California has a unique labor and employment law that allows aggrieved employees to file a representative legal action on behalf of themselves, other employees, and the state for alleged violations of California’s Labor Code. Under the Private Attorneys General Act, employers may have to pay substantial monetary penalties.
PAGA lawsuits grew by over 1,000 percent since this employment law took effect in 2004. The Labor and Workforce Development Agency received approximately 4,000 PAGA notices by 2014 and every year afterwards. PAGA applies to all California employers regardless of their size.
Penalties are high. The default penalty for a Labor Code violation is $100 for each employee per pay period for the first violation. It rises to $200 per employee per pay period for subsequent violations. Courts have not fully explained what a subsequent violation is and whether multiple violations can be compounded.
The average court wait time for a PAGA case is 18 months compared to 11 months for state decided cases. Attorneys usually seek 33 percent of an employee’s total recovery. In some cases, attorneys are the only party with a right to recovery.
PAGA is intended to encourage labor law compliance and protect workers. But critics claim that PAGA is used against employers as leverage to force them into costly settlements for minor errors.
PAGA does not require that an employee suffer actual harm such as unpaid wages. Simple and unintentional mistakes, such as an error identifying the legal entity on a paystub or failure to provide a coffee break, can lead to substantial penalties.
An aggrieved employee may pursue multiple violations of the Labor Code but suffer only one of the alleged violations. Employees can file a PAGA claim even if they settled their individual claims. They may also recover civil penalties and statutory penalties known as penalty stacking.
PAGA actions are representative and not class actions. Aggrieved employees do not have to meet class action requirements and it is easier to include larger employee groups.
According to a 2021 court case, an employee can file a PAGA action if the statute of limitations for their individual claims expired. These claims cannot be waived through an arbitration agreement. Plaintiffs may also sue in any venue if one employee worked in that county.
A common tactic in a PAGA action is to provide a draft complaint before its filing to an employer to seek a settlement. Employers should seek legal representation in these actions to assure that their rights are protected.