California workers are granted the right to sue violating employers after Governor Gavin Newsom agreed with the labor and business groups to block the initiative from the November ballot.

What Does The Private Attorneys General Act (PAGA) Seek?

According to the Governor's Office news release on Tuesday, the agreement, which seeks to amend the two-decade-old Private Attorneys General Act (PAGA), aims to place a cap on penalties for employers who promptly rectify their practices, increase the portion of penalty payments allocated to workers, authorize courts to issue injunctions compelling businesses to address labor violations and mandate that workers have firsthand experience of the alleged violations they cite in their claims. 

The reform has also faced criticism about being frequently misused and being typically costly and lengthy.

California's PAGA's substantial revenue raises concerns that a considerable portion of this money remains untouched. According to the State budget documents, funds accumulated from business settlements have grown faster than lawmakers, and Governor Newsom has allocated them for expenditure. In the 2022-23 fiscal year, $197 million remained unspent in the fund, and the 2023-24 budget retains $170 million unused, CalMatters reported.

Sara Flocks, campaign director at the California Labor Federation, explained during a recent hearing that the original law, commonly known as PAGA, was enacted to address a crisis in labor law enforcement and strengthen protections for immigrant workers, low-wage workers, farmworkers, and other vulnerable employees.

The Amended PAGA Bills Provision

The deal follows a significant year for labor when Governor Gavin Newsom signed legislation increasing wages for fast-food and healthcare workers, expanding paid sick leave, and granting lower-level legislative staff the right to unionize.

The proposed bills emerged from an agreement between Governor Newsom, legislators, business organizations, and labor representatives. They aimed to preempt a ballot measure that sought to repeal and replace the existing law.

A coalition of labor organizations, worker advocacy groups, and attorneys' associations stated in a press release that the agreement safeguards workers' ability to hold abusive employers accountable via PAGA while encouraging employers to treat workers respectfully by enhancing penalties for severe violations.

Both proposals passed by the state Senate and Assembly gained unanimous support, with no lawmakers voting against them. One of the bills grants businesses with fewer than 100 employees the ability to rectify violations, while larger businesses can request an early assessment of alleged violations. The second bill lowers penalties for minor labor law infractions and increases them for more severe offenses.

Under the current 2004 law, a quarter of employers' fines are allocated to affected workers, with the remainder directed to the Labor and Workforce Development Agency for worker safety enforcement and education. With the new legislation, 35% of the fines would now be allocated to affected workers, and employers would now have the opportunity to correct violations to avoid fines.

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Democratic Assemblymember Ash Kalra, who authored one of the bills, said the agreement illustrates the proper approach when all parties collaborate to resolve a longstanding division issue.

Blocking Measure Off November Ballot

California voters will face several ballot measures this November, including proposals on issues like abolishing involuntary servitude in prisons and establishing a new minimum wage, except for the Taxpayer Protection and Government Accountability Act removed by the California Supreme Court last week.

The proposed ballot measure, supported by numerous business groups, aimed to repeal the 2004 law by mandating state resources to aid employers in complying with labor laws, restricting the awarding of civil penalties to workers at least $100 per pay period by the labor commissioner, allowing employers a chance to rectify violations without penalties, and ensuring that employees receive 100% of penalties levied on employers, rather than the current 25%.

The court determined that the citizen-initiated measure, which aimed to make extensive changes to tax imposition processes, was not a proper method for amending the state constitution. As a result, the California secretary of state was instructed not to include the measure on the ballot or provide information about it in the voter information guide, Court House News reported.

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