On June 18, 2024, Governor Newsom announced a deal had been reached with the legislature and business groups to reform California’s Private Attorneys General Act (PAGA).

The agreement apparently comes after several months of negotiations between various business groups that had been pushing forward a ballot measure to repeal PAGA and labor advocates.

The following is an outline of the agreement:

Reform penalty structure

• Encourages compliance with labor laws by capping penalties on employers who quickly take steps to fix policies and practices, and make workers whole, after receiving a PAGA notice, as well as on employers who act responsibly to take steps proactively to comply with the labor code before even receiving a PAGA notice.
• Creates new, higher penalties on employers who act maliciously, fraudulently, or oppressively in violating labor laws.
• Ensures that more of the penalty money goes to employees by increasing the amount allocated to employees from 25% to 35%.

Reducing and streamlining litigation

• Expands which Labor Code sections can be cured to reduce the need for litigation and make employees whole quickly.
• Protects small employers by providing a more robust right-to-cure process through the Labor and Workforce Development Agency (LWDA) to reduce litigation and costs.
• Codifies that a court may limit the scope of claims presented at trial to ensure cases can be managed effectively.

Improving measures for injunctive relief and standing

• Allows courts to provide injunctive relief to compel businesses to implement changes in the workplace to remedy labor law violations.
• Requires the employee to personally experience the alleged violations brought in a claim.

Strengthening state enforcement

• Give the Department of Industrial Relations (DIR) the ability to expedite hiring and fill vacancies to ensure effective and timely enforcement of employee labor claims.

While this reform is exciting for employers, legislation still needs to be passed and signed by the Governor for the changes to take effect. The groups pushing forward the ballot measure will withdraw the initiative if the measure passes the legislature and is signed by the Governor by June 27.