The two legislative bills encompassing agreed upon reforms to California’s Private Attorneys General Act (PAGA) were voted out of their respective committees yesterday. The bills, SB 92 (Umberg; D-Santa Ana) and AB 2288 (Kalra; D-San Jose), are expected to be heard on the Senate and Assembly floors tomorrow before going to the Governor’s desk for signature.
Governor Gavin Newsom touched on the issue during his State of the State video address, noting PAGA reform was a thorny subject that had eluded compromise for decades.
“…California is enacting rational reforms and important labor protections, while sensibly managing reasonable concerns from small businesses,” he said.
In concluding remarks before the SB 92 vote in the Assembly Judiciary Committee yesterday morning, Senator Tom Umberg thanked the California Chamber of Commerce and the California Labor Federation for their collaboration in the reform proposal.
“[SB 92] is a monument to how we can get things done when we spend time collaborating and negotiating,” the state Senator said. “I do think this is a great improvement for employees, as well as employers and I’m, of course, proud to have my name on it.”
To watch Senator Umberg’s closing remarks, see video at the bottom of this article.
Testifying before the Senate Judiciary Committee for the AB 2288 hearing, CalChamber Senior Policy Advocate Ashley Hoffman reiterated the need for PAGA reform, explaining that due to the way that PAGA is structured, many small businesses and nonprofits end up paying millions of dollars in penalties that they simply cannot afford.
“What was once a well-intentioned law has unfortunately been manipulated by certain trial attorneys at the expense of workers, businesses and nonprofits who serve our most vulnerable Californians,” she said. “What’s in this bill…represents historic reforms…that address employers’ concerns, but also ensure that California workers can feel confident that there is robust labor law enforcement against the bad actors.”
Reform Package
The PAGA reform package was negotiated between business, labor, and legislative leadership. Together, SB 92 and AB 2288 bring long overdue reform to PAGA, a law that was intended to bolster labor law enforcement, but has been manipulated over its 20-year history by certain trial attorneys as a money-making scheme.
This reform package will ensure that workers are having claims resolved more quickly and that businesses and non-profits which comply with the law are not penalized. Employers will now have the means to better defend PAGA claims.
The reforms include:
- Standing Reforms:
- Supersedes holdings in Huff and Johnson decisions by requiring an aggrieved employee to have personally suffered the alleged violations within the one-year statute of limitations.
- Penalty Reforms:
- Provides higher share of the civil penalty recovered to employees;
- Caps the penalty for employers who have proactively taken steps to comply with the Labor Code;
- Caps the penalty for employers who take proactive steps to be in compliance after receiving a PAGA notice;
- Reduces the maximum penalty for a wage statement violation or a violation that was short in duration;
- Addresses derivative claims;
- Levels the playing field for employers who pay weekly by ensuring they are not penalized at a higher rate;
- Specifies that the $200 penalty applies only where a court or the agency issued a finding or determination against that employer or where the employer acted maliciously, fraudulently, or oppressively.
- Broadens Right to Cure:
- Expands which Labor Code sections may be cured, so employees are made whole quickly;
- Protects small employers by providing a more robust right to cure processes through the Labor and Workforce Development Agency;
- Provides an opportunity for early resolution in court.
- Judicial Discretion:
- Codifies that the court may limit evidence presented or the scope of the claim to ensure the claim can be tried effectively.
Staff Contact: Ashley Hoffman
