Oct 18, 2024

To embed, copy and paste the code into your website or blog: <iframe frameborder="1" height="620" scrolling="auto" src="//www.jdsupra.com/post/contentViewerEmbed.aspx?fid=f8a56c93-9610-4478-ab7d-11bf1f5bf1e5" style="border: 2px solid #ccc; overflow-x:hidden !important; overflow:hidden;" width="100%"></iframe> The California Department of Industrial Relations (“DIR”) recently issued some FAQs regarding how PAGA claims are administered following reform legislation. As you may know, the CA Legislature acted earlier this year to pass legislation to reform PAGA in order to avoid a vote by citizens this November on a ballot measure to repeal the PAGA statute. If you are asking yourself “what is PAGA,” the FAQs explain the statute for you. However, if you are an employer in CA, and have never heard of PAGA before reading this, I encourage you to educate yourself about PAGA and ensure your wage and hour practices are in compliance with CA law. “PAGA” stands for the “Private Attorneys General Act” and the Act allows employees to stand in the shoes of the State by suing their employers on behalf of the State for violations of certain labor laws (mainly wage and hour laws) to recover civil penalties. These civil penalties are separate from and additional to other remedies employees may be entitled to, including damages, for Labor Code violations through a separate non-PAGA lawsuit. Mainly the FAQs address certain aspects of the legislative reform. Below is a summary of just a few: Standing to bring a PAGA lawsuit. PAGA permits employees to bring an action on behalf of themselves and other current and former employees. Prior to June 19, 2024, a current or former employee had standing to bring a PAGA lawsuit if they experienced at least one of the alleged violations of labor laws. The reform legislation changed this and provides that on or after June 19, 2024, the current or former employee who files the PAGA lawsuit must have experienced each of the alleged violations of labor laws. However, there is one exception to this new standing requirement. If the employee is represented by a non-profit legal service organization that litigated PAGA actions in court for at least five years prior to January 1, 2025, the employee has standing to file a PAGA lawsuit if they have experienced at least one alleged violation of labor laws. Increase in the Percentage of Recovered Penalties that Goes to Employees. For PAGA claims filed prior to June 19, 2024, the civil penalties recovered in a PAGA lawsuit were split between the State and the employees 75%/25% respectively. For PAGA claims/notices filed on or after June 19, 2024, the civil penalties are split 65%/35% respectively. Expanded Cure Opportunities for Employers. Before an employee can bring a PAGA lawsuit, the employee must give notice by filling out an online form and submitting a letter to Labor & Workforce Development Agency (LWDA) through the DIR’s PAGA Filing Portal. The LWDA has assigned the responsibility to investigate PAGA claims that raise wage and hour violations to the Labor Commissioner’s Office (LCO). The notice must also be sent to the employer by certified mail. The LCO may decide to investigate any PAGA notice alleging wage and hour violations. If it decides to do so, the 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. However, during the notice period that the LCO is evaluating whether to investigate a PAGA claim, an employer has the opportunity to cure, or correct, certain violations 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. The PAGA reform legislation also put in place new processes for certain types of employer cures: Prior to October 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 the LWDA that the alleged violation has been cured, including a description of actions taken. An aggrieved employee may dispute the sufficiency of the cure. The LWDA will review cure disputes and provide written notice of its decision to the aggrieved employee and the employer. The LWDA may give the employer three additional days to complete the cure. If the LWDA determines that the violation is not cured or does not provide timely notice, the aggrieved employee may file a PAGA lawsuit. Effective October 1, 2024, employers of any size may cure violations of Labor Code section 226 (wage statement [aka paystub] violations). If that is the only violation an employer seeks to cure, the same cure process described above for cures prior to October 1, 2024, applies. Effective October 1, 2024, employers that employ fewer than 100 employees may submit to the LWDA proposals to cure violations within 33 days of the PAGA notice. The 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 the LWDA determines that the violation is not cured or does not provide timely notice, the aggrieved employee may file a PAGA lawsuit. If the LWDA determines that the alleged violation has been cured, an aggrieved employee may request a hearing to dispute that finding. The LCO will preside over the cure hearing. An employee may appeal the 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. Employers 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 proposal and cure disputes must be submitted online through the PAGA Filing Portal. The LWDA’s Position on what an effective cure requires. Correcting the alleged violation requires the following: Compliance with the statute alleged to have been violated Making each aggrieved employee whole If an employee is owed wages, the cure must include:  unpaid wages back three years from the notice, seven percent (7%) interest, any liquidated damages required by statute, and reasonable attorney’s 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 For wage statement violations of Labor Code §226(a)(8), employer must provide written notice of the correct information to each aggrieved employee. New “Early Evaluation Conference” Opportunity for Large Employers. Employers who employ at least 100 employees may request an early evaluation conference and stay of a PAGA lawsuit court proceeding when the employer is 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 the LWDA administers. Employers are encouraged to work with their employment counsel to audit their wage and hour practices for compliance with CA law. The DIR’s PAGA FAQs can be found here .