California Enacts New PAGA Amendments as Part of Governors Budget Bill

The Private Attorneys General Act of 2004 (“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. In January, Governor Brown submitted a budget proposal that sought greater oversight of PAGA claims and amendments to the PAGA statute. On June 15, 2016, the California Legislature approved Governor Brown’s budget proposal which included significant amendments to PAGA (Labor Sections 2698-2699.5). SB 836 went into effect on June 27, 2016 and provides:

• The Labor and Workforce Development Agency (“LWDA”), the agency which coordinates workforce programs by overseeing seven major departments that serve California businesses and workers now has 60 days to review a notice under Labor Code § 2699.3(a). Prior to the amendments, the LWDA had 30 days to review. Additionally, the time for the LWDA to investigate a claim is extended to 180 days (it was 120 days);
• A Plaintiff cannot file a civil action until 65 days after sending notice to the LWDA (previously 33 days);
• The LWDA must be provided with a copy of any proposed settlement of a PAGA action at the time it is submitted to the court;
• A copy of the court’s judgment and any other order that awards or denies PAGA penalties must be provided to LWDA;
• All items that are required to be provided to the LWDA must be submitted online, including PAGA claim notices and employer cure notices or other responses;
• A $75 filing fee is required for a new PAGA claim notice and also for any initial employer response to a new PAGA claim notice. The filing fee may be waived if the party on whose behalf the notice or response is filed is entitled to in forma pauperis status; and
• When a plaintiff files a new PAGA lawsuit in court, a filed-stamped copy of the complaint must be provided to LWDA. This requirement only applies to cases in which the initial PAGA claim notice was filed on or after July 1, 2016.

Although SB 836 is a modest version of the Governor’s original proposal, employers should still expect to see significant changes in litigating PAGA claims. Providing the LWDA additional time to review and investigate PAGA claims should help to weed out frivolous claims that employers incur significant costs to defend in court. However, the LWDA is likely to become more active in reviewing proposed PAGA settlements, which could complicate the settlement process and lead to higher litigation costs if the LWDA chooses to intervene. Additionally, employers can expect to see delays in the LWDA’s ability to process online submissions given that no online filing or payment systems have been developed. In the interim, the LWDA requests that all required online filings be sent to [email protected] and that all payments be mailed to the Department of Industrial Relations.