Existing law, the Labor Code Private Attorneys General Act of 2004, permits an aggrieved employee, on behalf of themselves and other current or former employees, to bring a civil action pursuant to specified procedures for a violation of a provision of the Labor Code that provides for a civil penalty to be assessed and collected by the Labor and Workforce Development Agency. Existing law imposes specified filing requirements on the aggrieved employee or representative in order to bring the action, including providing notice to the agency and the employer with the specific provisions of the Labor Code alleged to have been violated, and the facts and theories that support the alleged violations. Existing law provides an employer, for certain of those violations, a right to cure the violation within 33 days, as specified. For alleged violations of specified provisions of the Labor Code relating to safety in employment, existing law requires the Division of Occupational Safety and Health to investigate the allegations in the notice.

This bill would make a nonsubstantive change to the provision naming the act. require the notice, for alleged violations of the Labor Code other than those specified provisions relating to safety in employment, to instead include a statement setting forth the relevant facts, legal authorities, and authorities supporting each alleged violation. For those alleged violations that provide an employer a right to cure, the bill would require the notice to inform the employer of their right to cure the violation. The bill would also require the notice to include an estimate of the number of employees on whose behalf relief is being sought. The bill would require the aggrieved employee or representative, if that number of employees is 10 or more, to verify the notice under penalty of perjury, as specified. By expanding the crime of perjury, this bill would impose a state-mandated local program. The bill would make a conforming change.

Existing law, the Labor Code Private Attorneys General Act of 2004, permits an aggrieved employee, on behalf of themselves and other current or former employees, to bring a civil action pursuant to specified procedures for a violation of a provision of the Labor Code that provides for a civil penalty to be assessed and collected by the Labor and Workforce Development Agency.

This bill would make a nonsubstantive change to the provision naming the act.

SENATE COMMITTEE ON LABOR, PUBLIC EMPLOYMENT AND RETIREMENT

Senator Dave Cortese, Chair

2023 - 2024 Regular

Bill No: SB 330 Hearing Date: April 19, 2023

SUBJECT: Labor Code Private Attorneys General Act of 2004

KEY ISSUES

Should the Legislature require an aggrieved employee or representative when, pursuing a Private Attorneys General Act (PAGA) claim, to include in their written notice to the Labor and Workforce Development Agency and to the employer providing the alleged labor code violations to additionally include a statement setting forth the relevant facts, legal contentions, and authorities supporting each alleged violation?

Should they also be required to include an estimate of the number of current and former employees against whom the alleged violations were committed and on whose behalf relief is being sought?

Should they also be required to include a description of the harm alleged to have been suffered by each employee?

Should this written notice be verified, under penalty of perjury, when an aggrieved employee or representative is seeking relief on behalf of 10 or more employees?

ANALYSIS

Existing law:

1. Establishes a comprehensive set of protections for employees, including a time-sure minimum wage, meal and rest periods, overtime, prevailing wages on public works projects, and a broad series of occupational health and safety protective orders.
   (Labor Code §§201, 226.7, 246, 511, 512, 1182.12, 1771, & 6300)
2. Establishes the Private Attorneys General Act (PAGA) of 2004, which permits aggrieved employees to a pursue civil action (file lawsuits) to recover civil penalties on behalf of themselves, other employees, and the State of California for Labor Code violations.

(Labor Code §2698-2699.8)

1. PAGA specifies that, notwithstanding any other provision of law, any provision of the Labor Code that provides for a civil penalty to be assessed and collected by the Labor and Workforce Development Agency (Labor Agency) or any of its departments, divisions, commissions, boards, agencies, or employees, for a violation of this code, may, as an alternative, be recovered through a civil action brought pursuant to specified procedures. In order to file a PAGA action, the following requirements must be met:

For violations specified under Labor Code section 2699.5 (various specified provisions of the Labor Code):

• 1. The aggrieved employee or representative must give written notice by online filing with the Labor Agency and by certified mail to the employer of the specific provisions of the Labor Code alleged to have been violated, including the facts and theories to support the alleged violation and pay a $75 filing fee.
  2. The Labor Agency must notify the employer and the aggrieved employee or representative by certified mail whether it does or does not intend to investigate the alleged violation within 60-65 calendar days of the notice postmark date.
  3. If the Agency decides to investigate the alleged violation, it has up to 120 calendar days to investigate and cite the employer.

For violations of any provision of Division 5 – occupational safety and health violations:

1. The aggrieved employee or representative shall give notice by online filing with the Division of Occupational Safety and Health (Cal/OSHA) and by certified mail to the employer, with a copy to the Labor Agency, of the specific provisions of Division 5 (commencing with Section 6300) alleged to have been violated, including the facts and theories to support the alleged violation.
2. Cal/OSHA shall inspect or investigate the alleged violation pursuant to the procedures specified in Division 5 (commencing with Section 6300). If Cal/OSHA issues a citation, the employee may not commence an action. Cal/OSHA must notify the aggrieved employee and employer in writing within 14 days of certifying that the employer has corrected the violation.
3. If Cal/OSHA fails to issue a citation and the aggrieved employee disputes that decision, the employee may challenge that decision in the superior court. If the court finds that the division should have issued a citation and orders the division to issue a citation, then the aggrieved employee may not commence a civil action pursuant to Section 2699.

For violations of any provision other than those listed in 2699.5 or Division 5:

1. The aggrieved employee or representative shall give written notice by online filing with the Labor Agency and by certified mail to the employer of the specific provisions alleged to have been violated, including the facts and theories to support the alleged violation and a $75 filing fee.
2. Authorizes the employer to cure the alleged violation within 33 calendar days of the postmark date of the notice sent by the aggrieved employee or representative, as specified. If the alleged violation is not cured, the employee may commence a civil action. Includes limitation on the number of times an employer may avail his/herself of the cure provisions.

(Labor Code §2699.3)

1. Specifies that no action may be brought under this section by an aggrieved employee if the agency or any of its departments, divisions, commissions, boards, agencies, or employees, on the same facts and theories, cites a person within the specified timeframes for a violation of the same section or sections of the Labor Code under which the aggrieved employee is attempting to recover a civil penalty, as specified. If the Agency declines to investigate or issue a citation, the aggrieved employee or representative may then file a PAGA claim. (Labor Code §§2699-2699.5)
2. Provides that civil penalties recovered by aggrieved employees shall be distributed as follows: 75 percent to the Labor Agency for enforcement of labor laws, including the administration of PAGA, and for education of employers and employees about their rights and responsibilities; and 25 percent to the aggrieved employees.

(Labor Code §2699(i))

This bill:

For violations specified under Labor Code section 2699.5:

1. When an aggrieved employee or representative provides written notice of the specific provisions of the Labor Code alleged to have been violated, strikes the facts and theories to support the violation provision and instead requires the notice to include:
   1. a statement setting forth the relevant facts, legal contentions, and authorities supporting each alleged violation.
   2. an estimate of the number of current and former employees against whom the alleged violations were committed and on whose behalf relief is being sought.
   3. a description of the harm alleged to have been suffered by each employee. 
2. If the aggrieved employee or representative is seeking relief on behalf of 10 or more employees, requires the notice to be verified in the manner prescribed by Section 446 of the Code of Civil Procedure (under penalty of perjury) and a copy of the proposed complaint shall be attached to the notice.

For violations of any provision of Division 5 – occupational safety and cure provisions:

1. Changes various provisions from “may not” to “shall not” to make explicitly clear that an aggrieved employee shall not commence a PAGA action as specified in existing law.

For violations of any provision other than those listed in 2699.5 or Division 5:

1. When an aggrieved employee or representative provides written notice of the specific provisions of the Labor Code alleged to have been violated, strikes the facts and theories to support the violation provision and instead requires the notice to include:
   1. a statement setting forth the relevant facts, legal contentions, and authorities supporting each alleged violation, as well as notice informing the employer of their right to cure the violation, as specified.
   2. an estimate of the number of current and former employees against whom the alleged violations were committed and on whose behalf relief is being sought.
   3. a description of the harm alleged to have been suffered by each employee. 
2. If the aggrieved employee or representative is seeking relief on behalf of 10 or more employees, requires the notice to be verified in the manner prescribed by Section 446 of the Code of Civil Procedure (under penalty of perjury) and a copy of the proposed complaint shall be attached to the notice.
3. Strikes an obsolete operative date and makes gender non-conforming changes to various PAGA provisions.

COMMENTS

1. Background on the Private Attorneys General Act (PAGA):

Enacted in 2003 and going into effect in 2004 (SB 796, Dunn, Chapter 906, Statutes of 2003), PAGA allows an aggrieved employee to recover civil penalties normally assessed and collected by the Labor and Workforce Development Agency through a civil action. PAGA grants an aggrieved employee a private right of action to file lawsuits on behalf of themselves, other employees, and the State of California. The Legislature passed PAGA in response to growing underground businesses in California operating outside the state’s tax and licensing requirements at a time when regulatory agency staffing levels had dramatically decreased.

      Specifically, as was noted in the 2003 Senate Labor Committee and Senate Judiciary Committee analyses, many stakeholders noted that the California Labor and Workforce Development Agency’s budget had not kept up with the growth of California’s economy. This was in part by design: under Governor George Deukmejian, Cal-OSHA positions were slashed and all hiring was frozen in 1983, and then Cal-OSHA was abolished until court action and a ballot initiative brought Cal-OSHA back into existence in 1988. Under Governor Pete Wilson, hiring freezes and limited resources for labor law enforcement was the norm. By the time Governor Gray Davis assumed office in 1998, labor law enforcement had been deprioritized for sixteen years. Moreover, the impact of this neglect has had a very long tail. To this day, the Department of Industrial Relations continues to be severely underfunded given the size and complexity of our workforce, as evidenced by the wage theft backlog currently impacting the Labor Commissioner’s unit.

The Department of Industrial Relations is prioritizing the hiring of more staff and have instituted new initiatives to reduce the backlogs and streamline hiring. Civil penalties recovered through a PAGA action are split between the employees and the state with the Labor and Workforce Development Agency receiving 75% of the amount and the employee bringing the action receiving 25% as well as attorney’s fees and costs. Funds received by the Labor Agency are used for enforcement of labor laws, including the administration of PAGA, and for education of employers and employees about their rights and responsibilities under the Labor Code.

2. PAGA Initiative: “Fair Pay and Employer Accountability Act”

The PAGA Repeal Initiative (#21-0027A1) gathered enough signatures and has qualified for the November 5, 2024 ballot. The initiative would do the following:

• Repeal PAGA;
• Labor Commissioner retains authority to enforce labor laws and impose penalties;
• Eliminates Labor Commissioner’s authority to contract with private organizations or attorneys to assist with enforcement;
• Requires Legislature to provide funding of unspecified amount for Labor Commissioner enforcement;
• Requires Labor Commissioner to provide pre-enforcement advice – allowing employers to correct identified labor-law violations without penalties;
• Authorizes increased penalties for willful violations.

According to the summary estimate by Legislative Analyst and Director of Finance on the fiscal impact of the initiative on state local governments: Likely increase in state costs to enforce labor laws that could exceed $100 million per year. Reduction in state penalty revenue used for labor law enforcement in the tens of millions of dollars annually.

Staff notes that this bill proposes changes to PAGA that, if adopted, would go into effect January 1, 2024 and potentially be repealed by the end of 2024 if the initiative is approved by the voters on November 5^th.

3. Need for this bill?

According to the author, “This bill seeks to address two problems as follows:

1. Existing law provides a right to cure a narrow, limited number of labor code violations within 33 days from the postmark date of a notice (that alleges a labor code violation). The deficiency of the law is that while an employer may have 33 days (a very small window of time to cure an alleged violation), many businesses- especially small to medium sized businesses- are unaware of their opportunity to cure until it is too late to do so.
2. Existing law imposes specified filing requirements on the aggrieved employee or representative in order to bring the action, including providing notice to the agency and the employer with the specific provisions of the Labor Code alleged to have been violated, and the facts and theories that support the alleged violations. Existing law allows, under PAGA, for an employee to bring an action on behalf of other (current and former) employees. However, the law does not require the notice to include an estimate of the number of employees the action seeks to be on the behalf of. Additionally, there no description of the alleged harm to have been suffered by the employee(s).”

According to the author, “SB 330 seeks to propose two modest reforms to address the two problems listed above:

1. SB 330 improves compliance by including a notification requirement of the existing right to cure for minor PAGA violations. This will help businesses comply with state law and utilize the right to cure provision without providing additional days.
2. SB 330 additionally requires that a notice provides relevant facts, legal contentions and alleged harm when an employee or their representative seek to bring a civil action by an aggrieved employee. When am action is brought, it is important to understand what the alleged harm is and the alleged number of employees that an action is seeking to be brought on the behalf of.”

4. Proponent Arguments:

The Orange County Business Council is in support of the measure and argues that this bill, “A 2021 report discovered PAGA cases have grown exponentially in recent years, averaging 5,200 cases statewide between Fiscal Years 16/17-19/20. Many smaller businesses lack the legal resources to navigate a PAGA case, and therefore may be unaware of the right to cure process or other important information regarding PAGA compliance. SB 330 enables employers subject to alleged violations of the Labor Code, except those related to safety, to be equipped with the knowledge needed to adequately respond to a PAGA case.”

A coalition of employer organizations are in support of the bill arguing, “California has some of the most onerous and complex labor laws in the country. This complexity is exemplified by PAGA, which essentially allows an individual to pursue a “representative action” on behalf of similarly aggrieved employees without being subject to the filing requirements of a class action. Thousands of PAGA lawsuits are filed every year and continue to grow. Employers have paid about $8 billion in PAGA settlements since 2016 with a $3 billion dollar surge just in the last two years. The breadth of the law and resulting case law has allowed attorneys to abuse PAGA by threatening employers with costly litigation for alleged Labor Code violations to secure a financial settlement, with a substantial amount of the money going to attorneys rather than the injured employees or the state.

They conclude by stating that, “SB 330 is a reasonable, modest proposal that gives employers more information about the allegations at hand and notifies them whether PAGA’s right to cure applies. This is beneficial to both the employer and employee because it provides more clarity about the case up front and ensures the employer is aware of the ability to cure the violation, if applicable.”

5. Opponent Arguments:

The California Labor Federation is opposed to the measure arguing, “This bill contains provisions meant to discourage low-wage workers from using PAGA when their rights are violated. It would require PAGA claims to provide both factual documentation and legal reasoning beyond what a worker would often know or be able to access. For example, the worker has to document how many other workers are impacted and the harm to each individual. This is a nearly impossible task at this stage in the process. It would also require that workers sign under penalty of perjury which would intimidate workers from filing claims for fear of having made a mistake. None of these proposed changes would actually address the issues frequently raised by the business lobby around the role of unscrupulous lawyers or the inadequacy of settlements. All this bill would do is make it even harder for low-wage and immigrant workers to get justice.”

Additional opposition from a coalition of organizations representing and advocating on behalf of workers writes, “In addition, any rise in PAGA lawsuits can be directly linked to the dramatic increase in the number of workers forced into arbitration “agreements” as a condition of their employment. These “agreements” almost universally include class action waivers that effectively prevent workers from vindicating their rights in court. However, the California Supreme Court has held that PAGA claims, because they are enforcement actions on behalf of the State, cannot be forced into individual arbitration. (See Iskanian v. CLS Transportation Los Angeles LLC, 59 Cal. 4th 348 (2014). Without PAGA all workers would be forced to pursue labor violations on an individual basis in private, secret arbitrations. Thus, PAGA now stands as one of the last remaining tools for workers to take collective action to remedy violations of their rights under the Labor Code. With workers losing an estimated $15 billion in minimum wage violations alone every year, it is imperative that we focus on strengthening, not weakening, enforcement mechanisms under the Labor Code.”

Furthermore, the coalition argues, “current law already requires the aggrieved employee or representative to give written notice to the agency and the employer of the specific provisions of the Labor Code alleged to have been violated, including the facts and theories to support the alleged violation. This effect of the heightened notice requirements proposed under this bill would be to reduce or eliminate meritorious claims. No other administrative notice requirement requires the kind of detail contemplated by SB 330. Even a claim under the Fair Employment and Housing Act – which requires a sworn statement from the charging party – does not require the level of detail SB 330 would mandate.

There is good reason for the current standard, which already far exceeds the “notice pleading” requirements in place in our Superior Courts. The most obvious reason is that the kind of information SB 330 would require is largely – and in many cases, exclusively – known by the employer. Each worker will have personal knowledge of her experience, and the alleged violations of law; however, each worker cannot be expected to know what practices are common among all employees (across managers, shifts, and job sites, to name but three variables). This is the purpose of an inquiry and investigation by the LWDA and of discovery in a civil action.”

They conclude by stating, “Employers that steal wages should not be able to escape liability and penalties because a worker fails to meet burdensome filing requirements. And delaying workers' ability to get into court helps no one - it is just meant to discourage workers from enforcing their rights under the Labor Code. For all the reasons stated above, we must respectfully oppose SB 330.”

6. Double referral:

This bill has been double referred and if approved by this Committee today, will be sent to Senate Judiciary Committee for a hearing.

7. Prior Legislation:

AB 2016 (Fong, 2018) attempted to modify the procedures for bringing a civil action under PAGA, what violations may be cured, the time line for curing those violation and the remedies available to aggrieved employees. AB 2016 failed passage in its first policy committee.

AB 281 (Salas, 2017) would have extended the period of time in which an employer may cure violations of the Labor Code enforced by PAGA from 33 to 65 calendar days. First policy committee hearing cancelled at the request of the author.

AB 1429 (Fong, 2017) would have limited the violations for which an aggrieved employee is authorized to bring a civil action under PAGA and would have required the employee to follow specified procedures before bringing an action. The bill would have capped the civil penalties recoverable under PAGAs at $10,000 per claimant and would have excluded the recovery of filing fees by a successful claimant. AB 1429 would have also required the superior court to review any penalties sought as part of a settlement agreement under PAGA. Bill was never set for hearing.

AB 1430 (Fong, 2017) would have revised PAGA to require the LWDA, after receiving notification of an alleged PAGA violation, to investigate the alleged violation and either issue a citation or determine if there is a reasonable basis for a civil action. Would have authorized an aggrieved employee to commence an action upon receipt of notice from the LWDA that there is a reasonable basis for a civil action, or if the LWDA fails to provide timely or any notification, as specified. Bill was never set for hearing. Bill never set for hearing.

SB 836 (Committee on Budget, Chapter 31, Statutes of 2016), among other provisions, this budget trailer bill made several changes to PAGA, including an extension of the time period for LWDA to review and investigate PAGA claims. SB 836 also requires a copy of proposed settlement of a PAGA claim to be submitted to LWDA at same that it is submitted to court, and requires parties to provide the LWDA with a copy of the court’s judgement.

AB 1506 (R. Hernández, Chapter 445, Statutes of 2015) provides an employer with the right to cure a violation of failing to provide its employees with a wage statement containing the inclusive dates of the pay period and the name and address of the legal entity that is the employer.

SB 1255 (Wright, Chapter 843, Statutes of 2012) provides a statutory definition of what constitutes “suffering injury” for purposes of recovering damages pursuant to the itemized wage statements requirements including failure by the employer to provide a wage statement or failure to provide accurate or complete information regarding the other specified items, as specified.

SB 899 (Poochigian, Chapter 34, Statutes of 2004) exempted workers compensation provisions of the Labor Code from enforcement through PAGA.

SB 1809 (Dunn, Chapter 221, Statutes of 2004) significantly amended PAGA provisions by enacting specified procedural and administrative requirements that must be met prior to bringing a private action to recover civil penalties for Labor Code violations.

SB 796 (Dunn, Chapter 906, Statutes of 2003) created PAGA as an alternative private attorney general system for labor law enforcement in order to augment the enforcement abilities of the Labor Commissioner.

SUPPORT

Acclamation Insurance Management Services (AIMS)

Allied Managed Care (AMC)

Anaheim Chamber of Commerce

Antelope Valley Chambers of Commerce

Brea Chamber of Commerce

California Apartment Association

California Assisted Living Association

California Association for Health Services at Home

California Association of Health Facilities

California Association of Sheet Metal and Air Conditioning Contractors National Association

California Chamber of Commerce

California Farm Bureau

California Fuels and Convenience Alliance (CFCA)

California Grocers Association

California New Car Dealers Association

California Restaurant Association

California Retailers Association

California State Council of the Society for Human Resource Management

California Trucking Association

Chino Valley Chamber of Commerce

Citrus Heights Chamber of Commerce

Civil Justice Association of California (CJAC)

Coalition of Small and Disabled Veteran Businesses

Dana Point Chamber of Commerce

Family Business Association of California

Flasher Barricade Association (FBA)

Fontana Chamber of Commerce

Fremont Chamber of Commerce

Glendora Chamber of Commerce

Greater Coachella Valley Chamber of Commerce

Greater High Desert Chamber of Commerce

Greater Riverside Chambers of Commerce

Housing Contractors of California

Job Creators for Workplace Fairness Coalition

La Cañada Flintridge Chamber of Commerce

La Verne Chamber of Commerce

Mission Viejo Chamber of Commerce

Modesto Chamber of Commerce

Murrieta/Wildomar Chamber of Commerce

National Federation for Independent Business (NFIB)

National Association of Theater Owners of California

Oceanside Chamber of Commerce

Orange County Business Council

Palm Desert Area Chamber of Commerce

Paso Robles Chamber of Commerce

Rancho Cordova Area Chamber of Commerce

Roseville Area Chamber of Commerce

San Jose Chamber of Commerce

San Marcos Chamber of Commerce

Santa Barbara South Coast Chamber of Commerce

Santa Clarita Valley Chamber of Commerce

Santa Maria Valley Chamber of Commerce

Santee Chamber of Commerce

Templeton Chamber of Commerce

Torrance Area Chamber of Commerce

Tulare Chamber of Commerce

Walnut Creek Chamber of Commerce

Western Carwash Association

Western Growers Association

OPPOSITION

American Federation of State, County and Municipal Employees (AFSCME)

California Conference of the Amalgamated Transit Union

California Conference of Machinists

California Employment Lawyers Association

California Labor Federation

California Rural Legal Assistance Foundation

California Teamsters Political Affairs Council

Consumer Attorneys of California

Engineers and Scientists of California

Equal Rights Advocates

Legal Aid at Work

Santa Clara County Wage Theft Coalition

SEIU California

UFCW Western States Council

UNITE HERE

Utility Workers Union of America

Worksafe

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