PAGA changes bring additional LWDA involvement, but the effect remains unclear

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SB 836 went into effect and implemented the following important changes in PAGA (Private Attorneys General Act) requirements, effective July 1, 2016:

  • All new PAGA notices must be filed online (by emailing PAGAfilings@dir.ca.gov until the online filing system is set up), with a copy sent by certified mail to the employer. The cost of filing these is now $75. Any employer response or notice of cure must also be filed online.
  • The waiting time between filing a PAGA notice and being able to file a civil action is increasing from 33 to 65 days (based on the postmark date of the notice). The LWDA will now have 60 days to decide whether it will be investigating the allegations. For the time being, the additional LWDA review time does not increase the employer’s timeframe to cure certain violations, but will likely provide additional time for discussing pre-litigation resolution of claims.
  • For PAGA notices filed after July 1, 2016, the aggrieved employee or representative must provide the Labor and Workforce Development Agency (LWDA) with a file-stamped copy of the complaint that includes the case number assigned by the court within 10 days following commencement of a civil action for PAGA.
  • Any settlement of a PAGA action must be approved by the court, whether or not the settlement includes an award of PAGA penalties. This expands the court’s reach, which was previously limited to approving only any penalties sought as part of a proposed settlement agreement. Cal. Labor Code Section 2699(l).
  • A copy of the proposed settlement must be provided to the LWDA at the same time as it is submitted to the court, and a copy of the superior court’s judgment and any other order in that action that either provides or denies an award of PAGA penalties must be submitted to the LWDA within 10 days after entry of judgment or order.
  • All documents provided to be LWDA pursuant to the above must be submitted online.

What is the effect on employers?

These changes are not as expansive as the originally proposed more than $1 million in additional funding to create a new PAGA enforcement unit within the LWDA, which could have shifted a larger number of PAGA claims to the LWDA instead of being in the hands of individual plaintiffs and their attorneys. Nevertheless, the changes do demonstrate the LWDA’s interest in monitoring PAGA claims and their settlements. It remains to be seen what affect this increased scrutiny will have, and whether it will result in the LWDA weighing in on proposed settlements. In the past, plaintiffs’ attorneys were often happy to settle claims while attributing only nominal funds to PAGA claims, since 75% of those go to the LWDA and not the plaintiff or class directly. However, the increased emphasis on PAGA may result in larger PAGA payouts, and thus, overall more expensive settlements. Further, PAGA claims are not going anywhere and dealerships will continue to be targeted as large employers subject to detailed and ever-changing wage and hour laws (AB1513, anyone?).

Contact an experienced wage and hour attorney for guidance in how to respond to and litigate a PAGA claim, and to ensure compliance with wage and hour laws specific to your industry.

In Coffee Break episode 5, Chris and Jennifer give an overview of procedural changes to the Private Attorneys General Act (PAGA) that could effect employers.