Governor Newsom & Legislative Leaders Announce Agreement on PAGA Reform

What you need to know: Labor and business groups reached an agreement on PAGA reform that strengthens worker protections, encourages employer compliance, streamlines litigation processes, and averts a contentious ballot measure.

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SACRAMENTO — Governor Gavin Newsom, in partnership with legislative leadership and business and labor groups, announced an agreement on needed reforms to the Private Attorneys General Act (PAGA) that avoids a contentious ballot measure campaign.

“We came to the table and hammered out a deal that works for both businesses and workers, and it will bring needed improvements to this system. This proposal maintains strong protections for workers, provides incentives for businesses to comply with labor laws and reduces litigation.”
Governor Gavin Newsom

“This package provides meaningful reforms that ensure workers continue to have a strong vehicle to get labor claims resolved, while also limiting the frivolous litigation that has cost employers billions without benefiting workers,” said Jennifer Barrera, President & CEO, California Chamber of Commerce. “We thank Governor Newsom, Senate President pro Tempore McGuire and Assembly Speaker Rivas for navigating this agreement, and we encourage the legislature to pass this package quickly.”

“We are happy to have negotiated reforms to PAGA that better ensure abusive practices by employers are cured and that workers are made whole, quicker,” said Lorena Gonzalez, principal officer of the California Labor Federation, AFL-CIO. “PAGA is an essential tool to help workers hold corporations accountable for widespread wage theft, safety violations, and misclassification. We appreciate the work of the Governor’s office and Legislative Leadership to help us reach agreement with the Cal Chamber of Commerce to protect this innovative law and strengthen labor law enforcement.”

“Today’s agreement is critical to the long-term success of workers and businesses here in the Golden State,” said Senate President pro Tempore Mike McGuire (D-North Coast). “Commonsense reform of PAGA has been discussed for years, and thanks to the collaboration of all sides, including the work of the Governor, this agreement will continue to provide strong worker protections and implement long talked-about reforms. Next steps include working with Speaker Rivas to move legislation forward in the days to come.”

“This agreement is important because it protects working people, who are the real engine behind California’s economic strength,” said Speaker of the Assembly Robert Rivas (D-Salinas). “It also recognizes companies that follow labor laws, and it puts more muscle into enforcement. I grew up watching farmworkers and employers find common ground, so it means a lot to me that so many groups came together and found consensus. This is a hard-earned agreement, and that makes the positive outcomes we’ll see for businesses and workers even better.”

Once the legislation reflecting this agreement is passed and signed into law by the Governor, proponents of the PAGA ballot initiative eligible for the November ballot have agreed to withdraw their measure.

Here’s what this PAGA reform proposal would do:

Reform penalty structure

• Encourages compliance with labor laws by capping penalties on employers who quickly take steps to fix policies and practices, and make workers whole, after receiving a PAGA notice, as well as on employers that act responsibly to take steps proactively to comply with the labor code before even receiving a PAGA notice.
• Creates new, higher penalties on employers who act maliciously, fraudulently or oppressively in violating labor laws.
• Ensures that more of the penalty money goes to employees by increasing the amount allocated to employees from 25% to 35%.

Reducing and streamlining litigation

• Expands which Labor Code sections can be cured to reduce the need for litigation and make employees whole quickly.
• Protects small employers by providing a more robust right to cure process through the Labor and Workforce Development Agency (LWDA) to reduce litigation and costs.
• Codifies that a court may limit both the scope of claims presented at trial to ensure cases can be managed effectively.

Improving measures for injunctive relief and standing

• Allows courts to provide injunctive relief to compel businesses to implement changes in the workplace to remedy labor law violations.
• Requires the employee to personally experience the alleged violations brought in a claim.

Strengthening state enforcement

Give the Department of Industrial Relations (DIR) the ability to expedite hiring and fill vacancies to ensure effective and timely enforcement of employee labor claims.

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Source: Office of the California Governor

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