Workers can now sue employers for breaking workplace rules, under California law.
A last-ditch political agreement has prevented the repeal of this law, which has cost businesses billions of dollars.
Governor Gavin Newsom announced the compromise on Tuesday, June 18.
It followed discussions with business leaders and the influential California Labor Federation to amend the 2004 Private Attorneys General Act (PAGA).
PAGA empowers employees to file civil complaints against businesses for themselves and their coworkers, often resulting in substantial settlements.
Newsom said: “We came to the table and hammered out a deal that works for both businesses and workers, and it will bring needed improvements to this system.
“This proposal maintains strong protections for workers, provides incentives for businesses to comply with labor laws, and reduces litigation.”
A February study by a coalition opposing PAGA revealed the law had cost businesses approximately $10 billion since 2013.
There were more than 3,000 proposed settlements in 2022 alone—a tenfold increase from 2016.
Governor Gavin Newsom: “We came to the table and hammered out a deal that works for both businesses and workers, and it will bring needed improvements to this system”
High-profile cases include Google’s $27 million settlement in 2023 and Walmart’s $65 million in 2018.
Business groups had secured a measure to repeal PAGA on the November ballot.
However, they agreed to withdraw it once the compromise legislation is passed and signed into law.
Labor groups argue PAGA is a critical check on corporate behavior.
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A U.C.L.A. Labor Center report warned repealing PAGA would eliminate a powerful tool for combating wage theft and workplace abuses.
The compromise includes higher penalties for employers violating labor laws.
It also increases the percentage of penalty money going to employees from 25 to 35 percent.
It also stipulates any legal action must be initiated by the employee directly affected by the violations.
Jennifer Barrera, president of the California Chamber of Commerce, said: “This package provides meaningful reforms that ensure workers continue to have a strong vehicle to get labor claims resolved while also limiting the frivolous litigation that has cost employers billions without benefiting workers.”
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