What is the PAGA?
Throughout the history of California, the State lacked the resources necessary to address widespread labor code violations occurring within the State.
The Labor Code is a set of laws that outline the rights an employee has in the State of California. When an employer violates the labor code, employees can be deprived of wages, overtime, meal and rest breaks, compensation for interrupted or deprived meal/rest breaks, and other benefits and privileges each employee in California is entitled to under the law.
In response, the California Legislature enacted the Private Attorney General Act (2004), known as PAGA. PAGA is a law that allows employees to hire a private attorney to seek the same civil penalties that the California government could seek if they were to enforce the labor code themselves. Previously, many penalties for labor code violations could only be recovered by the State of California.
Now, PAGA authorizes an aggrieved employee to bring a civil lawsuit on behalf of themselves and all other employees who suffered from any labor code violations. An “aggrieved employee” is defined as any person who was employed by the alleged violator and against whom one or more of the alleged violations were committed.
If successful, the aggrieved employees may collect penalties that the Labor and Workforce Development Agency of California (hereinafter “LWDA”) would otherwise have had the right to seek and collect. Importantly, the penalties that are recovered in a PAGA action are split between the aggrieved employees and the State of California with 75% of the recovered penalties going to the State and 25% going to the State of California. The employee who prevails in a PAGA action is also entitled to recover his or her attorneys’ fees and costs.
Please look at the Benefits of PAGA
- PAGA makes it easier to recover penalties
- Procedure for bringing PAGA Action
- Curing Labor Code Violations
- Statute of Limitations for PAGA Actions
- Can I bring both PAGA and individual claims?
- What types of violations can I recover for?
- Can Civil Penalties be stacked?
Benefits of PAGA
Many employees who suffered labor code violations will ask why to pursue a PAGA action when 75% of the recovery goes to the State of California.
The first part of the answer to this question is that penalties recoverable in a PAGA action can be incredibly large.
For those Labor Code violations that do not already specify a civil penalty, PAGA establishes a default civil penalty of $100.00 per pay period for each “initial violation” and $200.00 per pay period for each “subsequent violation”.
Since a PAGA action authorizes the employee to recover compensation for all employees who suffered labor code violations, employers with a lot of employees who also suffered labor code violations could end up having to pay millions of dollars in penalties due to PAGA. Even after the State of California takes its share, the amount the employees recover can surely be sizable and worth pursuing.
For example, if employees are paid semi-monthly, and one labor code violation occurs for at least a year, for 50 employees, the penalties could be calculated as follows:
($100 x 50 employees) + (23 pay periods x $200 x 50 employees) = $235,000.00. In this hypothetical example, this would result in $58,750.00 (25% of penalties) being allocated for the aggrieved employees.
If you work for a bigger company, such as a major fast-food restaurant, the amount of penalties recoverable can be astronomical.
For example, if the company routinely does not allow 1,0000 employees to have the 10-minute rest break they’re entitled to, the amount of penalties can be calculated as follows:
($100 x 1000 employees) + (23 pay periods x $200 x 1000 employees) = $4,700,000.00, amounting to $1,150,000.00 allocated for the employees (25% of penalties).
Remember, if your employer is committing multiple labor code violations, then each aggrieved employee can be entitled to hundreds of thousands of dollars or more.
However, some labor code violations may require that the employer be notified that it is violating the labor code. In such situations, the $200.00 penalty per each subsequent pay period only applies after the employer is notified of its violations. In this scenario, the violations subject to penalties before notice will be subject to the initial violation penalty of $100 per pay period.
In either event, especially when multiple labor code sections have been violated, PAGA penalties can amount to heavy penalties for the employer and thousands of dollars to aggrieved employees.
PAGA makes it easier to recover penalties
A PAGA action allows more employees to recover penalties for Labor Code violations a lot easier than traditional lawsuits may allow. Notably, an employee who files a PAGA action can recover civil penalties for any labor code violations that any other employee of the company suffered, even if the employee who filed the PAGA action never suffered the same labor code violation. This way, the employer is liable and must pay for all labor code violations they committed against each of their employees.
Further, there is no requirement under PAGA that an employee suffers harm. If the violation occurred, the penalty applies. This often comes up in paystub violations. For example, if an employer fails to put the correct legal name on the pay stub. The employee may not have suffered any actual harm because they were always paid. However, the company is liable to pay PAGA penalties.
Some employers attempt to combat liability for labor code violations by having their employees waive class actions and or PAGA actions. Additionally, employers will often have their employees sign arbitration agreements, which often favor the employer.
However, your right to pursue a PAGA claim on behalf of you and all other employees cannot be waived. Additionally, even if you or others sign an Arbitration agreement, it is unenforceable when it comes to PAGA action. Thus, if either situation applies to you, PAGA provides an incredibly powerful tool to comprehensively enforce the labor code.
Additionally, it is important to note, that the purpose of PAGA is not necessarily to recover damages for the worker, but rather, to create a way for citizens to enforce the labor laws of the State of California.
For instance, you cannot recover back wages or wages your employer did not pay you. You can only recover penalties under PAGA. Your lost wages will have to be brought as a separate cause of action.
However, by filing a PAGA action, you can ensure your employer is treating you and all their employees properly by enforcing the law while recovering some civil penalties for you and your co-workers.
Procedure for bringing PAGA Action
Before bringing a PAGA action, the employee must first provide written notice to the employer and the LWDA. For most alleged violations, the employer must provide the LWDA with 65 days to decide whether they wish to investigate the alleged violations themselves. If the LWDA declines to investigate or respond, the employee may bring a civil suit to collect civil penalties as authorized by law.
Curing Labor Code Violations
An employer is allowed to “cure” two types of wage statement violations: (1) failure to provide the employer’s legal name and address and (2) failure to state the start and/or end date of the pay period. The employer has 33 days from the postmark date of the notice to complete the curing process. If the statement violations are cured, the employees are barred from bringing a civil suit against the employer for those two violations. Of course, the employees can bring a PAGA action for the rest of the labor code violations that occurred.
Statute of Limitations for PAGA Actions
The statute of limitations for filing a PAGA claim is 1 year from the last alleged labor violation. The penalty period for actions brought under PAGA is one year before the date of filing, plus 65 days for the PAGA notice period. (Code Civ. Proc., §340; Lab. Code, §2669.3, sub. (d)).
Thus, it is important to contact an attorney right away from the time you realize violations of the labor code are occurring in your workplace.
Can I bring both PAGA and individual claims?
The answer to this question is yes. An experienced discrimination attorney will be able to bring both a PAGA action for labor code violations and any other causes of action you may have such as wrongful termination.
In fact, by retaining an experienced employment attorney who is well-versed in both labor code violations and wrongful termination law, you could ensure all of your rights are protected and all violations are held accountable.
What types of violations can I recover for?
All of the Labor Codes sections that PAGA allows penalties to be sought when the code is violated are outlined in Labor Code Section 2699.5.
If you take a look at this labor code section, you will notice that PAGA covers over 100 different labor codes including labor codes that express employees’ rights to overtime, meal breaks, rest breaks, proper itemized wage statements, certain employee/employer records, and more. Thus, if your employer violated any one of those labor codes covered by PAGA, even if they only violate part of the labor code covered by PAGA, the employer is liable for PAGA penalties.
A common violation that many employees may not know about is wage statement violations. The law requires there to be nine different pieces of information on your wage statement/paystub. If not, penalties can apply. Those nine things are:
- Gross wages earned
- Total hours worked by the employee
- The number of piece-rate units earned and any applicable piece rate if the employee is paid on a piece-rate basis
- All deductions
- Net wages earned
- The inclusive dates of the period for which the employee is paid
- The name of the employee and the last four digits of his or her social security number or an employee identification number other than a social security number
- The name and address of the legal entity that is the employer
- All applicable hourly rates in effect during the pay period (including the overtime hourly rate)
If any of these items are not accurately available on an employee’s wage statement and/or the employee’s wage statement/paystub fails to have one of these items, then PAGA penalties may apply.
While the particular labor code dealing with wage statement violations requires some employers intended to be liable for penalties (requiring the employer to act “intentionally and knowingly”), PAGA does not have an intent requirement. The California Court of Appeals held that in the PAGA statutory framework, Plaintiff seeking civil penalties under PAGA for violations of wage statement violations does not have to satisfy the “injury” and “knowing and intentional” requirements of the statute, thus, another advantage of PAGA.
Can Civil Penalties be stacked?
As discussed above, some labor codes have civil penalties, separate from PAGA, that are also recoverable. However, the language of PAGA is somewhat unclear as to whether one can “stack” the penalties, meaning seek both.
The language of the Labor Code encompassing PAGA states that it established a “civil penalty for a violation” of the listed labor codes, implying a separate penalty from what is already prescribed in some labor codes. Some federal courts have also held that stacking civil penalties as described above is permitted.
While some employers will argue this is a double recovery for employees, court rulings and analysis on other wage and hours issues imply differently. For example, for meal and rest breaks, the California Supreme Court ruled that an employer does not have a lawful choice between providing either a meal break and rest break or the premium pay.
When the employer does not relieve their employees of their duties for a meal and/or rest breaks, they are liable for premium payments which are one-hour wages for a meal break violation, and one hours wages for a rest break violation (for a maximum of 2 hours wages per day – one maximum for meal break violation and one max for rest break violation per day). Thus, even if they are paid for the rest break they did not take, the employer is still liable. Accordingly, penalties can apply even when the employee is already been compensated. Many find the argument that multiple penalties cannot apply to a violation of law to be unpersuasive. Accordingly, it is likely PAGA will continue to be one penalty, among others, able to be recoverable for violations of the Labor Code.
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