California’s Private Attorneys General Act (PAGA) has long been a point of contention for employers across the state. The law empowers employees to file lawsuits on behalf of themselves and others for labor code violations, often leading to costly litigation for businesses. In July 2024, Governor Gavin Newsom signed a set of reforms into law—Assembly Bill 2288 (AB 2288) and Senate Bill 92 (SB 92)—designed to address many of the concerns raised by businesses.
Standing Requirements for Lawsuits
One of the most significant changes under the 2024 PAGA reforms is the new standing requirement for plaintiffs. Previously, employees could file claims even if they hadn’t personally experienced every alleged violation. This loophole allowed lawsuits to balloon in size, as plaintiffs could target violations they didn’t personally endure but claimed on behalf of other workers.
The reform tightens this rule. To bring a PAGA claim now, plaintiffs must have personally experienced all of the violations they are suing over, and these violations must have occurred within the one-year statute of limitations. This stricter standing requirement narrows the scope of lawsuits, providing a welcome relief to businesses that often faced broad and costly claims.
It’s worth noting, however, that nonprofit organizations bringing PAGA actions on behalf of employees are exempt from this rule. Businesses working with nonprofits or facing such claims should be aware that these cases could still proceed under the previous, more lenient standing requirements.
Penalty Adjustments
The way penalties are calculated under PAGA has also seen some important changes. Previously, PAGA lawsuits could result in steep fines that quickly escalated, even for minor infractions. The 2024 reforms introduce a more balanced penalty structure.
The default penalty is now $100 per aggrieved employee per pay period, which still provides ample deterrent for noncompliance. However, in cases where an employer is found to have acted maliciously or had prior warnings, the penalty can rise to $200 per employee per pay period. This structure emphasizes fairness—companies that actively ignore labor law violations will face higher penalties, but those with minor or first-time infractions won’t be subject to unduly harsh fines.
The Cure Period
Perhaps one of the most business-friendly aspects of the PAGA reforms is the introduction of a “cure” period. Employers now have the opportunity to correct certain violations before facing litigation. This provision offers a proactive route for businesses to avoid the heavy costs associated with PAGA lawsuits.
Under the new law, companies can cure violations by taking reasonable steps to rectify the issue before a PAGA notice is filed or a request for employee records is made. If an employer successfully corrects the violation in time, they may see penalties capped at a fraction of the total possible amount—15% or 30%, depending on when the corrective action is taken.
If you need assistance interpreting your business’ legal obligations or navigating the delicate “cure” period, Integrated General Counsel, P.C. is here to help. Our team is dedicated to providing legal support to California entrepreneurs, ensuring that you stay compliant and protected under the state’s ever-evolving legal framework. Contact us today at (925) 399-1529 for a free initial consultation.
