By: Phillip J. Ebsworth and Andrew Paley
Seyfarth Synopsis: AB 2288 and SB 92 collectively amount to the most substantive changes ever to be seen to PAGA. The changes include numerous pro-employer provisions which seek to address longstanding concerns such as standing, penalties, and manageability.
On June 21, 2024, AB 2288 and SB 92 were introduced proposing significant reforms to PAGA following an agreement brokered between Governor Newsom, legislative leaders, and business and labor groups. Below are the top 5 things to know about the proposed reforms:
1. Traditional Concept of Standing Restored. Plaintiffs must prove that they experienced the same Labor Code violations they seek to pursue on a representative basis.
2. One-Year Statute of Limitations On Individual Violation. The plaintiff must have experienced their individual Labor Code violation within the one-year statute of limitations to have standing to be a private attorney general.
3. Manageability Codified. AB 2288 has codified a Court’s ability to limit the scope of a PAGA claim or the evidence to be offered at trial so that a PAGA claim can be manageably tried.
4. Significant Changes to Penalty Structure. AB 2288 places caps on penalties for employers who take reasonable steps to be in compliance with the law. Additionally, AB 2288 limits when a $200 penalty can be imposed, eliminates penalties for derivative claims, and places caps on wage statement violations that do not cause injury.
5. Overhauled Cure Provisions For Employers. Small employers (less than 100 employees) can inform the LWDA that it would like to cure the alleged violations and request a settlement conference with the agency. Large employers can file a request for a stay and Early Neutral Evaluation with the court which will assess whether the alleged violations have been cured or whether the claims can proceed in court.
Both bills are expected to pass the legislature and be signed into law by Governor Newsom this week at which point, the new provisions will apply to PAGA claims where the PAGA authorization letter was submitted to the LWDA on or after June 19, 2024.
For a more detailed breakdown of the reforms proposed in AB 2288 and SB 92, you can find Seyfarth’s analysis here.