In a welcome development for California employers, the California Legislature recently passed reforms to the controversial Labor Code enforcement statute known formally as the Labor Code Private Attorneys General Act of 2004 (PAGA). Business groups had backed an initiative eligible for the November ballot that they say would have repealed and replaced PAGA. The legislation, which Gov. Gavin Newsom signed into law July 1, 2024, was the product of a deal that caused the business groups to withdraw their measure. The reforms restore more traditional standing requirements, codify case management tools for judges, and implement a more employee-friendly penalty structure, among other things. These changes apply to PAGA actions brought on or after June 19, 2024.

California’s Private Attorneys General Act

PAGA allows current and former employees to sue their employer for civil penalties and attorney fees based on Labor Code violations. Any recovery of civil penalties largely go to the state, and they do not preclude the recovery of individual damages and statutory penalties, which the employee gets to keep. PAGA cases have a number of peculiar characteristics, including that they can be brought as a “representative” action without needing to satisfy class action requirements. The amount of penalties at stake can be large.