New California PAGA FAQ

Legal Update

Brought to you by: Hammett Health, Inc.

The California Labor & Workforce Development Agency (LWDA) recently published answers to frequently asked questions (FAQs) on the state’s Private Attorneys General Act (PAGA). In general, PAGA authorizes aggrieved employees to file lawsuits to recover civil penalties on behalf of themselves, other aggrieved employees and the state of California for Labor Code violations. The FAQs provide an overview of the law and guidance for employers on the new procedures introduced by recent amendments, which took effect on July 1, 2024, and significantly reformed the law.

This Legal Update provides an overview of LWDA’s FAQs.

1. What is PAGA?

PAGA allows employees to assist the state in enforcing labor laws by suing their employers on behalf of the state for violations of the Labor Code to recover civil penalties. Civil penalties assessed and collected under PAGA help deter unlawful conduct and encourage compliance with labor protections. These civil penalties are separate from and additional to other remedies, including damages, available for labor law violations through a separate non-PAGA lawsuit.

Employees may bring other types of claims instead of, or in addition to, a PAGA claim, such as filing a lawsuit in court to recover unpaid wages, statutory damages and statutory penalties for certain Labor Code violations.

Additional information can be found at:

Cal/OSHA for health and safety violations
Labor Commissioner’s Office (LCO) for wage theft and retaliation claims

2. Who oversees PAGA?

PAGA is administered by LWDA. LWDA has assigned the LCO the responsibility to investigate PAGA notices that raise wage and hour violations and Cal/OSHA the responsibility to investigate PAGA notices that raise health and safety violations. Starting Oct. 1, 2024, LWDA will review cure notices and proposals and hold cure conferences, and LCO will hold cure determination hearings (see Question 8).

3. Who can bring a PAGA lawsuit?

Employees can bring the action on behalf of themselves and other current and former employees.

For PAGA notices filed on or after June 19, 2024, any current or former employee who has experienced each of the alleged violations of labor laws may file a PAGA lawsuit. Employees represented by a nonprofit legal service organization that litigated PAGA actions in court for at least five years prior to Jan. 1, 2025, may file a PAGA lawsuit if they have experienced at least one alleged violation of labor laws.

For PAGA notices filed before June 19, 2024, a PAGA lawsuit may be filed by a current or former employee who has experienced at least one of the alleged violations of labor laws.

4. Who can be sued under PAGA?

Private employers are subject to PAGA lawsuits for violations of the Labor Code, but government employers are not.

5. What can be recovered in a PAGA lawsuit?

A PAGA lawsuit is for the recovery of civil penalties, the amount of which depends on the type of violation. The penalties recovered by the state fund enforcement of labor laws and education of employers and employees about their rights and responsibilities under the Labor Code.

For PAGA notices filed before June 19, 2024, the penalties are split between employees and the State of California, with 75% of the recovered penalties going to the state and 25% going to the aggrieved employees;
For PAGA notices filed on or after June 19, 2024, 65% of the recovered penalties goes to the state and 35% to the aggrieved employees; and
For PAGA cases in which the notice and complaint were filed on or after June 19, 2024, the court may also order the employer to stop its unlawful action(s) or practice(s).

For PAGA notices filed on or after June 19, 2024, if an employer had taken all reasonable steps to comply with the law prior to receiving a PAGA notice, but a violation nonetheless occurred, the maximum civil penalty is 15% of the penalty sought. If the employer takes all reasonable steps to be prospectively in compliance with the law within 60 days of the PAGA notice, the maximum civil penalty is 30% of the penalty sought. Certain exceptions apply.

6. What are the procedures for bringing a PAGA lawsuit?

Before an employee can bring a PAGA lawsuit, the employee must give notice by filling out an online form and submitting a letter to LWDA through the Department of Industrial Relations’ PAGA Filing Portal. The notice must also be sent to the employer by certified mail.

LCO may decide to investigate any PAGA notice alleging wage and hour violations. If so, LCO will notify the employee within 65 days of the PAGA notice. If no notice to investigate is provided, the employee is authorized to file suit in court. If LCO provides notice that it will investigate, it has 120 days to do so. If LCO does not file suit or issue a citation within 120 days of its decision to investigate, the employee who submitted the notice may file suit. If LCO does file suit or issue a citation during that time, the employee may not file the PAGA lawsuit on the same facts and theories contained in the LCO’s citation or lawsuit.

In certain circumstances, an employer may seek to cure a violation during the notice period and avoid civil penalties and litigation costs. If LWDA determines the alleged violation has been cured, the employee may not file the PAGA lawsuit. See Questions 7 and 8 for information on the cure process.

Cal/OSHA must investigate any PAGA notice alleging health and safety violations and can issue a citation within six months of the alleged violations. If a citation is issued, the employee cannot file a PAGA lawsuit. If Cal/OSHA does not issue a citation within the prescribed time period, an employee may challenge that decision in court or file a PAGA lawsuit.

Within 10 days of filing a PAGA lawsuit with the court, the employee must provide a file-stamped copy of the court complaint by submitting it online through the PAGA Filing Portal.

7. What does a PAGA notice need to include?

The notice must specify the section(s) of the Labor Code alleged to have been violated and include sufficient facts and legal theories to support each alleged violation. It is not enough to merely recite or rephrase the law or code section(s) or make conclusory statements without factual support. The letter must give adequate notice for the state to investigate the allegations and provide employers the opportunity to correct the violation in certain circumstances.

8. What is the cure process?

PAGA provides employers the opportunity to cure or correct certain violations during the notice period and avoid PAGA litigation and penalties. For notices filed on or after June 19, 2024, the PAGA reform legislation expanded the types of violations that can be cured. Violations that can be cured now include claims for minimum wage, overtime, meal and rest breaks, necessary expense reimbursement, and all requirements for itemized wage statements, among others. Employer cure proposals are treated as confidential settlement proposals and may not be used to prove the validity of any claim or as an admission of liability. All cure notices or proposals and cure disputes must be submitted online through the PAGA Filing Portal.

PAGA reform legislation also put in place new processes for certain types of employer cures:

Prior to Oct. 1, 2024, the preexisting cure process continues to apply. Under that process, within 33 days of the PAGA notice, the employer must give written notice by certified mail to the aggrieved employee or representative and by online filing to LWDA that the alleged violation has been cured, including a description of actions taken. An aggrieved employee may dispute the sufficiency of the cure. LWDA will review cure disputes and provide written notice of its decision to the aggrieved employee and the employer. LWDA may give the employer three additional days to complete the cure. If LWDA determines that the violation is not cured or does not provide timely notice, the aggrieved employee may file a PAGA lawsuit;
Effective Oct. 1, 2024, employers of any size may cure violations of Labor Code Section 226 (wage statement violations). If that is the only violation an employer seeks to cure, the same cure process described above for cures prior to Oct.1, 2024, applies; and
Effective Oct. 1, 2024, employers that employ fewer than 100 employees may submit to LWDA proposals to cure violations within 33 days of the PAGA notice. LWDA may set a conference to evaluate the sufficiency of the proposed cure, and the employer must complete the cure within 45 days of the conference. If LWDA determines that the violation is not cured or does not provide timely notice, the aggrieved employee may file a PAGA lawsuit. If LWDA determines the alleged violation has been cured, an aggrieved employee may request a hearing to dispute that finding. LCO will preside over the cure hearing.

An employee may appeal LCO’s determination that the violation has been cured in Superior Court. An employer may not use the cure provisions more than once in a one-year period for the same violations.

9. What does an effective cure require?

Curing a violation requires the following:

Correcting the alleged violation;
Complying with the statute alleged to have been violated; and
Making each aggrieved employee whole:
- If an employee is owed wages, the cure must include unpaid wages back three years from the notice, 7% interest, any liquidated damages required by statute, and reasonable attorney fees and costs;
- For wage statement violations, the employer must provide fully compliant wage statements to each aggrieved employee for each pay period of the violation going back three years prior to the PAGA notice; and
- For wage statement violations of Labor Code §226(a)(8), the employer must provide written notice of the correct information to each aggrieved employee.

10. What is the early evaluation conference?

Employers who employ at least 100 employees, as well as smaller employers who wish to avail themselves of the process, may request an early evaluation conference and stay of the court proceedings when served with a summons and complaint. This process, which will be overseen by a neutral evaluator, is intended to facilitate early evaluation and resolution of the dispute in court. This process is distinct from the administrative cure process LWDA administers (see Question 7).

11. Does a PAGA settlement have to be approved by the court?

Yes, the court must independently review and approve PAGA settlements to make sure the resolution is fair to those affected. A PAGA settlement must provide relief that is fair, reasonable, adequate and consistent with the goals of PAGA. The purpose of civil penalties is to encourage employers to correct past violations and to stop current and future violations.

Settlement terms of health and safety violations must be at least as effective as the protections or remedies provided under state and federal laws.

A proposed settlement needs to be submitted online through the PAGA Filing Portal at the same time that it is submitted to the court.

12. What should be avoided in a PAGA settlement?

LWDA may object to the proposed settlement or intervene if the settlement does not meet PAGA’s purpose. Certain characteristics of a proposed settlement may raise red flags, indicating that a PAGA settlement may not be fair, reasonable, and adequate. These include settlement agreements that:

Release claims that are not included in the employee’s PAGA notice;
Designate the settlement or terms of the settlement agreement confidential;
Revert settlement funds to employers if not fully paid out to aggrieved employees;
Do not correct, in whole or in part, violations identified in the employee’s PAGA notice;
Fail to justify the settlement amount and discounts to claim(s); and
Substantial discounts to claims and extinguishes other pending PAGA lawsuits.

Questions

PAGA questions can be sent to PAGAinfo@dir.ca.gov, except questions about the PAGA cure process, which can be sent to PAGACure@labor.ca.gov.

Source: California Labor & Workforce Development Agency (LWDA)

Provided to you by Hammett Health, Inc.

Important Dates

June 19, 2024

The PAGA amendments apply to actions brought on or after June 19, 2024.

July 1, 2024

The PAGA reform bills took effect.

Oct. 1, 2024

Early resolution provisions of the PAGA reform bills become operative.

California’s LWDA recently published FAQs providing an overview of the state’s PAGA law and guidance on the new procedures introduced by recent amendments to the law.

This Legal Update is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel for legal advice. ©2024 Zywave, Inc. All rights reserved.