With days to go before the June 27 deadline to pull eligible voter initiatives from the November ballot, a deal was reached between labor unions, business groups, and lawmakers June 18 to remove a proposal to reform a state law allowing employees to file lawsuits against employers for workplace violations.
A list of trade groups, chambers of commerce, and more than 50 small businesses support the ballot initiative to reform the Private Attorney General Act—better known as PAGA. Reform proponents said PAGA litigation caused some businesses to fail because they could not afford the legal costs.
One proponent of the initiative in support of the new agreement said he’s hopeful the plan will be passed by the state Legislature and signed into law before the deadline.
“There is near universal consensus that PAGA is broken and not working for workers or employers,” Brian Maas, president of the California New Car Dealers Association said in a June 18 press release from the Fix PAGA campaign. “We need sensible reforms to fix the broken system.”
“This proposal maintains strong protections for workers, provides incentives for businesses to comply with labor laws and reduces litigation,” Mr. Newsom said.
Details of the plan include a cap on penalties for employers who take immediate action to resolve complaints while creating higher penalties for malicious or fraudulent violations of labor laws.
Additionally, the amount of money that goes to employees will increase from 25 percent to 35 percent, with attorneys and the state receiving the remainder.
With a goal of reducing and streamlining litigation, courts will have more leeway to limit the scope of proceedings while allowing employers to avoid lengthy lawsuits by quickly compensating employees and fixing actions that are in violation of state law.
Furthermore, though currently Californians can bring suits in the name of other employees, the agreement states that workers must personally experience alleged violations.
The plan will also allow the Department of Industrial Relations to expedite hiring needed to fill vacancies so the agency can handle complaints.
Once the legislation becomes law, an eligible ballot measure—known as the California Fair Pay and Accountability Act—will no longer be put to voters.
Those critical of what they described as a “contentious” ballot measure said the language would go too far in reforming the law by removing some legal remedies for employees harmed by labor violations.
By resolving the matter with legislation, lawmakers can revisit and change the act further, if needed, while any subsequent changes to a ballot initiative would need to be amended by voters, as mandated by state law.
Supporters of the agreement said it will help protect employers and workers across California.
“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,” Jennifer Barrera, president and CEO of the California Chamber of Commerce, said in the governor’s press release.
One labor group also applauded the deal.
“We are happy to have negotiated reforms to PAGA that better ensure abusive practices by employers are cured and that workers are made whole quicker,” Lorena Gonzalez, principal officer of the California Labor Federation, AFL-CIO, said in the same press release.
“PAGA is an essential tool to help workers hold corporations accountable for widespread wage theft, safety violations, and misclassification.”
The Democrat leader of the Senate said the package brings much-needed reform.
“Today’s agreement is critical to the long-term success of workers and businesses here in the Golden State,” Senate President pro Tempore Mike McGuire said in the governor’s press release.
“Common-sense reform of PAGA has been discussed for years, and thanks to the collaboration of all sides, including the work of the governor, this agreement will continue to provide strong worker protections and implement long talked-about reforms.”
His Capitol colleague, the Democrat leader of the Assembly, agreed, saying the consensus will prove mutually beneficial for workers and businesses.
“This agreement is important because it protects working people, who are the real engine behind California’s economic strength,” Speaker of the Assembly Robert Rivas said in the same press release. “This is a hard-earned agreement, and that makes the positive outcomes we’ll see for businesses and workers even better.”
Some business owners have been calling for PAGA reform for years, saying the law was hurting employers.
“PAGA is what’s killing all restaurants,” California restaurant owner and chef Andrew Gruel told Epoch TV’s California Insider in an episode aired June 11. “PAGA needs to be flipped upside down on its head.”
Other business leaders cited costly litigation and false claims as reasons to revisit the act.
“False PAGA claims are destroying businesses in California, and they have to stop,” Garry Tan, a San Francisco-based tech entrepreneur, posted June 17 on X.
The Legislature is now looking to move quickly—with the plan expected to be heard in committees in the coming days—in passing the legislation so the governor can sign it before June 27.
