New California PAGA Amendments Fail to Substantively Address Employers’ Concerns
California Governor Brown recently approved Senate Bill No. 836, which amends the Private Attorneys General Act (“PAGA”) in a few minor technical ways, including new filing and notice requirements. Although employers had hoped for substantive changes following the Governor’s initial budget proposal which expressly acknowledged that “employers are being sued and incurring substantial costs defending against technical or frivolous claims,” the enacted amendments fail to deliver any major gains for employers. SB 836 amends PAGA in four main ways:
First, while notices of alleged violations were previously required to be submitted to the Labor and Workforce Development Agency (“LWDA”) via certified mail along with a meager $3 filing fee, potential representative plaintiffs will now have to file new notices online and pay a $75 filing fee. However, the new LWDA website is not yet active, so all notices should be filed with the LWDA via email at PAGAfilings@dir.ca.gov. Alleged aggrieved employees are still required to notify employers of their claims via certified mail. Additionally, the new $75 filing fee may be recovered as a cost in a lawsuit by a prevailing employee. Employers should note that any responses by an employer, such as cure notices for technical wage statement violations, must also be filed online.
Second, SB 836 extends the time limit for the LWDA to review a PAGA claim and notify the parties of its intent to investigate. While the LWDA previously had only 30 days to review the notice from the postmarked date, the LWDA now has 60 days to notify the employer and the potentially aggrieved employee that it does not intend to investigate alleged violations. If the LWDA chooses to investigate the alleged violations, the LWDA has 65 days to advise the employer and aggrieved employee of its intent to investigate, rather than 33 days. Accordingly, if the LWDA does not provide notice of its intent to investigate within 65 calendar days of the postmarked notice date (or online submission date once the website is active), the potentially aggrieved employee may commence a civil action in Court. The new time limits are only effective for PAGA notices filed on or after July 1, 2016.
Third, a Superior Court must now approve “any settlement of any civil action” filed under PAGA, rather than only approving “any penalties sought as part of a proposed settlement agreement.” Lab. Code § 2699(l). This amendment may present frustrating roadblocks for settlements providing for dismissal of meritless PAGA claims without payment of penalties. Additionally, any proposed settlement must be electronically submitted to the LWDA at the same time it is submitted to the Court.
Fourth, there are new requirements for necessary submissions to the LWDA. For example, within 10 days of filing a PAGA action in Court, the plaintiff must provide a file-stamped copy of the complaint, with the case number, to the LWDA via online filing. Additionally, a copy of the Superior Court’s judgment in any PAGA civil action, or any other order that provides for or denies civil penalties under PAGA, must be submitted to the LWDA within 10 days following entry of the judgment or order.
Although a fairly recent amendment to PAGA allowing employers to “cure” certain violations of the labor code within 33 days gave employers hope that PAGA may slowly become less draconian, SB 836 fails to deliver the significant changes employers covet. By extending the LWDA’s review time period, plaintiffs will have to wait slightly longer before rushing to commence a civil action. Further, the amended time and notice requirements may result in more oversight of PAGA by the LWDA. But the new requirement that “any settlement of any civil action” filed under PAGA must be approved by a court may frustrate employers’ efforts to dispose of shakedown PAGA suits filed instead of class actions where employees have executed individual arbitration agreements. Ultimately, more substantive changes by the legislature are necessary if the end goal is to reduce frivolous PAGA litigation.
Michaela Goldstein is co-author of this article.