In a surprising turn of events, California Governor Gavin Newsom announced a pivotal compromise to amend the Private Attorneys General Act (PAGA), a 2004 law that empowers employees to sue their employers for workplace violations. This legal mechanism has led to settlements totaling billions of dollars and has been a controversial topic among business leaders and labor advocates alike.
The Genesis of the Compromise
Governor Newsom’s announcement on Tuesday came after intensive negotiations between business leaders and the influential California Labor Federation. The agreement aims to refine PAGA, balancing the needs of both workers and businesses while reducing excessive litigation.
“We came to the table and hammered out a deal that works for both businesses and workers,” Newsom said. “This proposal maintains strong protections for workers, provides incentives for businesses to comply with labor laws, and reduces litigation.”
The Impact of PAGA
Since its inception, PAGA has been a powerful tool for employees, enabling them to file civil grievances not only on their own behalf but also on behalf of their co-workers These grievances have often been largely settled, sometimes gone tens of millions of dollars. A study released by Congress in January found that PAGA has cost businesses nearly $10 billion since 2013. In 2022 alone, there were more than 3,000 settlements scheduled under PAGA, a huge increase than in previous years
Increased data confirms the impact of PAGA. In 2018, for example, Walmart employees received $65 million in settlements after employees said they didn’t have enough seats. Similarly, in 2023, Google agreed to a $27 million settlement following allegations of unfair labor practices under PAGA.
The Proposed Amendments
The compromise includes several key changes aimed at improving the current system:
- Higher Penalties for Non-Compliance: Employers who flout labor laws will face steeper penalties.
- Increased Employee Compensation: The share of penalty money going to employees will rise from 25 percent to 35 percent.
- Initiation of Legal Action: Only employees directly affected by the violations can initiate legal actions, curbing frivolous lawsuits.
Jennifer Barrera, president of the California Chamber of Commerce, expressed support for the reforms. “This package provides meaningful reforms that ensure workers continue to have a strong vehicle to get labor claims resolved, while also limiting the frivolous litigation that has cost employers billions without benefiting workers,” she stated.
Perspectives from Both Sides
Labor groups view PAGA as essential for protecting workers’ rights. A recent report by the U.C.L.A. Labor Center argued that the proposed repeal of PAGA would undermine one of the most effective tools for preventing wage theft and other workplace abuses. Tia Koonse, the center’s legal and policy research manager, emphasized the law’s importance in holding corporations accountable.
Lorena Gonzalez, the leader of the California Labor Federation, echoed this sentiment. “PAGA is an essential tool to help workers hold corporations accountable for widespread wage theft, safety violations, and misclassification,” she said. “We are pleased to have negotiated reforms to PAGA that better ensure abusive practices by employers are cured and that workers are made whole, quicker.”
The Road Ahead
Business groups had initially pushed for a ballot measure to repeal PAGA, but they agreed to withdraw the measure once the new legislation reflecting the compromise is enacted. This agreement marks a significant shift, reflecting a rare moment of consensus in the ongoing tug-of-war between labor rights and business interests.
This new deal promises a more balanced approach to labor law enforcement in California. It aims to retain the core protections that PAGA offers to employees while addressing the concerns of businesses regarding frivolous lawsuits and excessive legal costs. The hope is that these changes will foster a more equitable and efficient system, ensuring that legitimate claims are resolved swiftly and fairly.
