PAGA, the Labor Code’s Private Attorney General Act, was enacted in 2004 but has recently prompted overwhelming litigation for California courts and employers. With PAGA, employees have the ability to sue their employers for themselves and on behalf of other “aggrieved employees” for violations of the Labor Code. The employee basically acts “on behalf of the state” to recover civil penalties, with 75 percent paid to the state and 25 percent to aggrieved employees, plus attorney’s fees and penalties.
California Governor Jerry Brown is trying to help California employers with urgency legislation meant to give them a way to avoid litigation in cases of wage statement violations. He signed Assembly Bill 1506 into law on October 2, 2015 effective immediately amending PAGA, the Labor Code’s Private Attorney General Act. This is the latest in a long list of newly enacted laws regarding wage and hours issues, including amendments to California’s Equal Pay Act, amendments to California’s Healthy Workplaces, Healthy Families Act of 2014, amendments to the Family-School Partnership Act, and others.
The new law’s intent is to reduce the number of pending PAGA cases alleging technical violations of itemized wage statements. It gives employers a 33-day cure period for violations on wage statements that are missing either of two pieces of specific information: either inclusive dates of the pay period or the employer’s legal name and address, two of nine items specified in Labor Code section 226(a)(6) and 226(a)(8). If the employer properly cures the violation, the employee can’t sue.
The Governor feels this is a good way to ensure employees get accurate information on wage statements and gives employers a remedy to litigation for minor violations. But while PAGA requires nine items on the itemized wage statement, and has been a source of inundating litigation in recent years, this amendment only addresses two of the nine items, so it’s not a complete remedy.
The problem for employers is that the new legislation allowing employers to cure wage statement violations requires them to provide a fully compliant itemized wage statement for each pay period back three years from the date of the written notice from the employee per Labor Code § 2699(d). Depending on the size of the business and number of employees involved, this may make it hard for employers to take advantage of the relief measures. The law also limits the employer’s right to cure to one time in a 12 month period.
There are some questions about whether employees are even entitled to sue under PAGA for wage statement violations. PAGA penalties apply only when another part of the Labor Code doesn’t already provide a civil penalty, but Labor Code sections 226(e) and 226.3 do already provide for penalties for alleged wage statement violations.
California employers should be very familiar with Labor Code section 226 and make sure their wage statements comply and consult an attorney if a PAGA notification about wage statement violations is received.