Only July 1, 2024, Governor Newsom signed into law AB 2288 and SB 92, both of which significantly reform the California Private Attorneys General Act of 2004 (PAGA) by allowing for early evaluation and resolution procedures, revising and reducing the penalty structure, and imposing standing and manageability requirements in PAGA litigation. These changes apply to PAGA actions arising from notice made to the Labor and Workforce Development Agency (LWDA) on or after June 19, 2024.

PAGA was enacted in 2004 to allow individual employees to “stand in the shoes of” the state attorney general to recover civil penalties of $100 per violation for initial violations and $200 for subsequent violations, plus costs of suit and attorney’s fees (typically 33-40% of any total settlement amount), on behalf of themselves and other “aggrieved” employees for many Labor Code violations. Historically, 75% of the recovered penalties are paid to the LWDA and 25% are paid to the aggrieved employees. Since its enactment, critics have argued that the steep PAGA penalties for even the most innocent violations and low bar for standing to bring said actions are unfair and have encouraged Plaintiffs’ attorneys to create a cottage industry that benefits only the attorneys and harms California businesses. As a result, PAGA reform has long been discussed and was most recently proposed as a ballot measure for this November’s election. Instead, Governor Newsom reached a much-needed agreement with business groups and legislative leadership to avoid a contentious and potentially confusing ballot measure. Read more from Sweeney Mason LLP here.