Why it matters

California employers, take note: As part of a budget bill signed by Governor Jerry Brown, changes were made to the Private Attorneys General Act (PAGA) that have already taken effect. Intended to provide increased oversight and enforcement by the California Labor and Workforce Development Agency (LWDA), the amendments give the agency more time to investigate and issue citations for Labor Code violations, an opportunity to review proposed PAGA settlements, and additional funds. Specifically, the LWDA now has 60 days to review PAGA notices (twice the former 30-day period) and a PAGA plaintiff cannot commence a civil action until 65 days after sending notice to the agency (almost double the previous standard of 33 days). The agency must be served with a copy of any PAGA complaint filed in court and provided with a proposed settlement agreement of any PAGA claims. The “scope and frequency” of recent PAGA filings led the Governor to propose the tweaks in an attempt to push for more administrative handling of the claims to reduce the burden on the courts. The changes took immediate effect upon the Governor’s signature on June 27.

Detailed discussion

A piece of legislation added to the state’s budget could have an impact on employers. Senate Bill 836 contained multiple amendments to the Private Attorneys General Act (PAGA) intended to provide the California Labor and Workforce Development Agency (LWDA) with greater oversight and increased enforcement of PAGA claims.

The statute provides employees in the state with the right to sue their employer for violations of the Labor Code on behalf of the LWDA after the agency has the chance to investigate. PAGA claims have become an increasingly popular addition to plaintiffs’ complaints, particularly after the California Supreme Court ruled that a class waiver in a mandatory employment arbitration agreement does not apply to representative actions under the statute.

Governor Jerry Brown suggested the changes earlier this year. “The administration is committed to reducing unnecessary litigation and lowering the costs of doing business in California to support a thriving economic environment,” he wrote in his proposal. “Given the scope and frequency of PAGA filings, there is a great opportunity to increase the rate of administrative handling of cases versus the courts.”

To effectuate the changes, the amendments provide the LWDA with 60 days to review PAGA notices, up from the prior 30 days. A plaintiff asserting PAGA claims must now wait almost twice as long to file a complaint with the court, with the bill extending the time from 33 days to 65 days after sending notice to the agency. The LWDA’s time to notify a plaintiff and employer of its intent to investigate was similarly stretched to 65 days from 33 days, as was the agency’s power to extend its deadline to issue citations up to 180 days.

Going forward, a copy of any PAGA complaint filed in court must also be served on the LWDA and any proposed settlement of PAGA claims must be submitted to the agency at the same time it is provided to the court for approval. Any order that approves or denies a PAGA settlement must be given to the LWDA.

To ease the submissions process, the bill mandated that PAGA notices (and an accompanying $75 filing fee) as well as PAGA cure notices from employers must be provided to the LWDA online. The filing fee will boost the agency’s funding.

With Gov. Brown’s signature on June 27, the bill took immediate effect.

To read SB 836, click here.