Private Attorneys General Act (PAGA) Reform FAQs Published

The California Department of Industrial Relations (DIR) recently published Frequently Asked Questions (FAQs) about the Private Attorneys General Act (PAGA) and its recent reforms, providing an overview of how those reforms modify PAGA claims and procedures. The PAGA FAQs include who can bring PAGA claims, what can be recovered in a lawsuit, claim procedures, the cure process and settlements.

Remember, for the last 20 years, PAGA allowed individuals to file lawsuits on behalf of themselves and other aggrieved employees seeking penalties for Labor Code violations, resulting in significant litigation that costs businesses of all sizes billions of dollars while bringing little benefit to workers.

However, on July 1, 2024, legislation was signed bringing much needed reforms for PAGA claims beginning on or after June 19, 2024, including, for example, a more robust right to cure (i.e., correct) Labor Code violations, reduced penalties for certain wage statement violations and penalty caps for employers that take all reasonable steps to comply with California’s wage and hour laws, among many other reforms.

Taking “all reasonable steps” is perhaps the most significant and actionable step employers, who are not actively involved in a PAGA lawsuit, can take. As noted in the DIR’s PAGA FAQ #5, 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 percent 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 percent of the penalty sought.”

Though the PAGA FAQs do not go into specifics, Labor Code section 2699 provides that “all reasonable steps” may include, but are not limited to:

• 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; and
• Taking appropriate corrective action with regard to supervisors.

These steps have always been longtime “best practices” in an employer’s ongoing efforts to comply with the law. But now, under PAGA reform, it is critically important for employers to engage in these steps, prior to receiving a PAGA notice or an employee records request (e.g., personnel or payroll records request) — even if they think their policies and practices are already in compliance with the law. Doing so will help ensure legal compliance and potentially avoid substantial penalties in future PAGA claims.

To assist employers in meeting their wage and hour requirements as well as taking “all reasonable steps” identified above, CalChamber created the PAGA Wage and Hour Compliance Toolkit, which contains access to:

• Three PAGA-related webinar recordings;
• 16 wage and hour policies (English and Spanish), which employers can customize and disseminate to their supervisors and employees, and their instructions; and
• More than 40 wage and hour forms, including a comprehensive payroll audit checklist.

Employers should review the DIR’s PAGA FAQs.

James W. Ward, J.D., Employment Law Subject Matter Expert/Legal Writer and Editor, CalChamber

CalChamber members can use the Wage and Hour Guide that contains CalChamber resources related to the most common wage and hour topics that employers must comply with. Not a member? See how CalChamber can help you.