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PAGA Reform Bills Pass California Legislature; Ballot Initiative Removed

PAGA Reform Bills Pass California Legislature; Ballot Initiative Removed

Workers fill food orders at a Chipotle restaurant in San Rafael, Calif., on April 1, 2024. (Justin Sullivan/Getty Images)

Travis Gillmore
Travis Gillmore

6/29/2024

Updated: 7/1/2024

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Just hours before a worker-protection initiative could be placed on the November ballot, California lawmakers on June 27 passed a package of bills to accomplish exactly what the initiative’s supporters wanted, thus officially ending their campaign.
The ballot initiative sought to reform the Private Attorney General Act (PAGA) of 2004, which allows workers to bring lawsuits against employers for labor violations on behalf of the state.
Businesses blame the law for an increase in nuisance lawsuits and have long sought to reform it, but lawmakers wanted the revisions to take place in the Legislature rather than with a ballot initiative, because any subsequent changes would need voter-approval again, meaning it could only take place with another election.
The reforms enacted by the bills are meant to strengthen the Labor and Workforce Development Agency’s oversight powers while capping penalties and speeding up cases to help cut litigation costs, thus protecting both businesses and workers.
The Legislature fast-tracked the bills—Senate Bill 92 and Assembly Bill 2288—after Gov. Gavin Newsom and legislators reached an agreement June 18 with business groups, labor unions, and organizers of the initiative.
“PAGA has been broken for decades,” Brian Maas—president of the California New Car Dealers Association and proponent of the Fix PAGA campaign, said in a June 27  press release. “This reform package addresses the major problems in the law while also protecting workers.”
He expressed gratitude for the quick action from lawmakers and the governor.
“We applaud the Legislature for passing these reforms and Gov. Newsom for getting the agreement over the finish line,” Mr. Maas said. “We will now uphold our agreement to withdraw our ballot measure.”
Secretary of State Shirley Weber announced in a June 27  press release that the initiative was officially withdrawn by proponents before the measure was qualified.
The governor said in a June 18 press release that the agreement will prove beneficial for all parties.
“This proposal maintains strong protections for workers, provides incentives for businesses to comply with labor laws and reduces litigation,” Mr. Newsom said.

Specific Changes, Widespread Support

SB 92 expedites proceedings and allows employers with fewer than 100 workers to cure alleged violations and submit confidential proposals to the Labor and Workforce Development Agency within 33 days of a complaint, and requires the agency to verify if the cure is complete within 20 days of receiving the proposal for all complaints filed on or after Oct. 1.
Employers with 100 or more employees can request evaluation conferences and stays of court proceedings to potentially limit litigation costs for most civil actions brought on or after June 19.
AB 2288 decreases penalties for less serious labor law violations and increases penalties for egregious violations, while also reducing penalties for employers who quickly cure alleged violations. Additionally, the law gives courts more discretion to increase or decrease penalties to protect businesses and employees from unjust action.
The bill also increases the amount employees’ will get of civil penalties from 25 percent to 35 percent, with attorneys and the state splitting the remainder.
Assemblyman Ash Kalra, the bill’s author, said its reforms will benefit workers.
“AB 2288 makes several reforms to PAGA to improve its effectiveness as a vital tool to enforce workers’ rights, promote making workers whole, and incentivize employer compliance,” Mr. Kalra said in legislative analyses.
Support for the two bills was bipartisan, with both the Assembly and the Senate voting in favor of the proposals.
No groups filed opposition letters, while 91 organizations—including the California Chamber of Commerce and the California Labor Federation, among others—are listed in support of the bills in legislative analyses.
Change was needed, according to some, because of lengthy court proceedings and high litigation costs that hit businesses statewide.
One group said the bills will help prevent nuisance lawsuits that target employers and organizations.
“Small businesses throughout the state have been targeted by frivolous PAGA lawsuits for decades, even forcing some restaurants to shut down,” said Jot Condie, president and CEO of the California Restaurant Association, in the Fix PAGA press release. “This is strong reform that will help small businesses and we are proud to help make it happen.”
Another organization agreed and said the new laws will help protect employers and allow them to better serve their clients.
“Our members are frequent targets of exploitative PAGA lawsuits that jeopardize the services we provide to Californians with disabilities,” Barry Jardini, executive director of the California Disability Services Association, said in the same press release. “With these reforms our members will be better able to focus on the services we provide rather than spending money defending themselves in court.”
A representative for a group advocating for farmers said many small businesses were hurt by PAGA and thanked lawmakers for passing reforms.
“The abusive litigation that PAGA has allowed has contributed to the loss of small family farms and the movement of agricultural production away from California,” Dave Puglia, president and CEO of the Western Growers Association, said in the press release. “We applaud Gov. Newsom for shepherding this important reform effort and the Legislature for passing it.”
A February report prepared by the consulting firm Baker & Welsh found that businesses have paid nearly $10 billion in awards since 2013.
Researchers from the University of California-Los Angeles Labor Center also published a report in February which found that 600,000 workers experience wage violations in the state, amounting to $2 billion in losses annually.
The bills were presented to the governor’s office June 27, and Mr. Newsom is expected to sign the bills soon, as he was out of town attending the debate in Atlanta between President Joe Biden and former President Donald Trump.
Urgency clauses attached to the bills will cause them to take effect immediately upon receiving the governor’s signature.
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Travis Gillmore is an avid reader and journalism connoisseur based in California covering finance, politics, the State Capitol, and breaking news for The Epoch Times.

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