Employee Perspective: Paga 15 Years Later

• Citation: Vol. 33 No. 4
• Publication year: 2019
• Author: By Glenn A. Danas

Employee Perspective: PAGA 15 Years Later

By Glenn A. Danas

Glenn Danas is a partner at Robins Kaplan LLP, based in its Los Angeles office. Mr. Danas focuses on appeals and major motions, and has substantial experience litigating consumer and employment class actions and PAGA actions. Mr. Danas has argued dozens of appeals in the state and federal appellate courts, including Iskanian v. CLS Transportation Services, McGill v. Citibank, and Williams v. Superior Court (Marshalls), all in the California Supreme Court. Mr. Danas was named one of the Top 100 Attorneys in California in 2017 by the Daily Journal, and received a California Lawyer Attorney of the Year (CLAY) award in 2015 for his work on Iskanian.

Since its initial passage roughly 15 years ago, the Private Attorneys General Act of 2004 (PAGA)¹ has played an increasingly important role in California's enforcement of the Labor Code. A close review of PAGA's amendments, case law interpreting the Act, and the data show that PAGA is necessary as a law enforcement tool, and that claims of its being "out of control" are unfounded. Indeed, these sorts of criticisms have been lodged since PAGA was first enacted, largely unchanging, despite the Legislature's and the courts' responses to PAGA. Moreover, many of the criticisms of PAGA seem to be that it will accomplish the Legislature's goals of remediating and deterring widespread Labor Code violations. However, as district court judge David O. Carter noted in a 2011 PAGA suit, "The Court is not required to withhold the power of the PAGA statute simply because Defendant fears its potential power."²

The problem that PAGA was meant to address was that the California economy was continuing to grow exponentially, while the state's ability to police its labor laws was falling further behind with each passing year. To put into perspective how dire the problem of under-enforcement of the state's labor laws had been, a U.S. Department of Labor study in 2003 of Los Angeles's garment industry, which employs over 100,000 workers, estimated the existence of 33,000 "serious and ongoing wage violations by the city's garment industry employers," but California's Department of Industrial Relations was issuing fewer than 100 wage citations per year for all industries throughout the state.³ Against this backdrop, the California Legislature, under its historic police powers to enforce laws regarding "wages, hours, and other terms of employment,"⁴ determined that supplementing the state's enforcement efforts by deputizing employees who had been subject to alleged Labor Code violations was critical for the state to have any hope of keeping up.

Virtually since its inception, some California businesses and members of the defense bar have attacked PAGA as being unfair to employers; this effort led to PAGA's early amendments in 2004, adding the requirement of administrative exhaustion to the statute. These first amendments were designed to strike a balance by making PAGA suits harder to bring, while at the same time preserving the private attorneys general enforcement regime as a necessary tool to ensure some modicum of Labor Code enforcement.⁵ Under the 2004 amendments, a current or former employee wishing to seek civil penalties through PAGA must first send a letter to the LWDA laying out the facts and theories underlying the alleged Labor Code violations, giving the LWDA a certain amount of time to review the charges and evaluate whether to intervene before the employee may file a complaint in court.⁶ (This "waiting period" before which an employee may not file a PAGA complaint had initially been 33 days, but was lengthened to 65 days in 2016 pursuant to another set of amendments intended to increase LWDA oversight and involvement.) Likewise, the 2016 PAGA amendments added a requirement that notice of any proposed settlement of a PAGA action be provided to the LWDA, as well as any court order or judgment awarding or denying civil penalties.⁷ And the 2016 amendments expanded PAGA's cure provisions, allowing employers the option to cure certain technical violations, such as certain types of wage statement violations, before the plaintiff may file suit.⁸

While PAGA had generally been pleaded only as one of many claims in the context of class action complaints, all of this changed in 2011. In AT&T Mobility v. Concepcion,⁹ the United States Supreme Court issued a landmark ruling in which it held that class action waivers are enforceable under the Federal Arbitration Act.¹⁰ Unsurprisingly, following Concepcion, many employers inserted class action waivers into their mandatory arbitration provisions, thereby eviscerating the ability of many California employees to sue their employers on an aggregate basis (often the only way to sue them at all, as a practical matter). PAGA, however, offered an alternative avenue for employees to seek to vindicate rights underlying the Labor Code, and PAGA actions (particularly "pure PAGA" actions with no wage claims alleged) increased seemingly overnight.

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After Concepcion, with PAGA having taken on greater prominence in wage and hour litigation, employees and employers...