PAGA Reform Deal Reached

Last week, Governor Newsom, working with state lawmakers and labor and pro-business groups, hammered out a deal to reform key aspects of PAGA. The reforms, if passed by the California Legislature and signed by the Governor by June 27th, will result in removal of a pending PAGA reform measure from the November ballot.

The reforms are calculated to:

·      Encourage prompt compliance with wage-hour laws by capping penalties for employers who act quickly to fix policies and practices, and make workers whole, after receiving a PAGA notice.

·      Create new, higher penalties for employers who act maliciously, fraudulently, or oppressively in violating labor laws.

·      Increase percentage of penalties that go to employees from 25% to 35%.

·      Expand the number of Labor Code sections that can be cured to reduce the need for litigation.

·      Help to reduce the impact on small employers by providing a more robust right-to-cure process.

·      Allow courts to provide injunctive relief to compel businesses to implement changes in the workplace to remedy labor law violations.

·      Require employee(s) who sue to personally experience the alleged violations brought in a claim.

We will continue to monitor these developments. Regardless of reforms, it is clear PAGA is not going anywhere.

The very best way to avoid these potentially disastrous lawsuits is to ensure full compliance with California’s wage-hour laws. We encourage employers to audit their timekeeping, overtime, meal and rest break and reimbursement practices, as these are the most common PAGA violations.

Additionally, if the reforms become law, on receiving notice of a PAGA claim, in the form of a letter to the Labor Workforce Development Agency (LWDA), employers should immediately act to “cure” violations to reduce penalties. We can assist with each of these efforts. Please contact us for help.