Employers: Do You Know About PAGA? You Should.

Epps & Coulson Logo

Employers:  Do You Know About PAGA?  You Should.

California’s Private Attorney’s General Act (“PAGA”) authorizes aggrieved employees to file lawsuits to recover civil penalties on behalf of themselves, other employees, and the State of California for Labor Code violations.  The result can be like a mini class action lawsuit against the employer.[1]  California did not have the bandwidth to keep up with the abundant Labor Code violations and thus ‘deputized’ employees to bring the claims on behalf of the state, with the employees acting as private attorney generals and having the ability to seek on behalf of the state penalties for Labor Code violations suffered by a group of aggrieved employees.  The violation penalties can be $100 for each violation of the Labor Code for each pay period and $200 for subsequent violations (unless a penalty is stated in the section).  The state recovers 75% of the proceeds, and 25% goes to the aggrieved employees.

The claims can be innocuous claims under California’s wage and hour laws, including meal and rest breaks, minimum and overtime wages, final payment and wage statement laws, for instance, failing to include some required information on employee paychecks.  Each check for each employee over potentially 4 years can add up quickly.  But the kicker is that if the employee wins, the employer pays the employee’s attorneys fees and costs, as well as their own.

So, California’s PAGA made it a very friendly place for employees to sue employers, who risk large sums if the matter proceeds through trial and the employee wins.  Millions in PAGA damages and penalties can be at risk for relatively small or technical employer errors.  While the 2021 Ninth Circuit decision in Bernstein v. Virgin Am., Inc. (“Bernstein”)[2] resulted in a good outcome for employers certain Labor Code violations, certain language in the Bernstein decision questioned whether interstate employers with sufficient connections to the state of California (and especially with no greater connection to any other particular state) may be subject to California’s stringent wage & hour laws for employees both in California and those who work from other states.  So now, CA PAGA risks may extend to employers that are not paying attention.

Further, PAGA claims are not subject to an employer’s arbitration agreements or class action waivers, which could change because the U.S. Supreme Court is currently deciding this issue in the case of Viking River Cruises v. Moriana.

Epps & Coulson, LLP and its lawyers and staff are keenly tuned to protecting the Rule of Law.  If you have questions, please contact Dawn at: dcoulson@eppscoulson.com.

Information contained in this Memo is intended for informational and educational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.  It is likely considered advertising.  Epps & Coulson, LLP encourages you to call to discuss these matters as they apply to you or your business.

Attorneys admitted to practice in California, New York, Colorado, Texas, and Oregon

[1] https://www.dir.ca.gov/Private-Attorneys-General-Act/Private-Attorneys-General-Act.html

[2] Bernstein v. Virgin Am., Inc., 3 F.4th 1127 (9th Cir. 2021)