Under California’s unique Private Attorneys General Act of 2004 (PAGA), an aggrieved employee is permitted to not only bring their own civil action or a class action against an employer to seek damages for alleged wrongdoings, but is also deputized to step into the shoes of the Labor Commissioner and pursue penalties for alleged violations of the Labor Code on behalf of the Labor Workforce Development Agency (LWDA). The LWDA receives 75 percent of the recovered penalties, with the remaining 25 percent distributed to aggrieved employees. The availability to individuals of these additional PAGA penalties effectively incentivizes those individuals to bring private litigation on the agency’s behalf.
Amendments to PAGA were recently negotiated in the form of two separate bills which were signed into law on July 1, 2024. The amendments limit the claims that can be asserted and penalties that can be imposed in many PAGA lawsuits in the future. Most amendment provisions take effect immediately and apply to PAGA actions filed on or after June 19, 2024, unless the employee’s underlying PAGA notice was submitted to the LWDA and the employer prior to June 19, 2024. Some provisions, such as cure procedures for small employers and measures to cure pay statement violations, take effect on Oct. 1, 2024.
Review the details here.
Implications for California Employers
California employers should remain highly attuned to the risk of Labor Code violations.
Diligent employers should assess and document a comprehensive program demonstrating that they have taken all reasonable steps to comply with Labor Code requirements, e.g., routine payroll audits, establishing appropriate employee policies, and training all supervisors, to qualify for the lower penalty under the newly reformed PAGA. Consult with appropriate legal counsel before taking action.
ADP provides you with access to review your payroll data to assist with your payroll audit needs. For example, you could review your employees’ wage statements or other historical payroll data information. Consult with appropriate legal counsel to help determine your strategy. If payroll configuration changes are necessary or if you need assistance with retrieving your reports please contact your ADP Service Representative.
To learn more about California Pay statement requirements review our on-demand webcast here.
For more information, see both Assembly Bill 2288 and Senate Bill 92. The Assembly and Senate bills contain different provisions. Both bills should be reviewed.