The California Department of Industrial Relations (DIR) released an FAQ document addressing recent reforms to the Private Attorneys General Act (PAGA). This law has enabled employees to file lawsuits for Labor Code violations on behalf of themselves and others. These lawsuits have often led to billions of dollars in business costs and have seen little return in benefits for workers. The new PAGA FAQs cover critical changes, including who can bring PAGA claims, what can be recovered, claim procedures, and processes for resolving violations, known as the “cure process.”
The recent reforms, signed into law on July 1, 2024, offer significant updates for PAGA claims filed on or after June 19, 2024. Key reforms include a strengthened right to cure Labor Code violations, reduced penalties for certain wage statement errors, and caps on penalties for employers who take “all reasonable steps” to ensure compliance with wage and hour laws. Under these reforms, employers who take corrective steps before receiving a PAGA notice face reduced penalties, potentially capped at 15-30% of the total penalty amount.
DIR’s guidance suggests that “reasonable steps” might include periodic payroll audits, issuing compliant policies, training supervisors, and taking corrective action as needed. Previously seen as best practices, these practices now play a crucial role in PAGA compliance.