What You Should Know about the Private Attorneys General Act in 2017
This article is a top-level summary of how California’s Private Attorneys General Act (“PAGA”) works. PAGA has been revised several times, and has been the subject of many appellate court decisions, since it was first introduced in 2004.
Margaret Grover describes some of the more recent changes in “Recent Developments in PAGA Litigation,” which appears here. Given its complexity, employment attorneys are well advised to consult with an experienced PAGA attorney before prosecuting/defending against a PAGA claim.
PAGA provides employees with a private right of action against a California employer in order to collect penalties on behalf of the state’s Labor and Workforce Development Agency (LWDA). It is technically a type of qui tam claim. PAGA requires that 75 percent of any penalties collected be paid to the LWDA, with the remaining 25 percent distributed to the aggrieved employees.1 It provides for attorney’s fees and costs to the employee who successfully brings the suit.2
PAGA groups violations into three categories and provides for slightly different procedures for each category.
Category One: Violations of Labor Code Provisions Specifically Listed in Labor Code section 2699.53
This first category includes violations of those Labor Code sections identified in section 2699.5. There are over 150 different violations listed, including Section 203 (waiting time penalties), Section 226.7 (meal and rest break premiums), Section 1198 (which includes any “conditions prohibited by the wage order”)4, and certain violations of Section 226 (wage statement penalties).5
Before commencing a category one claim, an employee must satisfy certain notice requirements.6 A PAGA lawsuit can be dismissed outright if the notice is deficient.7
The employee is required to give written notice describing the “specific provisions … alleged to have been violated, including the facts and theories to support the alleged violation” to the LWDA via its website (along with a $75 filing fee) and on the employer via certified mail.
If the LWDA declines to investigate, or otherwise fails to respond to the employee, within 65 days of the postmark date of the notice, then the employee can proceed to file a civil lawsuit seeking PAGA penalties.
Category Two: Health and Safety Violations (Labor Code 6300 et seq.)8
The second category is for health and safety violations predicated on any section of Labor Code sections 6300 et seq. (other than those listed in Section 2699.5).
In addition to sending notice to LWDA and employer, an employee bringing a health and safety-based PAGA claim must also send notice to the Division of Occupational Safety and Health, which is then required to investigate the claim. If the Division issues a citation, the employee is precluded from commencing a civil action under PAGA. In the alternative, if the Division does not issue a citation then the aggrieved employee may appeal to the Superior Court for an order directing the Division to issue a citation.
Category Three: All Other Labor Code Violations9
The third category is for Labor Code violations other than those covered by the first two categories. Some common violations include wage statements that fail to provide inclusive dates of a pay period or the legal employer’s name and address, as required by Labor Code Section 226.
The notice requirement is the same as category one claims but an employer can “cure” the violation within 33 days of the PAGA notice. An employer sends notice to LWDA and the employee describing the actions taken to cure the violation. The employee can respond to the LWDA, as to why those actions did not actually cure the violation, and the LWDA has 17 days to review the actions taken and make a determination on whether the employer did in fact cure the violations. There are limitations on the number of times an employer can avail itself of the cure provision.
If the LWDA determines that the employer did not cure the violations, or otherwise fails to provide a timely response, then the employee can proceed with the civil lawsuit. If the LWDA instead determines the violations have been cured then an employee can appeal the agency’s determination by filing an action with the Superior Court.
PAGA claims are subject to the one-year statute of limitations.10 The limitations period is tolled by serving a PAGA notice until the employee fully exhausts his or her administrative remedies.11
Even though PAGA is a representative action, it does not need to be certified as a class action. See Arias v. Superior Court, 46 Cal.4th 969 (2009). However, many trial attorneys and courts are still grappling with how this works and District Courts have been known to dismiss PAGA claims for being “unmanageable.”12
The United States Supreme Court is expected to issue a major decision impacting class action waivers in June 2017.13 However, the California Supreme Court and the Federal Ninth Circuit Court of Appeals have both already held that an employee cannot waive a future PAGA claim vis a vis an arbitration agreement or class action waiver.14 [An arbitration agreement entered into after a dispute arises is often treated differently.15
PAGA claims can be compelled to arbitration if they fall within the scope of an arbitration clause.16 If not, then trial courts often compel arbitration of covered claims but retain/stay the PAGA claims pending the resolution of the arbitration.17
If the underlying Labor Code provision already provides for a civil penalty then an employee can seek to collect that penalty on behalf of other aggrieved employees. Where the underlying Labor Code section does not already provide a civil penalty, the PAGA penalty is equal to $100 per employee per pay period for the initial violation and $200 for each employee per pay period for each subsequent violation.18
A trial court must review and approve any proposed settlement that releases PAGA claims. A copy of the proposed settlement must also be submitted to the LWDA online at the same time as the court.19
*Thank you to Kevin R. Allen who wrote an article for the April 2013 editon of the Contra Costa Lawyer on this same topic. See his previous article here.
> Cal. Lab. Code § 2699(i).
> Cal. Lab. Code § 2699(g)(1).
> Cal. Lab. Code § 2699.3(a).
> This includes the failure to provide employees with suitable or to maintain comfortable temperatures at work.
> Paragraphs (1) to (5), inclusive, (7), and (9) of subdivision (a) of Section 226.
> See Cal. Lab. Code § 2699.3(a)(1), (2)
> See Alcantar v. Hobart Service, 800 F. 3d 1047 (9th Cir. 2015); see also Silva v. See’s Candy Shops, — Cal.App.4th — (2016).
> Cal. Lab. Code § 2699.3(b).
> Cal. Lab. Code § 2699.3(c),(d).
> Cal. Code of Civ. Proc. § 340.
> Cal. Lab. Code § 2669.3(d).
> See e.g. Bowers v. First Student, Inc., No. 2:14-CV-8866-ODW (Ex), 2015 WL 1862914, at *4 (C.D. Cal. April 23, 2015); Amey v. Cinemark USA Inc., No. 13-cv-05669-WHO, 2015 WL 2251504, at *16 (N.D. Cal. May 13, 2015).
> On January 13, 2017 the US Supreme Court granted a petition for a writ of certiorari and consolidated three cases (Nos. 16-307, 16-285, 16-300) to decide whether class action waivers violate the labor law provisions in the National Labor Relations Act (NLRA).
> See Iskanian v. CLS Transportation Los Angeles, LLC, 59 Cal.4th 348 (2014); Sakkab v. Luxottica Retail North America, Inc., 803 F. 3d 425 (9th Cir. 2015).
> See Iskanian v. CLS Transportation Los Angeles, LLC, 59 Cal.4th 348, 383 (2014).
> See e.g. Valdez v. Terminix Intern’l Co. Limited Partnership (9th Cir. March 31, 2017)(unpublished).
> See e.g. Franco v. Arakelian Enterprises, Inc., 234 Cal. App. 4th 947, 966 (2015).
> Cal. Lab. Code § 2699(f)(2).
> Cal. Lab. Code § 2699(l)(2).