PAGA deal is (mostly) good news for California employers

At long last, at least some relief is coming for California employers on the Private Attorneys General Act. Gov. Gavin Newson (D) has struck a deal with California legislative leaders, business, and labor to amend PAGA in exchange for the withdrawal of a November ballot initiative sponsored by business associations.

The terms of the bill have not yet been released (we will issue an update when they are) but per the Governor’s offices and other sources, we understand that there will be major changes that will benefit employers, including the following:

• Changes to cure provisions, which could lead to reduced penalties for employers who take quick steps to fix policies and practices and make employees whole after receiving PAGA notices. 
• Expansion of the number of PAGA sections that give the employer an opportunity to cure. 
• Additional and more robust cure provisions for small employers. 
• Allowing courts to limit the scope of claims at trial – in other words, reinstating “manageability” as an important threshold for plaintiffs to proceed at trial. 
• Requiring that the representative plaintiff be personally aggrieved as to allclaims brought in a representative action.

On the less positive side for employers, we expect the following additional changes:

• Employers who are found to have acted “maliciously, fraudulently or oppressively” could be subject to new, higher penalties. 
• The percentage awarded to employees is expected to increase from the current 25 percent to 35 percent.
• Courts will be authorized to award injunctive relief to compel businesses to remedy workplace violations. 

Although not all the expected changes are for the benefit of employers, overall the news is good. The expected changes relating to standing and manageability should roll back unfavorable court rulings in recent years that made it far more difficult and expensive for employers to defend themselves in PAGA lawsuits. 

June 27 is the deadline for withdrawing the ballot initiative, so the legislation must be enacted by that date.