What is a Private Attorney General Action (“PAGA”) claim?
It is a civil lawsuit in which an individual plaintiff may step into the state of California’ shoes to bring an action for civil penalties on behalf of themselves and other current and former employees of an employer for violations of California’s workplace health and safety violations.
PAGA was enacted in 2004. PAGA does not create any substantive rights and it does not impose legal obligations on employers. Rather, it is “simply a procedural statute allowing an aggrieved employee to recover civil penalties — for Labor Code violations — that otherwise would be sought by state labor law enforcement agencies.
Is there a time limit on bringing a claim?
PAGA claims must be brought within one year from the time that the claim arises.
What Claims Are Subject to PAGA?
PAGA encompasses labor law claims for civil penalties, which are penalties that were traditionally recoverable by the state’s labor law agencies. PAGA does not extend to statutory penalties, such as penalties for failure to pay wages upon termination, that are recoverable by employees.[6]
There has been significant debate over whether claims for unpaid wages brought pursuant to California Labor Code § 558 are subject to PAGA. Section 558 provides in relevant part:
(a) Any employer or other person acting on behalf of an employer who violates, or causes to be violated, a section of this chapter or any provision regulating hours and days of work in any order of the Industrial Welfare Commission shall be subject to a civil penalty as follows:
(1) For any initial violation, $50 for each underpaid employee for each pay period for which the employee was underpaid in addition to an amount sufficient to recover underpaid wages.
(2) For each subsequent violation, $100 for each underpaid employee for each pay period for which the employee was underpaid in addition to an amount sufficient to recover underpaid wages.
(3) Wages recovered pursuant to this section shall be paid to the affected employee.
Courts are divided on this issue. In Thurman v. Bayshore Transit Management Inc., the defendant contended that the statute’s provision for unpaid wages (subsection (a)(3)) was distinct from the provisions granting $50 or $100 in civil penalties (subsections (a)(1) and (a)(2)) and therefore not appropriate for a PAGA action for civil penalties. The court disagreed, holding that the statute’s civil penalty provision encompasses both the $50 or $100 penalty amount and any unpaid wages.[9] However, in Esparza v. KS Industries LP, the court diverged from Thurman, concluding that the plaintiff’s action to recover unpaid wages was a private dispute involving victim-specific relief that was not subject to PAGA.
Recent developments in the law address settlement of claims relating to PAGA. Reins presents new challenges in bringing finality to an employee’s individual wage and hour claims without exposing the employer to civil penalties under PAGA. Note, however, that the procedural landscape that allowed for this unfortunate ruling was that Kim had already brought a PAGA representative action and the parties’ settlement agreement expressly carved out that PAGA claim. In fact, the Supreme Court expressed concern as to why, under those circumstances, the employer would even have attempted to assert that Kim’s standing to continue pursuing the PAGA claim was extinguished, when that is exactly what it had agreed to permit.
On review, the California Supreme Court reversed, holding that a settlement of an employee’s individual wage and hour claims does not strip the employee of standing to pursue a PAGA claim as the state’s “authorized representative.” In reaching this conclusion, the Supreme Court relied on a number of characteristics of a PAGA claim. In particular, the court noted that a PAGA claim is “legally and conceptually” different from an employee’s individual claim because an employee bringing a PAGA claim does so as the proxy or agent of the state. In other words, a PAGA claim is one between the employer and the state. The court also noted that the civil penalties recoverable under PAGA are not available to employees who sue on their own, individual behalf, and that, in many circumstances, employees do not even have a private right of action to pursue individual damages for certain Labor Code violations.
The court held that PAGA’s statutory language sets forth only two requirements for a current or former employee to have standing as an “aggrieved employee” who can bring a representative action for civil penalties: (1) an employment relationship with the alleged violator; and (2) suffering one or more wage and hour violations. The Supreme Court found that Kim satisfied both of these requirements and thus had standing to pursue his PAGA representative action, notwithstanding his release of his individual claims.
Refocusing, this blog, the distinction between civil and statutory penalties in Section 558 plays an especially important role in determining whether claims for unpaid wages are subject to PAGA claims’ exemption from mandatory arbitration agreements. This is discussed in further detail below.
Employer’s Attorney Must Differentiate the Claims Being Asserted
PAGA actions are grouped into three general categories of violations:
(1) Specified Labor Code violations
(2) Workplace health and safety violations; and
(3) Unspecified Labor Code and wage order violations.
The type of violation determines the notice and exhaustion requirements and the ability of the employer to cure said violations. This makes it critical for an employer to take a PAGA claim/demand seriously to best assess what type of violation is being asserted.
A. Specified Labor Code Violation
Certain Labor Code violations are specifically identified in Section 2699.5 of the PAGA statute. This category of violation shall be referred to as “specified Labor Code violations.” The specified Labor Code violations generally involve compensation, working hours, protections for whistleblowers and prohibitions against retaliation for exercising employee rights
The specified Labor Code violations include:
(a) Retaliation for lawful activities outside of work;
(b) Retaliation for filing a labor complaint;
(c) Failure to pay wages due on termination;
(d) Payroll check lacks sufficient funds;
(e) Failure to pay wages on regularly scheduled pay days;
(f) Unlawful paycheck deductions;
(g) Paystub violations;
(h) Failure to provide required meal breaks; and
(i) Failure to provide time off for jury duty and other specified protected activities.
**Please note that there are over 100 potential Labor Code violations under California Labor Code § 2699.5.
B. Workplace Health and Safety Violations
The next category of PAGA violations involves violations of the California Occupational Safety and Health Act of 1973, or Cal/OSHA, and are found in California Labor Code § 6300 et seq. Workplace health and safety violations subject to PAGA requirements include:
Failure to provide a safe and healthful workplace;[20]
Failure to implement a workplace injury prevention program;[21] and
Failure to furnish employees with necessary safety devices;[22]
Importantly, certain Cal/OSHA provisions are enumerated in Section 2699.5 (the same as the Specific Labor Codes referenced above in Section A) and are, therefore, specified Labor Code violations. These include violations of Cal/OSHA provisions prohibiting employers from discriminating or retaliating against employees who:
(a) Complain about health or safety conditions or practices, institute or participate in any such proceeding, or exercise any rights under Cal/OSHA;
(b) Refuse to perform work if it would result in a violation of Cal/OSHA safety standards or of a safety order and would create a “real and apparent hazard”; or
(c) File a complaint or testify in a proceeding concerning violations of the Hazardous Substances Information and Training Act
C. Unspecified Labor Code and Wage Order Violations
The third category of PAGA violations is essentially a “catch-all” that includes Labor Code violations that Section 2699.5 does not specifically identify as well as wage order violations. This category of violations shall be referred to as “unspecified violations.” Examples of violations include:
(a) Misclassifying employees;
(b) Failure to provide paid sick leave;
(c) Requiring disclosure of employee social media passwords;
(d) Failure to permit inspection or copying of employee personnel records; and
(e) Failure to provide notice required under the Wage Theft Act.
D. Does a Claim Exist or Not Exist?
This question really boils down to whether or not the employee is considered to be “aggrieved”. ] An “aggrieved employee” is “any person who was employed by the alleged violator and against whom one or more of the alleged violations was committed.” Because only aggrieved employees may bring PAGA claims, always assess whether the plaintiff is “aggrieved” under the statute and has standing to sue
One of the first things to look for is whether or not the aggrieved employee has complied with PAGA’s Notice Requirements. For example have administrative remedies been exhausted and has the aggrieved employee paid the appropriate fees.
1. Did the Employee Properly File the PAGA Notice and Copy the Employer?
The aggrieved employee must give written notice to the employer via certified mail and file their PAGA notice online here. Aggrieved employees must also file PAGA notices of claims for workplace health and safety violations online with both the LWDA and the Division of Occupational Safety and Health, or DOSH. The aggrieved employee must also pay a $75 filing fee when filing a PAGA notice.[45] Although Section 2699.3(b) is silent as to a required filing fee for a PAGA notice alleging workplace health and safety violations, the DIR’s website states that a $75 filing fee is required for all new PAGA notices. Currently, there is no online payment system. Aggrieved employees must pay the filing fee by check, made payable to the LWDA. These documents become public records.
2. Does the Notice Provide Sufficient Notice to the Employer?
The PAGA notice must include a description of the specific provision(s) that the employer allegedly violated and the facts and theories supporting the alleged violation(s). The content of the notice must be sufficiently detailed to apprise the LWDA or DOSH, as well as the employer, of the precise nature of the violations. It is not enough for an aggrieved employee to simply list the Labor Code sections that were allegedly violated.[47] Employees must include a detailed description of the facts supporting the alleged violation so that the LWDA or DOSH can determine the nature of the violation and whether it should conduct an investigation. Also, for violations that are subject to cure under PAGA, a detailed notice assists the employer in determining if it can and should cure the violations.
Notices that are too vague or otherwise lack sufficient details may be subject to a motion to dismiss or demurrer after a PAGA action is filed.[48] Defective notices may also be challenged on a motion for summary judgment.[49]
3. Limitations on PAGA Actions
An aggrieved employee may not bring an action for workplace health and safety violations during the period that an employer has voluntarily entered into consultation with DOSH to ameliorate a condition in that particular work site. An aggrieved employee’s claims cannot be diffused with working out an agreement with DOSH.
4. Unspecified Violations
PAGA does not require any agency action in response to a PAGA notice for unspecified violations. Once an aggrieved employee files a PAGA notice alleging unspecified violations with the LWDA and serves it on the employer, the employer has 33 days to cure the alleged violations. The aggrieved employee may not initiate a PAGA action during the cure period. If the employer does not timely cure the violation, the aggrieved employee may then sue under PAGA. The rule of thumb here is to detail as much as possible the employer’s actions to cure the unspecific violations. If the aggrieved employee claims that the violation has not been cured then LWDA has 17 days to review the curative actions of the employer and then notify both the aggrieved employee and the employer of the findings.
In that case, the aggrieved employee may sue once the LWDA determines that the violation has not been cured, or if it fails to notify the aggrieved employee of its determination within 17 days. However, if there is a finding that it has been cured this will limit the aggrieved employee’s claims.
5. What Happens if There is No Right to Cure
PAGA does not permit employers to avoid liability by curing violations that fall in the specified Labor Code violations category. Strategically, an employer should still consider doing so. Curing the violation may cut off damages since penalties are calculated on a per violation, per pay period, per employee basis. This can bode well for an employer as a court may consider an employer’s decision to voluntarily cure violations when determining whether it should exercise its discretion to reduce the amount of penalties awarded under Section 2699(e)(2).[72].
What Can Employers Do Currently During the COVID19 Crisis? (California Specific)
During the month of March there were several discussions to issue a moratorium relating to PAGA claims. As background on March 25, 2020, the California Business and Industrial Alliance wrote a letter to Governor Gavin Newsom asking for a 90-day moratorium on PAGA claims. Currently the Judicial Counsel has instituted a moratorium on PAGA claims.
Should you have a questions about a PAGA claim please feel free to contact our office at 213-788-4412 to schedule a consult today. You can also e-mail us at info@thesandslawgroup.com
