AB 2288 and SB 92 PAGA Reform

In June 2024, the California Legislature passed SB 92 and AB 2288, which make significant reforms to the Private Attorneys General Act (PAGA) for the first time since it was enacted in 2004. These reforms apply to cases filed on or after June 19, 2024.

The California Legislature enacted PAGA in 2004 to allow California employees to collect penalties for Labor Code violations on behalf of the state.

The new laws impact PAGA in several ways:

• An “aggrieved” employee must personally experience each alleged Labor Code violation for which they seek penalties, with a limited exception for plaintiffs represented by legal aid organizations.  Previously plaintiffs had standing to bring PAGA claims for any Labor Code violation as long as they showed they suffered at least one Labor Code violation.

• Courts may impose “manageability” requirements on PAGA trials, limiting the scope of claims and evidence presented at trial.

• Employers that take “all reasonable steps” to comply with the Labor Code will have penalties capped at 15% of the default amounts if they take those steps before receiving a PAGA notice, and 30% if they take those steps after receiving a notice.

• The statute identifies conducting audits and actioning findings, disseminating lawful written policies, training supervisors, and taking corrective action with respect to supervisors as examples of “reasonable steps” an employer may take.

• Reasonableness will be evaluated by the totality of the circumstances and take into consideration the size of and resources available to the employer, and the nature, severity, and duration of the alleged violations.

• Penalties are now more limited, including PAGA penalties for employees paid on a weekly basis are now half.  PAGA penalties accrue per pay period, so employees on a weekly basis previously recovered twice as many PAGA penalties as other employees.

• “Curable” PAGA violations have expanded and now include wage statement claims, meal and rest break claims, minimum wage claims, overtime claims, and expense reimbursement claims.  Courts may not levy PAGA penalties for violations when an employer has taken all reasonable steps to comply with the Labor Code and has adequately cured the violation.

• There are new paths to alternative dispute resolution.  Small employers with fewer than 100 employees can request a settlement conference through the Labor Workforce Development Agency.  Large employers with 100 or more employees can request a stay of litigation and neutral evaluation through the court where the PAGA action is pending.

• PAGA plaintiffs may seek injunctive relief in addition to penalties.

• The percentage of PAGA penalties distributed to employees increased from 25% to 35%, with the balance still paid to the Labor and Workforce Development Agency.

Please contact your usual labor law counsel if you have any questions about this new legislation.