the Labor and Workforce Development Agency’s (LWDA) oversight of PAGA claims in order to “reduce unnecessary litigation” and lower “the costs of doing business” in the state. Of course, ensuring that California receives its fair share of any settlement may also be of interest to the state. California employers should take note of the changes to PAGA.

Although the Legislature ultimately whittled down many of Brown’s more wide-reaching PAGA-related budget proposals, the following changes survived and will be in effect for all PAGA cases filed prospectively: 

• An aggrieved employee must now submit his or her PAGA claim online rather than by certified mail, and must also submit a $75 filing fee with each claim. A copy of the claim is to be sent by certified mail to the employer. 

• All employer cure notices or other responses to PAGA claims must be filed online, with a copy sent by certified mail to the aggrieved employee or the employee’s representative.

• An aggrieved employee cannot file a civil PAGA action until 65 days after providing online notice to the LWDA, rather than the current 33 days. 

• The LWDA will have 60 days, rather than 30, to review PAGA notices and to inform parties that it is not planning to investigate an alleged violation.

• The LWDA may extend its time to investigate by an additional 60 days if the agency deems this additional time necessary, effectively giving the agency 180 days (previously 120 days) to investigate PAGA claims.

• Where a PAGA complaint is filed in court, the LWDA must be provided with a copy of the filed-stamped copy of complaint (applies only to cases in which the initial PAGA claim notice was filed on or after July 1, 2016).

• Parties must now provide a copy of a proposed settlement to the LWDA at the same time they provide it to the court for the court’s approval.

• A court must approve any settlement of a PAGA action, whether or not the settlement includes PAGA penalties.

• Any approved settlement must be provided to the LWDA through its online system within 10 days after the entry of judgment.

• A prevailing employee may be entitled to recover filing fees in certain circumstances.

• Employers must now submit PAGA cure notices to the LWDA online.

Whether these changes ultimately affect the scope and volume of litigated PAGA claims is still uncertain. However, it is likely that the amendments will lead to heightened LWDA involvement in PAGA claims from initial filings through final, court-approved settlements. The extent to which the LWDA utilizes its newfound powers of review also remains to be seen, but will certainly add a new layer of administrative oversight and bureaucratic red tape to the investigation and resolution of a PAGA claim. In the meantime, employers should be prepared that these changes may increase the lifetime of a PAGA claim and potentially lead to increased complications and litigation costs.