California is known for its tough labor laws, which protect workers’ rights. For example, the state offers one of the highest minimum wages, as well as paid rest breaks and generous sick leave. The Private Attorneys General Act (PAGA) is another way the state empowers employees.
But many businesses struggle to navigate PAGA compliance, which leads to costly PAGA lawsuits. The following guide breaks down everything you need to know about PAGA, including the law’s history and impacts for employers and employees.
What is PAGA?
PAGA is a California statute enacted in 2004. According to California’s Labor and Workforce Development Agency (LWDA), “the labor code PAGA authorizes aggrieved employees to file lawsuits to recover civil penalties on behalf of the State of California for Labor Code violations.”
PAGA’s meaning is simple: employees can sue their employers for labor law violations and seek penalties that would typically be enforced by the state.
History of PAGA Lawsuits
Before 2004, the California LWDA was solely responsible for investigating and penalizing labor code violations. However, due to budget constraints and limited staffing, many violations went uninvestigated.
Labor advocates argued this created a system where employers could violate labor laws with little fear of consequences. In response, the California legislature passed the Private Attorneys General Act (PAGA) to supplement the state’s enforcement capabilities by allowing private citizens to act as “attorneys general” and enforce these laws themselves.
What is a PAGA Claim?
A PAGA claim is a legal action brought by an employee against their employer for violations of California labor laws. Unlike traditional wage and hour claims, a PAGA claim is filed on behalf of the state, which gives employees the ability to enforce labor code violations. These claims typically involve workplace issues, such as:
- Unpaid wages
- Failure to provide meal and rest breaks
- Inaccurate wage statements
- Safety violations
When an employee files a claim, the Labor Commissioner’s Office (LCO) may take up the case or an employer may rectify the labor violation. If the initial administrative process doesn’t result in resolution, a PAGA claim can develop into a full PAGA lawsuit.
What is a PAGA Lawsuit?
A PAGA lawsuit is a legal case filed in court after an employee submits a PAGA claim with the California LWDA. Employees can file on behalf of themselves and their coworkers.
How Does a PAGA Lawsuit Work?
Unlike class action lawsuits, PAGA lawsuits do not require employees to meet class certification standards, which means: it’s easier for workers to bring collective claims. Any civil penalties awarded are split between the state (65%) and the employees involved (35%), reinforcing PAGA’s role as a labor law enforcement tool.
Note: The previous split was 75/25, but Governor Gavin Newsom signed PAGA reform legislation into law in 2024.
Steps to Filing a PAGA Claim
The step-by-step process for filing a claim includes the following steps:
1. Submit Notice
First, the employee must provide notice by filling out an online form and submitting a letter to LWDA through the Department of Industrial Relations’ PAGA Filing Portal. The employee must also send the notice letter to the employer via certified mail.
2. Wait for a Response
The LCO may decide to investigate any PAGA notice alleging wage and hour violations. If so, they must notify the employee within 65 days of the PAGA notice. Here’s what happens after an employee files a PAGA notice with the Labor Commissioner’s Office (LCO):
- If the LCO doesn’t respond with a notice to investigate, the employee can proceed with filing a PAGA lawsuit.
- If the LCO does provide notice that they’ll investigate, they have 120 days to complete their investigation.
- If the LCO fails to file suit or issue a citation within that 120-day investigation period, the employee regains the right to file their own PAGA lawsuit.
Sometimes employers choose to rectify a violation during the notice period in order to avoid civil penalties and litigation costs. If LWDA determines the alleged violation has been cured, the employee may not file the lawsuit.
3. File a Lawsuit
If the LWDA does not investigate or the employer doesn’t cure eligible violations, the employee can file the PAGA lawsuit in superior court after the 65-day notice period expires.
Note: The lawsuit must be filed within one year of the alleged violations.
PAGA Litigation Process
Finally, the case proceeds through litigation, where evidence is presented and a judge determines whether penalties should be awarded. If the lawsuit succeeds, penalties are divided between the state (65%) and employees (35%). If unsuccessful, the claim is dismissed, and no penalties are issued. Many PAGA cases settle before reaching trial to avoid costly legal battles.
How PAGA Lawsuits Impact Employers and Employees
While intended to enforce workplace protections, PAGA lawsuits can have significant consequences for both employers and employees. For businesses, these claims can lead to financial penalties and operational challenges, while employees may see both benefits and drawbacks in the legal process. Here’s how the lawsuits impact both sides:
For Employers
PAGA presents significant challenges and risks for California employers. First off, PAGA penalties can be substantial — $100 for each initial violation per employee per pay period, which quickly can add up to millions in larger workforces.
Unlike class actions, PAGA claims don’t require formal certification, making them easier to bring and harder to defeat on procedural grounds. Beyond financial penalties, PAGA lawsuits can damage company reputation and employee morale.
For Employees
For employees, PAGA lawsuits provide a means to hold employers accountable for labor law violations, such as unpaid wages, meal and rest break violations, or misclassification. Successful claims can lead to financial compensation and workplace policy improvements, benefiting both current and future employees. However, lengthy legal battles can delay resolutions, and settlements often distribute funds across multiple employees, potentially reducing individual payouts.
PAGA Lawsuit FAQs
Still have questions? Read on for answers to frequently asked questions about PAGA.
Do PAGA Settlement Agreements Have to be Approved by the Court?
Yes, all PAGA settlements must be reviewed and approved by a court to ensure fairness and compliance with the law.
What Should be Avoided in a PAGA Settlement?
Settlements should not waive an employee’s right to pursue future PAGA claims, undervalue penalties, or lack transparency in distribution.
Who Oversees The Private Attorneys General Act?
PAGA is enforced by the California Labor and Workforce Development Agency (LWDA), which reviews and monitors claims.
Who Can File a PAGA Lawsuit?
Current or former employees can file a PAGA lawsuit on behalf of themselves and other affected workers for labor law violations.
What is the Penalty for PAGA in California?
Penalties typically start at $100 per employee per pay period for initial violations, but the 2024 PAGA reform legislation made this more flexible.
More FAQs can be found on the State of California Labor and Workforce Development Agency website.
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