INFO ALERT: New PAGA deal aims to reduce shakedown lawsuits

One of the business community's top issues is nearing a fix. After a years-long fight to reform the Private Attorneys General Act (PAGA), a deal was announced today by Governor Gavin Newsom, Senate President pro Tem Mike McGuire, and Assembly Speaker Robert Rivas to create a fairer system for employers and employees. It cracks down on frivolous lawsuits that hurt businesses, while increasing the share of award money that workers receive from legitimate claims.

The legislative package is set to be introduced and considered as early as this week. If this compromise is passed and signed into law by June 27 (the deadline for measures to be withdrawn from the November ballot), the "Fix PAGA" coalition will remove its PAGA reform measure from the ballot. The deal is backed by a diverse coalition of business leaders, nonprofit organizations, social justice advocates, family farmers, healthcare providers, and policymakers. Here are the key ways it reforms PAGA.

• Requires the employee plaintiff to personally experience alleged violations.
• Sets time limit for alleged violations to within one year of claim.
• Caps penalties to 15% of applicable amount for employers who take steps to comply with Labor Code before receiving notice.
• Caps penalties to 30% of applicable amount for employers who take steps to comply with Labor Code after receiving notice.
• Reduces the maximum penalty where the alleged violation was brief or where it is a wage statement violation that did not cause confusion or economic harm to the employee.
• Levels the playing field for employers who pay weekly by ensuring a penalty is adjusted. Presently, such employers are penalized at twice the amount because the penalty accrues on a per pay period basis.
• Protects small employers by providing a more robust right to cure process through the state labor department, reducing litigation and costs.
• Increases share employees receive from any penalties from 25% to 35%.

WHY THIS MATTERS

PAGA isn't working for employees or employers. It's lining the pockets of lawyers. Workers have received only a small portion of the nearly $10 billion awarded through PAGA lawsuits since 2013, according to a recent report. Attorneys who file PAGA cases with courts collect fees that account for least one-third of the total amount recovered by workers, averaging more than $369,000 per case! Meanwhile, PAGA provisions are hurting employers across every industry in California, slowing job growth and forcing some smaller enterprises to close.

“Small businesses throughout the state have been targeted by frivolous PAGA lawsuits for decades, even forcing some restaurants to shut down. We support this reform which will reduce shakedown lawsuits against small businesses while providing strong protections for workers,” said BizFed leader Jot Condie, President & CEO of the California Restaurant Association.

THANK YOU, BIZFED LEADERS!

The groups listed below were among the BizFed leaders who played an integral role in shaping and shepherding this deal through critical processes. Thank you to all members and business community leaders who leaned in. We need you to continue raising your vital voices to ensure sensible PAGA solutions are adopted – and implemented. Please contact BizFed Director of Advocacy Sarah Wiltfong at sarah.wiltfong@bizfed.org with questions.

• Bicker, Castillo, Fairbanks, & Spitz Public Affairs
• California Restaurant Association
• CalChamber
• New Car Dealers Association