In 2024, the California Legislature enacted significant amendments to California’s Private Attorneys General Act (or “PAGA”). PAGA has been in effect for decades, and many believe that, while well-intentioned, it has come to be a boon for a select group of savvy plaintiff-side attorneys while resulting in minimal financial benefits for employees. The 2024 amendments, while arguably needed, may not have the material effects that were intended. These amendments took effect on June 19, 2024.
One change in the 2024 amendments is the scope of what an “aggrieved employee” could recover on behalf of a collective group. Previously, an aggrieved employee (who is typically the named or lead plaintiff in a PAGA action) could recover for any PAGA-eligible violations that occurred at any time in the past. (There are dozens of potential violations for which PAGA penalties can be recovered.) This would often lead to broad allegations of liability in hopes that the collective action would encompass as many employees and PAGA-eligible violations as possible. Now, the aggrieved employee can only recover for violations that occurred in the one year preceding the sending of a PAGA notice. (See Cal. Lab. Code, § 2699(c)(1).)
Another change in the 2024 amendments is the percentage of damages that goes directly to the collectively aggrieved employees. Under PAGA, the bulk – seventy-five percent – of any monetary penalties that are recovered goes to the California Labor & Workforce Development Agency (“LWDA”). While in theory any penalties assessed to the employer should have some deterrent effect in curbing future violations, observers have wondered why the LWDA receives the majority of penalties from PAGA actions when the primary function of PAGA has been to privatize regulation of Labor Code violations by incentivizing employees and their attorneys (who are allowed to recover attorney’s fees through successful PAGA actions) to pursue such actions. Under the 2024 amendments, the LWDA will now receive only sixty-five percent of penalties, with thirty-five percent now going to aggrieved employees. (Cal. Lab. Code, § 2699(m).)
A third change in the 2024 amendments is that, for most employers, a plaintiff in a PAGA action can now recover penalties on behalf of aggrieved employees only for violations that the plaintiff had “personally suffered.” (Cal. Lab. Code, § 2699(c)(1).) This change was meant to address previous interpretations of PAGA by California courts that had held a PAGA plaintiff could recover for any violations aggrieved employees had suffered so long as the plaintiff had experienced one PAGA-eligible Labor Code violation.
While these amendments may fall short of the changes some groups sought, they do represent material changes to PAGA that should lessen the overall volume of penalties. These changes should also create PAGA actions that more closely align with the alleged wrongs actually suffered by the plaintiff who is seeking to recover on behalf of other aggrieved employees.
Scherer Smith & Kenny LLP remains available to assist you with these and any other employment-related questions you may have. For additional information, please contact Ryan Stahl at [email protected] or Denis Kenny at [email protected].