In December 2021, the California Secretary of State approved the distribution of a petition that seeks to add an initiative to the 2022 ballot that, if passed, would effectively repeal the California Private Attorneys General Act (PAGA).
Under current California law, PAGA authorizes “aggrieved employees” to bring an action against an employer on behalf of themselves and other employees and to collect civil penalties on behalf of the Labor Commissioner for an employer’s Labor Code violations. Aimed at punishing “bad” employers, the law and its powers are often abused, resulting in an imbalance where even the most well-intentioned employers are punished and compelled to pay a settlement out of fear of rising attorney’s fees, while the actual “aggrieved employees” receive very little of the monetary settlement or award. Instead, plaintiff’s attorneys collect the biggest piece of the PAGA settlement pie in the form of attorney’s fees.
If the new initiative is passed, PAGA would be replaced with the new Fair Play and Employer Accountability Act of 2022, which is designed to correct the imbalance by cutting out the incentive for plaintiff’s attorneys, while upping the ante for employers who willfully violate the law.
The new Fair Play and Employer Accountability Act of 2022 would do the following:
- Remove an employee’s ability to pursue independent Labor Code violations on behalf of the state;
- Eliminate the ability to collect attorney fees as part of a PAGA award; and
- Allow an employer to cure violations without penalty.
Additionally, the objective of the new Act would better address the worker-protection aims of the Labor Code and public policy through:
- Permitting employees to recover unpaid wages without an attorney;
- Removing the requirement that employees split penalties with the state;
- Increasing penalties for “willful violations” to keep problem employers, or “bad actors,” accountable;
- Protecting small businesses from “shakedown” lawsuits; and
- Providing resources to guide and assist employer who want to ensure they are following the law.
In the meantime, PAGA remains in full force and effect.
We will continue to monitor this matter and keep you informed.