California Governor Signs PAGA Reform Legislation

On July 1, 2024, California Governor Gavin Newsom signed into law two Private Attorneys General Act (PAGA) reform measures — Assembly Bill 2288 and Senate Bill 92 — that, together, will curtail rampant PAGA lawsuit abuse while offering better outcomes for employees who have been wronged.

“The new policies coming out of the reform measures signed [yesterday] will create more fairness in the process for small businesses and, importantly, incentivize them to understand and comply with labor laws that impact their workforce to the benefit of all,” said CalChamber President and CEO Jennifer Barrera in a statement.

As previously reported, seven core elements are in the package, and CalChamber is proud to have played a leading role in negotiating these significant reforms that include big wins for employers in California.

One such win is the significant reduction of potential penalties under a PAGA action if an employer has proactively taken “reasonable steps” to comply with the Labor Code, before receiving a records request or a PAGA notice. Additionally, employers who take all reasonable steps to prospectively be in compliance after a PAGA notice may also benefit from caps on penalties.

These “reasonable steps” include:

• Conducting periodic payroll audits and taking action in response to audit results;
• Disseminating lawful written policies;
• Training supervisors on applicable Labor Code and wage order compliance; or
• Taking appropriate corrective action with regard to supervisors.

“This package provides meaningful reforms that ensure workers continue to have a strong vehicle to get labor claims resolved,” Barrera said in a previous statement, “while also limiting the frivolous litigation that has cost employers billions without benefiting workers.”

To help California businesses with proactive compliance, CalChamber is creating a suite of comprehensive PAGA-related resources — stay tuned for more!