In a significant development aimed at balancing worker rights and business interests, California Governor Gavin Newsom announced a breakthrough compromise regarding the state’s Private Attorneys General Act (PAGA). This law, enacted in 2004, enables employees to file lawsuits on behalf of themselves and their colleagues against companies for labor violations, often resulting in substantial financial settlements.
The compromise, unveiled after extensive negotiations between business leaders and the California Labor Federation, aims to amend PAGA rather than repeal it entirely. Governor Newsom described the agreement as a win-win for both workers and businesses, emphasizing its goal to enhance the existing system while reducing excessive litigation.
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Under the current law, companies have faced significant financial burdens, with estimates suggesting costs nearing $10 billion since 2013 alone. Numerous high-profile cases, including Google’s $27 million settlement in 2023 and Walmart’s $65 million settlement in 2018, underscored the law’s impact on corporate accountability.
The proposed amendments include stricter penalties for employers violating labor laws and an increase in the portion of penalty money allocated to employees from 25% to 35%. Moreover, the revised legislation mandates that legal actions must originate from employees directly affected by the alleged violations, aiming to curb frivolous lawsuits.
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Business groups, which had pushed for a ballot measure to repeal PAGA, agreed to withdraw their initiative pending the passage of legislation reflecting the compromise. Labor advocates, meanwhile, hailed PAGA as essential in safeguarding workers’ rights against wage theft and workplace abuses.
In response to the compromise, Jennifer Barrera, President of the California Chamber of Commerce, emphasized that the reforms strike a balance by preserving workers’ access to justice while addressing concerns about excessive litigation costs for businesses.
Lorena Gonzalez of the California Labor Federation expressed satisfaction with the negotiated reforms, highlighting their potential to swiftly rectify employer misconduct and ensure fair treatment of workers.
The compromise legislation is expected to be introduced soon, pending legislative approval and Governor Newsom’s signature.