• Navigating the New PAGA Reforms: What Employers Need to Know

  • Jul 16 2024
  • Duración: 9 m
  • Podcast

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Navigating the New PAGA Reforms: What Employers Need to Know

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  • Weintraub attorneys Shauna Correia and Lukas Clary as they discuss the new PAGA reform, offering insights on how it impacts California employers and steps they can take to stay compliant in the latest episode of "California Employment News." Watch this episode on the Weintraub YouTube channel and listen to this podcast episode here. Show Notes: Shauna Hi, thank you for joining us for this installment of the “California Employment News”, an informative video and podcast resource offered by the Labor and Employment Group at Weintraub Tobin. I'm Shauna Correia, and I'm joined today by my partner, Lukas Clary, and today we're here to discuss the new Private Attorney General Act or PAGA reform. Lukas, can you start us off by giving a little bit of background about the PAGA? Lukas Yeah, thanks, Shauna. PAGA is the Private Attorneys General Act. It's a California statute that allows employees to step into the shoes of the government effectively as private attorneys general to enforce labor laws and seek penalties for violations of the California Labor Code. These can be brought on behalf of not only the aggrieved employee who is bringing it but as representative actions on behalf of other employees and the state itself. While just about any violation of the labor code could give rise to a PAGA lawsuit, the ones we most commonly see range from wage-related violations such as non-compliant overtime practices and missed meal and rest breaks to more minor things like paycheck the employer's address or legal name is missing from the paycheck, or the last four digits of the employee's social security number or a similar ID is missing. Regardless of what the error is, the existing penalties are fairly uniform. $100 per employee per pay period for initial violations and $200 per employee per pay period for subsequent violations. While that might not seem like a huge amount, when you multiply it across the workforce and across the one-year statutory lookback period that applies to these lawsuits, PAGA lawsuits can often add up to well into the six figures and sometimes even seven figures in liability or more, plus your own legal fees. While this was enacted with good intentions back in 2004, in practice, PAGA has been a bit of a nightmare for California employers. In the overwhelming majority of these lawsuits, the alleged violations at issue did not occur because a malicious employer was trying to skirt the rules. Instead, particularly with technical violations such as missing information on the wage saving, employers typically do not even realize they were out of compliance until litigation is underway. And by that point, it's too late. With very limited exceptions, existing law has not allowed employers to cure the violations and avoid the penalties. These lawsuits have sometimes presented an existential crisis for employers who did not even realize they were doing anything wrong. And the way the law has been structured, 75% of all recovered PAGA penalties are turned over to the state, with the remaining 25% going to the employee. Plaintiffs' lawyers also take a cut of the employee's recovery before it is turned over to them. That can be anywhere from 25 to 35% of the amount. In the end, despite substantial liability to the employer, each degree of employee does not see much of the recovery at all. For years, employers have been trying to get PAGA of reform and have had just about no luck. One last-ditch effort at reform in the form of a measure on the ballot this coming November seemed to offer some promise, but with no guarantees it would pass. Enter the California legislature and an 11th-hour bill in place of this ballot measure. Shauna, why don't you tell about the bill? Shauna Yeah, so the new PAGA reforms bills were meant to redress concerns that the act was being abused with, as you said, small business owners facing unreasonably large penalties or paying huge settlements for minor technical or isolat...
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