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Understanding Changes to the Labor Code Private Attorneys General Act of 2004 (PAGA)

Posted by Sinai Franco | Jan 23, 2025 | 0 Comments

In July of 2024, Governor Gavin Newsom signed Assembly Bill 2288 and Senate Bill No. 92 into law, introducing significant changes to California's the Labor Code Private Attorneys General Act of 2004 (PAGA). This legislation would allow employers to reduce their penalties if mitigating factors exist, but also expands on who an employee can file a claim on behalf of.

The Senate has recognized that “family-run small businesses, non-profits, local governments, school districts, labor unions and thousands of other employers have become major targets for lawsuits, often for minor technical violations”

What is the Labor Code Private Attorneys General Act of 2004 (PAGA)

Simply put, The Labor Code Private Attorneys General Act (PAGA) lets workers sue on behalf of other employees and themselves to enforce violations of California labor laws and seek civil fines for such violations when the state agency is unable to do so.

What do the changes of the Labor Code Mean?

1. Broader Scope of Action

The measure increases the power of an aggrieved worker to file a civil lawsuit on behalf of other present or past colleagues who have also suffered the same violation. This modification enables more representation in situations where the same offense affects several employees. For example, the definition of "aggrieved employee" is expanded to allow nonprofit legal aid organizations with five years of experience to file actions on behalf of employees.

2. Adjustment and Reduction to Civil Penalties

Both statutes provide a system in which companies violating labor regulations pay civil fines; although, under some conditions the penalties can be lowered. Penalties can be lowered by 15% to 30% specifically if an employer takes action following a violation notice. Penalties for isolated or non-recurring infractions might even be reduced as low as $25 or $50.

For penalty reductions, employers may need to demonstrate that these steps were taken proactively after receiving the notice from the Department of Labor but before a civil action was filed.

The measure also lets businesses with less than 100 workers send a proposal to "cure" the infractions to the Labor and Workforce Development Agency within 33 days after notice. If they effectively address the breach, and give the agency and the employee sworn notification, they can avoid paying the full civil penalty for the violation and potentially not be subject to the civil penalties typically assessed.

The process involves a court or the Labor and Workforce Development Agency, who will evaluate the employer's efforts and the nature of the violation to determine the appropriate penalty. If the employer has made a sincere effort to comply and correct the issue, the penalty may be reduced by 15% to 30%, depending on the specific circumstances outlined in the law.

However, the employer must meet the prescribed requirements and timelines for the cure process to be effective.

3. Penalty Distribution

While the original law mandated that 75% of civil penalties go to the Labor and Workforce Development Agency (for enforcement and educational purposes), with 25% going to the aggrieved employees, the bill maintains this structure but includes specific exceptions for certain cases where the penalty reductions apply.

What does this mean for small and large business owners?

These laws provide companies opportunities to avoid expensive lawsuits, lower penalties, and actively address infractions.

An attorney can help businesses sued under the Labor Code by demonstrating their efforts to comply with the law, which may lead to a reduction in penalties. By showing that reasonable steps were taken to address the violation, under the code a business can obtain a 15% to 30% reduction in penalties, potentially minimizing the financial impact of the case.

We suggest speaking with an attorney to make sure you're following all the required notice rules and legal obligations, and to get a clear explanation of how these changes apply to your specific situation.

Disclaimer: This article is for informational purposes only and is not a substitute for legal advice. If you have specific legal questions, consult an experienced attorney.

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Downey, California Attorney

At the Law Offices of Steve Lopez, we represent individuals, families and businesses throughout California in legal matters ranging from Civil Litigation, Family Law, and Estate Planning.

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