California’s largest business and labor groups have reached an agreement to amend the landmark Private Attorneys General Act (PAGA), a law that has been instrumental in allowing workers to sue companies for workplace violations. This new deal aims to balance the interests of businesses and workers, following years of employers' efforts to curtail the law's impact.

Key Changes in the Agreement

The agreement introduces several key changes:

1. Limiting Penalties for Swift Action: Employers who promptly address alleged violations will face limited penalties. This provision encourages businesses to act quickly in correcting labor code violations, reducing the risk of lengthy and costly lawsuits.
2. Higher Penalties for Malicious Actions: Companies found to be acting 'maliciously, fraudulently, or oppressively' will incur higher penalties, maintaining a strong deterrent against serious labor violations.
3. Avoiding PAGA Lawsuits: The new terms offer businesses more avenues to avoid PAGA lawsuits altogether by proactively correcting issues, thus fostering a more collaborative environment for addressing workplace concerns.

Preserving Worker Protections

Despite these changes, the core of PAGA remains intact. Workers in California retain their unique right to sue their employers on behalf of the state for workplace violations. Governor Gavin Newsom highlighted the balanced nature of the agreement, stating, “We came to the table and hammered out a deal that works for both businesses and workers, and it will bring needed improvements to this system.”

Negotiation Process and Future Outlook

The agreement is the result of intensive negotiations mediated by Governor Newsom, involving the California Chamber of Commerce and the California Labor Federation. A significant factor in these talks was a pending November ballot measure that aimed to repeal PAGA. With the new deal, this measure will be removed from the ballot, and the agreement is expected to gain approval from state lawmakers. 

Jennifer Barrera, president of the Chamber of Commerce, praised the compromise for its potential to limit 'frivolous litigation that has cost employers billions without benefiting workers.' Meanwhile, Lorena Gonzalez, head of the California Labor Federation, emphasized that the reforms will help ensure employers rectify abusive practices swiftly and workers receive timely compensation.

The Impact of PAGA

Since its passage in 2003, PAGA has enabled employees to file lawsuits on behalf of their colleagues, bypassing forced arbitration clauses. The number of PAGA cases has surged, with settlements increasing from around 1,000 in 2017 to over 3,165 in 2022. Critics argue that the law has led to numerous lawsuits over minor technical violations, often resulting in substantial legal fees rather than direct benefits to workers.

Unions have expressed concerns that repealing PAGA could leave wage theft and other serious violations unchecked, as the state labor commissioner’s office is often overburdened and slow to respond to claims.

Conclusion

The new agreement represents a significant shift in California’s approach to labor law enforcement, seeking to reduce the burden on businesses while maintaining robust protections for workers. As the legislature moves to approve the compromise, both employers and employees can expect a more streamlined and equitable system for addressing workplace violations.