California Proposes New PAGA Regulations
California's Labor & Workforce Development Agency has proposed new regulations for the Private Attorneys General Act (PAGA), clarifying compliance and documentation obligations for employers. The rules impact wage, reimbursement, and pay equity claims. Meanwhile, analysis suggests pay equity legislation is having unintended consequences, with some firms freezing salaries or offshoring roles to manage risk.
- The Private Attorneys General Act (PAGA), enacted in 2004, deputizes employees to sue employers for Labor Code violations on behalf of the state, a measure originally intended to help California's understaffed enforcement agencies. - A key feature of the newly proposed regulations is a requirement for PAGA notices to include specific facts and theories supporting each alleged violation, moving away from vague, boilerplate claims. - For employers with fewer than 100 employees, the proposed rules outline a detailed pre-litigation "cure" process, providing a 33-day window to submit a confidential correction plan to the Labor & Workforce Development Agency (LWDA). - The 2024 PAGA reforms, which these new regulations clarify, allow employers who demonstrate they took "all reasonable steps" to comply with the Labor Code to have penalties capped at 15%. - Under the proposed rules, parties seeking to settle a PAGA case must submit court filings and notify other individuals with pending PAGA actions against the same employer to the LWDA for review. - Penalties recovered through PAGA actions are split, with 65% going to the LWDA and 35% to the aggrieved employees. - The proposed regulations aim to identify and impose additional requirements on "high-frequency filers," defined as attorneys or firms that have filed over 200 PAGA notices in the preceding year. - Initial PAGA violations carry a civil penalty of $100 per employee per pay period, with subsequent violations increasing to $200 per employee per pay period.
