Although most California employment attorneys are no doubt familiar with the Private Attorney General Act of 2004 (PAGA), they may not fully understand what the PAGA is or grasp how it works. This article summarizes what every California employment attorney should know about PAGA, regardless of whether they are actively litigating such claims.
PAGA provides employees with a private right of action against an employer in order to collect penalties on behalf of the state’s Labor and Workforce Development Agency (LWDA). PAGA requires that 75 percent of any penalties collected be paid to the LWDA, with the remaining 25 percent distributed to the aggrieved employees. It provides for attorney’s fees to the employee who successfully brings the suit. It is subject to a one-year statute of limitations.
PAGA groups violations into three categories and provides for slightly different procedures for each category.
Category 1: Violations of Labor Code Provisions Specifically Listed in Labor Code section 2699.5
Most PAGA claims fall within this first category. It encompasses violations of those Labor Code sections identified in section 2699.5. There are over a hundred different Labor Code sections listed. They include section 203 on waiting time penalties, section 226.7 on meal and rest break premiums, as well as section 1198, which makes it illegal to employ an employee “under conditions prohibited by the wage order.” The inclusion of section 1198 greatly expands the scope of the PAGA since it allows claims to be predicated on sections of the wage order which may not otherwise provide for a private right of action. These “new” wage and hour claims have been in the news recently. They include failure to provide employees with suitable seating (Section 14 of most wage orders) or to maintain comfortable temperatures at work (section 15 of most wage orders).
Before commencing a category 1 PAGA claim, an employee must satisfy certain notice requirements. He or she is required to give written notice, by certified mail, to both the LWDA and the employer describing the “specific provisions … alleged to have been violated, including the facts and theories to support the alleged violation.” An employee can only proceed with the PAGA claim if LWDA either declines to investigate or neglects to respond to the notice within 33 days.
PAGA was enacted because the LWDA did not have adequate resources to police employers’ compliance with the Labor Code. It is, therefore, not surprising that the LWDA rarely initiates an investigation as a result of a PAGA notice. However, this does not mean that the PAGA notice requirements should be taken lightly. Since the notice is a jurisdictional prerequisite, a PAGA claim can be dismissed outright if the notice is deficient. One court recently dismissed PAGA claims due to an insufficient notice even though the employer raised the sufficiency of the notice for the first time at the final pretrial conference. For these reasons, it is very important to determine whether notice was served properly and contained sufficiently specific facts about the alleged violations.
Category 2: Health and Safety Violations (Labor Code 6300 et seq.)
The second category of PAGA claims is for health and safety violations predicated on any section of Labor Code sections 6300 et seq. (other than sections 6310, 6311, and 6399.7 which are specifically listed in Labor Code section 2699.5. and, therefore, fall under category 1).
In addition to sending notice to LWDA, a plaintiff bringing a health and safety-based PAGA claim must also send notice to the Division of Occupational Safety and Health, which is then required to investigate the claim. If the Division issues a citation, the employee is precluded from commencing an action under the PAGA. In the alternative, if the Division does not do so, the aggrieved employee may proceed to Superior Court.
Category 3: All Other Labor Code Violations
The third PAGA category applies to violations of the Labor Code other than those covered by the first two categories. The notice requirement is the same as category 1 claims. However, unlike category 1 claims, an employer is provided with a safe harbor and can avoid a category 3 PAGA claim if it cures the violation within 33 days of the notice. An employer who wishes to take advantage of this cure provision sends notice to LWDA and the employee describing the actions taken to cure the violation. The employee can then submit arguments to LWDA as to why those actions did not actually cure the violation. An employee may appeal the agency’s determination that a violation has been cured by filing an action with the Superior Court.
For the first five years under PAGA, it was an open question as to whether a plaintiff had to have a class certified in order to pursue PAGA claims on behalf of other aggrieved employees. However, in 2009, the California Supreme Court held that a plaintiff is not required to have a class certified in order to pursue PAGA claims on behalf of aggrieved third parties. The court in Arias v. Superior Court in 2009 decided that class certification “requirements need not be met when an employee’s representative action against an employer is seeking civil penalties under the Labor Code Private Attorneys General Act of 2004.”
While this clarified the issue in state court, there remains a split in California’s federal District Courts. Some district courts have adopted Arias and allow PAGA claims to be pursued without requiring Rule 23 class certification.
Other district courts view the PAGA as a state procedural statute. Since district courts must follow federal civil procedure, some district courts have held that a plaintiff must first obtain Rule 23 class certification before having standing to pursue PAGA claims on behalf of absentee third parties. Regardless of whether a particular court requires Rule 23 certification, a PAGA plaintiff needs to be cognizant of additional difficulties they may face establishing liability and proving damages at trial. The California Supreme Court is currently considering whether using representative testimony and sampling for purposes of proving group liability deprives an employer of its constitutional due process rights. If the court limits or precludes representative testimony and sampling as methods of proof in group actions, this will greatly impact how PAGA claims are tried.
PAGA penalties are calculated differently depending on the predicate violation. If the Labor Code provision underlying the PAGA claim already provides for a civil penalty, then an employee can seek to collect that penalty on behalf of other aggrieved employees. Where the underlying Labor Code section does not already provide a civil penalty, the PAGA penalty is equal to $100 per employee per pay period for the initial violation and $200 for each employee per pay period for each subsequent violation.
One interesting aspect of the PAGA is that it allows a trial court to reduce the civil penalty amount if, “based on the facts and circumstances of a particular case, to do otherwise would result in an award that is unjust, arbitrary or oppressive, or confiscatory.” Although there is currently scant case law defining what is unjust or oppressive in regards to PAGA penalties, this will likely change as more PAGA cases are litigated to judgment and reviewed on appeal.
A court must review and approve any proposed settlement that purports to release PAGA claims. Often times, PAGA claims are released as part of a wider class action settlement that includes causes of action for other Labor Code violations. In such cases, a portion of the total settlement amount is typically allocated towards the PAGA claims. In years past, perhaps due to the lack of precedent, it was not unusual to see courts approve class action settlements that allocated nominal amounts to PAGA claims. However, recently courts are scrutinizing the amount allocated to PAGA claims more closely to ensure that the allocation is reasonable in light of the maximum penalties that could have been collected had the case been successfully tried to verdict.
As PAGA claims are a relatively new addition to the Labor Code, the case law is still developing. In the next few years, we can expect to receive additional direction from the appellate courts, especially with regard to how a plaintiff can prove group liability and damages. For these reasons, attorneys representing employees and employers alike are well advised to carefully track developments in the case law or to seek counsel from lawyers who routinely handle such claims.
Kevin R. Allen lives in Lafayette and is a trial attorney at San Francisco-based Minami Tamaki, LLP. He is a member of the firm’s Consumer and Employee Rights Group and his practice focuses primarily on class actions involving wage and hour and consumer protection laws. Minami Tamaki, LLP Paralegal George Rafal contributed to this article.
Other articles you may be interested in:
To Withhold or Not to Withhold: The Employment Tax Consequences of Settlements and Judgements – William Hays Weissman
Employment Law Basics for Business Lawyers – Michelle Ferber and Stuart Goldware
Admissibility of a Plaintiff’s Immigration Status in California Employment and Personal Injury Cases – Ralph L. Jacobson and Yen P. Chau
You Won! Now What? Three Tips When Applying for Prevailing Party Fees – Kevin R. Allen, Esq.
A Motivating Reason: Chipping Away at Pretext – Delia Isvoranu
 See e.g., Bright v. 99¢ Only Stores, 189 Cal.App.4th 1472 (2010). See also Labor Code section 2699.5.
 See Labor Code section 2699.3(b).
 Arias v. Superior Court, 46 Cal.4th 969, 975 (2009).
 See e.g., Kilby v. CVS Pharmacy, Inc., Case No. 09cv2051-MMA (KSC), 2012 U.S. Dist. LEXIS 47855, 2012 WL 1132854, at *6 (S.D. Cal. Apr. 4, 2012); Echavez v. Abercrombie & Fitch Co., Case No. CV 11-9754 GAF (PJWx), 2012 U.S. Dist. LEXIS 34381 (C.D. Cal. Mar. 12, 2012); Gonzalez v. Millard Mall Servs., Inc., 281 F.R.D. 455, 469 (S.D. Cal. 2012); and see McDonald v. Ricardo’s on the Beach, Inc., Case. No. CV 11-9366 PSG (MRWx), 2013 U.S. Dist. LEXIS 8536 (C.D. Cal. Jan. 22, 2013) (citing, Arias, supra)(“both the California Supreme Court and the vast majority of district courts in this circuit have held that a PAGA claim need not meet class certification requirements.”)
 See e.g., Fields v. QSP, Inc., Case No CV 12-1238 CAS (PJWx), 2012 U.S. Dist. LEXIS 78001, 2012 WL 2049528, at *5 (C.D. Cal. June 4, 2012); Williams v. Lockheed Martin Corp., Case No. 09cv1669 WQH (MDD), 2011 U.S. Dist. LEXIS 115091, 2011 WL 4634269, at *2 (S.D. Cal. Oct. 5, 2011); Ivey v. Apogen Techs., Inc., Case No. 11CV366 DMS NLS, 2011 U.S. Dist. LEXIS 89432, 2011 WL 3515936, at *3 (S.D. Cal. Aug. 10, 2011); Thompson v. APM Terminals Pac. Ltd., Case No. C 10-00677 JSW, 2010 U.S. Dist. LEXIS 142537, 2010 WL 6309364, at *2 (N.D. Cal. Aug. 26, 2010); Adams v. Luxottica U.S. Holdings Corp., Case No. SA CV 07-1465 AHS (MLGx), 2009 U.S. Dist. LEXIS 130660, 2009 WL 7401970 (C.D. Cal. July 24, 2009)
 See Duran v. U.S. Bank National Assn., 203 Cal. App. 4th 212 (Cal. App. 1st Dist. 2012) (petition for review granted and opinion depublished by Duran v. U.S. Bank National Assn., 275 P.3d 1266 (Cal. 2012)).
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