California adopted a novel approach to enforcing the Labor Code of California when it enacted the Private Attorney General Act of 2004 (“PAGA”) codified in Cal. Lab. Code § 2698, et seq. This law allows a private citizen to pursue civil penalties on behalf of the State of California Labor and Workforce Development Agency (“LWDA”) provided the formal notice and waiting procedures of the law are followed.
Unlike so called “private attorney general” suits that usually refer to some type of unfair competition claim, the PAGA gives a private citizen the right to pursue fines that would normally only be available to the State of California. As such, it is truly allowing a private citizen to act as an attorney general. Cal. Lab. Code § 2699(a). Any resulting civil penalties are split between the LWDA and the employee with the LWDA receiving 75% of the penalties and the employee receiving 25%. Cal. Lab. Code § 2699(i).
In essence, an aggrieved employee is deputized to act as a Private Attorney General if he first informs the LWDA of the alleged violations and the LWDA does not pursue the allegations or does not issue a citation within certain time periods. Cal. Lab. Code § 2699.3. As a Private Attorney General, the aggrieved employee is allowed to seek civil penalties not only for violations that he personally suffered but also for violations of “other current or former employees.” Cal. Lab. Code § 2699(a).
Three Classes of Violations
The PAGA divides labor code violations into three different types and prescribes different procedures for each class. The first class is for more serious violations. The statute specifically lists out what these are and a complete list of serious California Law Code violations can be found here.
The next classification is for Health and Safety vioations. While these violations are of the labor code, they primarily relate to safety rather than to the payment of wages, benefit, etc. The procedures are also a little different under the classification.
The final classification is all other labor code violations that are not covered by one of the above classifications. In general, these are considered less serious and the employer is given the opportunity to fix the problem before a lawsuit is filed. If the employer fixes the problem go forward, then you can not sue for fines for past actions. This is very different from the above classification where even if the employer fixes it immediately, the employee can still sue for past violations.
Split the Civil Penalties
When an employee brings an action against an employer, it is on behalf of all the employees who suffered labor violations by that employer. Thus, if the employer was not paying any employees overtime, the fines would be on behalf of all employees that were supposed to receive overtime but did not. The fine for unpaid overtime for this first offense is $50 per employee per pay period. Thus, if a company has 10 employees that were improperly denied overtime and they are paid on a weekly basis, the total fine would be $50 x 10 x 52 weeks (the statutes of limitations is 1 years for PAGA claims) = $26,000. The State of California gets 75% of this and the employees get the other 25%. Currently, it is not clear whether the 25% is split amoung all the employees who did not get overtime or whether the employee who brought the lawsuit would get to keep the entire 25%.
It would be more effective if the employee who brought the suit was allowed to keep the entire 25% as this would encourage employees to bring legitimate labor complaints against illegal employers. In addition, it would compensate the named employee for the additional trouble of being associated with the lawsuit. Although a court has not decided this issue, if the 25% is kept by the named employee, it would greatly help with the enforcement of the California Labor Code and is the position we take in all our PAGA cases.