124 | 2025 Cal-Peculiarities ©2025 Seyfarth Shaw LLP www.seyfarth.com The 2024 reforms settled the dispute in favor of employers by amending the Labor Code to state that a $200 penalty was only available if “[w]ithin the five years preceding the alleged violation, the agency or any court issued a finding or determination to the employer that its policy or practice giving rise to the violation was unlawful.425 Available penalties for PAGA plaintiffs were further curtailed by 2024 reforms prohibiting civil penalties to be recovered for violations of Labor Code sections 201–204 (waiting time or timely pay penalties) and section 226 (wage statement penalties) in addition to the penalty for the underlying violation.426 The reforms further introduced two circumstances in which available penalties would be capped. First, if an employer demonstrates that it “has taken all reasonable steps to be in compliance” with the law prior to receipt of a PAGA notice or a request for personnel records, then the available penalties are capped at 15% of the penalties sought.427 Examples of such reasonable steps include, but are explicitly not limited to, “conduct[ing] periodic payroll audits and [taking] action in response to the results of the audit, disseminat[ing] lawful written policies, train[ing] supervisors on applicable Labor Code and wage order compliance, or [taking] appropriate corrective action with regard to supervisors.”428 Similarly, the reform provided that if an employer “has taken all reasonable steps to prospectively be in compliance with all provisions identified in the notice,” then the available penalties are capped at 30%.429 Additionally, the California legislature added a provision stating that if a violation occurs for less than 30 days or four consecutive pay periods, the maximum penalty available is $50.430 Anti-retaliation provision. California employers must not retaliate against any employee for bringing a PAGA claim.431 5.15.2 2024 PAGA reforms Following an agreement reached between legislative leaders and business and labor groups, the California legislature in 2024 enacted the most substantive changes to PAGA in its twenty-year history. The changes made by AB 2288 and SB 92 included numerous provisions that benefit California employers. These significant reforms included: A plaintiff must experience the Labor Code violations they are seeking to pursue on a representative basis.432 A plaintiff must experience their individual Labor Code violation within the one-year statute of limitations.433 PAGA’s manageability requirement was codified inasmuch as a court “may limit the evidence to be presented at trial or otherwise limit the scope of any claim filed . . . to ensure that claim can be effectively tried.”434 The structure of available civil penalties was modified, including penalty caps for employers who take reasonable steps for compliance, limitations on when the $200 “subsequent violation” penalty is available, and prohibiting derivative penalties on certain Labor Code violations.435 New cure provisions were added that allow employers to cure additional violations and establish new mechanisms for early resolution of claims that have been cured.436 PAGA plaintiffs are permitted to seek injunctive relief.437 The reforms apply to all PAGA claims where the PAGA authorization letter was submitted to the LWDA on or after June 19, 2024.438
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