Deal Reached on California’s PAGA Reform

Business and labor groups have reached a deal on reforms to California’s Private Attorneys General Act (PAGA), avoiding a contentious ballot measure.

We’ve gathered articles from SHRM Online and other outlets on the news.

Deal’s Provisions

Gov. Gavin Newsom, in partnership with legislative leadership and business and labor groups, announced the deal on June 18.

“We came to the table and hammered out a deal that works for both businesses and workers, and it will bring needed improvements to this system,” Newsom said. “This proposal maintains strong protections for workers, provides incentives to comply with labor laws, and reduces litigation.”

Here’s what the PAGA reform deal would do:

• Cap 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 take proactive steps to comply with the labor code before receiving a PAGA notice.
• Create new, higher penalties on employers that act maliciously, fraudulently, or oppressively in violating labor laws.
• Ensure that more of the penalty money goes to employees by increasing the amount allocated to employees from 25 percent to 35 percent.

The deal also would reduce and streamline litigation, improve measures for injunctive relief and standing, and strengthen state enforcement.

(California governor’s press release)

Remaining Steps to Implement Deal

The agreement would need to be put into legislation and passed by state lawmakers. It was not clear if this would replace an existing bill that would expand PAGA or if it would be placed into a set of expedited bills that are approved through the state’s budget process.

(KCRA—NBC 3)

What’s PAGA?

PAGA gives aggrieved employees a simplified and relatively inexpensive process for filing a class-action lawsuit. PAGA has been criticized as enriching lawyers while subjecting many businesses to costly suits over technical violations.

(LawyersandSettlements.com and SHRM Online)

PAGA Has Been Expensive for Employers

The deal caps years of efforts by the state’s employers to rein in PAGA, which they blame for mounting lawsuits that, according to one study, have cost businesses $10 billion during the past decade. Advocates say the law is a model of worker protection.

(Bloomberg)