CHA News

PAGA Overhaul Means Reduced Fines for Employers, Greater Opportunity to Correct Mistakes

What’s happening: Earlier this month, Gov. Newsom and legislative leadership announced sweeping changes to the Private Attorneys General Act (PAGA) intended to disincentivize costly lawsuits while protecting employees’ ability to bring claims against employers that violate the law.  

What else to know: These changes are included in Assembly Bill 2288 (Kalra, D-San Jose) and Senate Bill 92 (Umberg, D-Santa Ana), which were passed by the Legislature in late June and signed by the governor on July 1. They will apply to lawsuits brought on or after June 19. 

Notable provisions include:   

  • Creation of a less punitive penalty structure that both reduces fine amounts and provides for an additional 15%-30% reduction in penalties if an employer took reasonable steps to correct alleged violation(s) 
  • Clarification of the “cure” process for correcting alleged violations before a lawsuit may proceed    
  • Changes to standing requirements that ensure a plaintiff bringing a lawsuit on behalf of others also experienced the same labor code violations  
  • Restructuring of the shares of recovered penalties to allow employees to receive 35% (rather than 25%)  

Based on these reforms, hospitals can take proactive steps now to defend against PAGA lawsuits: auditing payroll on an annual basis, conducting periodic training on topics such as wage and hour compliance, updating and disseminating workplace policies, and correcting any discovered mistakes promptly.

For more information, see CHA’s summary or contact Erika Frank, CHA vice president, legal counsel, at efrank@calhospital.org