Earlier this month, three separate initiatives were submitted to the California Attorney General for title and summary to reform California’s Private Attorneys General Act (PAGA) statute because this law continues to be of significant concern to California employers. Enacted over a dozen years ago, PAGA allows employees to sue their employers in a “representative action” for violations of the state’s Labor Code.
Because the Legislature has been unwilling to address any significant changes to PAGA (found at Labor Code Sections 2698, et seq.), the state’s business community has been looking at reforming PAGA at the ballot box, assuming the statewide electorate is willing to do so. In the instances where multiple versions of a proposed initiative are filed, we assume that the one that enjoys the most support in public opinion polling is the one most likely to proceed.
On the other hand, the proposed ballot measure may be used to leverage statutory reforms to be considered in the 2018 Legislative Session. While Governor Brown proposed policy and procedural changes to PAGA as part of his January 2016 state budget, those proposals were reduced to very modest changes that summer and contained in a budget trailer bill. Since then, several bills have been introduced in the Legislature to make reforms to PAGA, but those have been strongly opposed by labor unions and the plaintiff’s bar.
As a result, many businesses and trade groups in California have decided to pursue a ballot measure to reform PAGA. These ballot measures represent the views of these groups. This initiative (all three versions) is being called the “Worker Protection and Lawsuit Accountability Act.”
All three versions contain almost identical findings and declarations regarding the need for the reforms contained in each proposed ballot measure. The statement of purpose is almost identical in each initiative as well. All three versions also contain a “liberal construction” clause, language dealing with conflicting measures on the same ballot, a severability clause, and required legal defense of the ballot measure if passed.
The following are summaries of the three versions:
Version 1 (17-0035) – This measure would allow every employee and job applicant to report any Labor Code violation personally suffered; DLSE and Labor Commissioner shall use their authority; an employee who suffered a violation of the Labor Code can receive a civil penalty up to $10,000; Labor Commissioner is the primary authority for investigating and enforcing California’s labor laws and for imposing civil penalties; Labor Commissioner has sole and exclusive authority to issue a civil penalty citation; civil penalty of $200 per employee per pay period is permitted; civil penalties are distributed 50% to employee and 50% to the state; employers are permitted a defense based on a good faith reliance upon written determinations by the Labor Commissioner; and, it affects any actions or complaints filed on or after October 6, 2017.
Version 2 (17-0036) – This measure would allow every employee and job applicant to report any Labor Code violation personally suffered; DLSE and Labor Commissioner shall use their authority; an employee who suffered a violation of the Labor Code can receive a civil penalty up to $10,000; civil penalties are distributed 50% to employee and 50% to the state; no contingency fees are allowed; compensation is only allowed on an hourly basis using a subscribed rate; court review and approval of legal fees is required; representative actions can only be brought by employees who personally suffered an actual injury under each and every action; discovery rights are limited; require complaints be filed under penalty of perjury; employers are permitted a defense based on a good faith reliance upon written determinations by the Labor Commissioner; require attorneys handling PAGA claims to complete additional ethics training each year; and, it affects any actions or complaints filed on or after October 6, 2017.
Version 3 (17-0037) – This measure would allow every employee and job applicant to report any Labor Code violation personally suffered; DLSE and Labor Commissioner shall use their authority; an employee who suffered a violation of the Labor Code can receive a civil penalty up to $10,000; civil penalties are distributed 50% to employee and 50% to the state; limit contingency fees to 25% of the first $100K and 12.5% for amounts over $100K; representative actions can only be brought by employees who personally suffered an actual injury under each and every action; discovery rights are limited; require complaints be filed under penalty of perjury; employers are permitted a defense based on a good faith reliance upon written determinations by the Labor Commissioner; and, it affects any actions or complaints filed on or after October 6, 2017.
Chris Micheli is an attorney and legislative advocate with the Sacramento governmental relations firm of Aprea & Micheli, Inc.