Navigating the 2024 PAGA Reforms:
Key Changes and Implications for Employers

On July 1, 2024, Governor Gavin Newsom enacted significant reforms to the California Private Attorneys’ General Act (PAGA). These reforms were designed to provide relief to employers by limiting who can bring claims, offering more opportunities to correct mistakes, reducing penalties, and enhancing procedural mechanisms to decrease court claims. These reforms should provide relief to many employers but will require them to review how they may impact employer policies and compliance.

 

PAGA Reforms

The most significant PAGA reform is the reduction of penalties for isolated violations, decreased from $100 to $50 per pay period. The reform also offers up to an 85% reduction in penalties for employers who proactively take reasonable compliance steps before any disputes arise, encouraging a more preventive approach. In terms of heightened penalties for more serious violations, a $200 penalty will only be imposed if an agency or court determines that a practice is unlawful within five years or if the conduct is malicious. Notably, reductions are not available for these heightened penalties, ensuring that serious violations are appropriately addressed.

The reform also narrows the scope of claims by limiting standing to employees who have suffered the same violations, thereby focusing on genuine grievances and reducing the potential for frivolous claims. Furthermore, courts are now empowered to limit the scope of PAGA claims before trial, providing procedural mechanisms to manage claims in a streamlined and effective manner. To prevent excessive litigation, the reform also precludes the combination of penalties for certain Labor Code violations, curbing attempts to “double dip.”

The reform further incentivizes employers to promptly address issues by allowing them to avoid civil penalties if they cure violations or take reasonable steps to cure. However, the best practice is for employers to avoid wage and hour violations altogether. Fisher Phillips Solutions offers a variety of tools to help ensure employer compliance, such as a California Compliance Checklist and customizable On-Duty Meal Period Agreement.

For employers with weekly payrolls, the reform addresses existing inequities by halving penalties compared to those with bi-weekly payrolls. This adjustment ensures fairness in penalty assessments based on payroll frequency.

Other reform measures include distinct cure processes established for small and large employers, involving multi-step reviews and potential relief from penalties. This tailored approach recognizes the varying capacities of employers to address violations. Additionally, the reform specifies that reduced penalties will not apply to pending cases or notices given before June 19, 2024, ensuring clarity on the applicability of new provisions. The reform also allows non-profit legal aid organizations to bring claims. Finally, employers may face attorneys’ fees and costs even when curing violations. This aspect, in particular, underscores the importance of compliance as well as the potential consequences of non-compliance.

Overall, the PAGA reforms aim to better balance employer relief with maintaining robust employee protections, reflecting a comprehensive approach to labor law reform.

 

Implications for Employers

Employers are encouraged to immediately update policies to take “reasonable steps” for their organization to comply with these changes. These policies can include updating employee handbooks, conducting audits, and training employees. Employers are also advised to consult with legal counsel from Fisher Phillips, who specialize in employment law, to ensure policies are consistent with legal obligations. Fisher Phillips Solutions also offers a more cost-efficient alterative to help employers ensure compliance with PAGA reforms.