Oops, They Did It Again: New PAGA Legislation Proposes the LWDA Take Back Previously Delegated PAGA Power

PAGA was enacted in 2004 to enable private litigants to recover penalties for Labor Code violations that previously could only be pursued by the Labor Commissioner and Labor Workforce Development Agency (“LWDA”).  In an apparent “take back” of some of this power, Governor Brown asked the Legislature for $1.6 million to “stabilize and improve the handling of [PAGA] cases.”  The Governor acknowledged that very few, if any, PAGA filings are scrutinized, employers are being sued for frivolous claims and that when PAGA claims are settled, the state is not receiving enough of the civil PAGA penalties at issue.

Governor Brown’s proposal asks for more staff to review and investigate PAGA claims and also proposes amendments to PAGA which will purportedly provide increased oversight and protect the government’s interest in any penalties ultimately recovered by the private litigant.  The proposed revisions include:

• Requiring the employee to provide a legal basis for pursuing PAGA penalties when it notifies the LWDA of an intent to file a PAGA action;
• Requiring that claims for ten or more employees be verified and accompanied by a proposed complaint;
  extending the LWDA’s time to review PAGA notices from 30 to 60 days;
• Permitting employers to request for the LWDA to investigate a PAGA claim;
• Extending the time for the LWDA to investigate and accept a claim from 120 to 180 days;
• Requiring the Director of Industrial Relations be served with a copy of any complaint when a PAGA case is filed;
• Requiring that the Director of Industrial Relations be served with a notice and an opportunity to object to any PAGA settlement before court approval;
• Allowing employers, under very limited circumstances, to apply for amnesty while it repays employees back wages for potential Labor Code violations.

Whether this proposal hurts or helps employers’ remains to be seen.  On the one hand more oversight and stricter exhaustion requirements may curb frivolous claims.  On the other hand, the LWDA’s involvement in the settlement process will likely drive up the settlement value of PAGA cases.