Private Attorney General Act of 2004 (“PAGA”), gives employees the right to bring a lawsuit against their employers for any violation of the California Code. It means that the employees can step into shoes of an enforcement agency like the Division of Labor Standards Enforcement and recover civil penalties on behalf of the California Labor Workforce Development Agency (“LWDA”) for aggrieved employees and their coworkers. So the law also allows these employees to recover civil penalties and to receive part of the amount recovered as compensation.

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PAGA was originally enacted to help the state regulate its underground economy – those businesses that operate unlawfully outside of tax and licensing requirements.

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Thus, PAGA allows employees to sue for almost every Labor Code violation, not just serious violations or those dealing with health and safety. PAGA was intended to deputize citizens as private attorneys general to enforce the labor code in light of the state government's limited resources. PAGA also allows employees to bring civil actions to enforce non-monetary provisions in the Labor Code. With the latest PAGA, it also imposes monetary fines on employers for each violation of almost every single provision in the California Labor Code. If the Labor Code does not provide for a penalty, PAGA imposes on the employer a $100 fine for the first violation and $200 for each subsequent violation of the same provision. These fines can be assessed for each employee or each pay period. (i.e., the same violation may incur multiple fines.) For example, in October 2018, Walmart agreed to a $65 million PAGA settlement because its cashiers had not been provided with seats. The trial attorneys representing the employees will receive $21 million, while affected employees will receive a check average of $108 each. Thus, a PAGA claim can be more damaging to an employer than a regular Labor Code violation based on the fact that PAGA imposes fines on non-monetary labor code violations and motivates attorneys to encourage employees to file civil actions.

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Furthermore, the California Supreme Court in 2017 ruled that PAGA plaintiffs are generally entitled to request and receive a significant amount of information from the employer early in the litigation, which creates pressure for employers to settle early to avoid substantial litigation costs.

Additionally, the most consequential provision of PAGA is Section 2699(c), which broadly defines an "aggrieved employee" as any current or former employee "against whom one or more of the alleged violations was committed." A California appellate court applied this definition in a 2018 decision and held that a PAGA plaintiff who is affected by at least one labor code violation may pursue PAGA claims for other violations that did not affect that plaintiff directly.

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In sum, there are increasing number of employees who are now filing complaints alleging a wide variety of labor code violations under PAGA even if they have not or could not have personally suffered a violation of each provision. As you can imagine, these penalties can add up to a significant amount very quickly.

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Taiwanese-owned businesses with employees in California should recognize that California has stricter laws. Practices of conducting regular audits of wage and hour shall be implemented. Employers also should have attorneys review employee handbooks on an annual basis to ensure continued compliance.

(Author: Pei-Yuan Wei Legal Consultant)

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