PAGA, California's Private Attorneys General Act of 2004, allows employees to sue their employers on behalf of themselves and other "aggrieved" employees to recover penalties for Labor Code violations. Unfortunately, evaluating an employers exposure in a wage-and-hour class and/or PAGA action requires a fair amount of number crunching. The second part of PAGA imposes a monetary penalty for every violation an employer commits, including violations committed against other employees. California attorneys told The damages periods used below should be reduced to three years if the lawsuit does not include a cause of action for unlawful business practices in violation of the UCL. 45 0 obj <>/Filter/FlateDecode/ID[]/Index[37 14]/Info 36 0 R/Length 60/Prev 133243/Root 38 0 R/Size 51/Type/XRef/W[1 2 1]>>stream 4 years x 52 weeks per year x 5 workdays per week = 1,040 days, 1,040 days x 30 minutes of overtime per day = 520 hours of overtime owed per employee, 520 hours of overtime x 50 employees = 26,000 hours of overtime owed. If so, you should advocate for a higher quantifier. endstream endobj 38 0 obj <> endobj 39 0 obj <>/ProcSet[/PDF/Text/ImageC]/XObject<>>>/Rotate 0/Type/Page>> endobj 40 0 obj <>stream This includes when an employer: When the Labor Code does not already provide a civil penalty, the PAGA default penalty is $100 for each employee per pay period for the initial violation and $200 for each employee per pay period for each subsequent violation. PAGA lawsuits have similarities and differences to wage and hour class action lawsuits, and plaintiffs may assert both: Prior to commencing a PAGA action, the employee must provide written notice to the Labor and Workforce Development Agency (LWDA) notifying the LWDA of the alleged violations in writing, a copy of which is also sent to the employer. For the typical Class, PAGA, and UCL action, here is what you must know before mediating: 1) total number of employees during the four-year period; 2) total number of workweeks during the four-year period; 3) total number of employees who were terminated and/or quit during the three-year period; 4) total number of employees during the one-year period; and, 5) total number of pay periods during the one-year period. Learn how SHRM Certification can accelerate your career growth by earning a SHRM-CP or SHRM-SCP. 2010) 2010 WL 2793650 at *6; Smith v. Brinker Intl, Inc. (N.D. Cal. This, each violation should get its own PAGA . Seventy-five percent of the penalties that are recovered go to the state, and 25 percent go to employees. hb```"f A2, s'6mk`h#b!,,ej@kfbvc~+b2QN H3@ d KChkBLViG3>%G!RKW(!9El17S*B2 xPD. (c).) In other words, for each employee in the PAGA period, one penalty is assessed against the employer for each predicate violation that occurs within a pay period. Undertaking the cure option is no small feat. Civil penalties under PAGA can be eye-popping. Claims that fall under the default PAGA penalty include: When PAGA was first enacted, plaintiffs argued that if an employee missed a meal break at least one time per pay period, for example, over the course of 26 pay periods, there is one initial violation and 25 subsequent violations. However, it is generally accepted now that for subsequent violations, employers must have notice of a violation for the heightened penalty to apply. The Esparza court affirmed the trial court's ruling striking the PAGA claim, because the LWDA notice was sent more than 1 year after the last alleged violation. Under PAGA, Plaintiff may seek penalties in the sum of one hundred dollars ($100) per [*3] aggrieved employee, per pay period for an initial Labor Code violation, and two hundred dollars ($200) for each subsequent violation per aggrieved employee, per pay period. The Court's opinion can be found here. San Mateo, CA, 94402-3535, 55 South Market St., Suite 900 (Belaire-West Landscape, Inc. v. Superior Court (2007) 149 Cal.App.4th 554.). The waiting time penalty is an amount equal to the employee's daily rate of pay for each day the wages remain unpaid, up to a maximum of thirty (30) calendar days. All Rights Reserved. A District Court in California ruled that civil penalties under the California Labor Code Private Attorneys General Act of 2004 ("PAGA") could be aggregated as class claims to meet the amount-in-controversy requirement for CAFA jurisdiction. Moreover, plaintiffs can recoup attorney fees under PAGA. Proc., 338.) In any action brought for the nonpayment of wages, the court shall award interest on all due and unpaid wages, at a rate of 10 percent per annum. Employers should note that they do have an opportunity to correct PAGA violations and avoid penalties. To request permission for specific items, click on the reuse permissions button on the page where you find the item. Note that interruptions to meal periods are not readily apparent on the time records, so your actual violation rate may be higher than that which is shown on the face of the time records. The calculation of Labor Code section 210 penalties is different, however, and amounts to $100 for the initial violation and $200 for each subsequent violation (or any willful or intentional violation) plus25% of the amount unlawfully withheld. Need help with a specific HR issue like coronavirus or FLSA? Please confirm that you want to proceed with deleting bookmark. Code, 3289.) If a PAGA plaintiff employee is successful, 75% of any penalty recovered is paid to the Labor and Workforce Development Agency (LWDA), with the remainder going to the PAGA plaintiff employee or distributed among the aggrieved employees. To calculate the penalty take the wage rate and average hours worked per day (max 8 hours) and multiply the hourly wage rate times average hours per day times 30 days. Proc., 340; Lab. Where such requisite information is inaccurate on the wage statements, you should weigh the cost and benefit of the cure option with your counsel. Private Attorneys General Act (PAGA) claimsallow an employee to suefor late wages, as well as a civil penalty.23 The penaltiesfor failing to pay employees on time are as follows: Any civil penaltiesrecovered by an aggrieved employee are divided up as 75% to the Labor and Workforce Development Agency and 25% to the aggrieved employee.24 (Ibid.) PAGA penalties on that claim based on violations incurred by other Walmart employees. PAGA penalty for non-compliant wage statements is $100 for each employee per pay period for the initial violation and $200 for each employee per pay period for any subsequent violations. Because Labor Code section 226 violations carry the heaviest penalty amount at $250 for the initial violation and $1,000 for subsequent violations, correcting the wage statements soon after the PAGA notice will allow you to argue that there are only a few subsequent violations for which penalties may be assessed, if at all. You must also give nonexempt employees an opportunity to take a 10-minute . It also remains unsettled as to whether PAGA penalties for multiple violations in a pay period can be added together, also known as stacking. For example, 50 employees who receive non-compliant wage statements (e.g., non-itemized deductions) and were not paid five hours of overtime per pay period (30 minutes of overtime per workday) over the course of a year (26 pay periods) may be able to claim penalties on the basis of potentially two separate violations per pay period: one violation for each non-itemized wage statement and one for unpaid overtime per pay period. What Are PAGA Penalties? (d).). When asking for the time and wage records, be sure to request them in electronic format, preferably Excel, so that you can search through the records efficiently and, if you know how, utilize macros and formulas to quickly identify search parameters and data points within the records. Assuming each of those 50 employees was paid $25.00 per hour, overtime is paid at 1.5x the regular rate (i.e., $37.50). Employers should also be aware that in addition to PAGA penalties (which the plaintiff is ostensibly asserting on behalf of the State), plaintiffs may seek individual damages to compensate for any unpaid monies owed to the employee. Calculation of PAGA penalties is based on each employee and each Labor Code violation on a per-pay-period basis. Finally, depending on the Labor Code violations alleged and the fact-specific issues in your case, you may want to request additional documents for each employee selected for the sampling, such as documents regarding final payment of wages, business expense reimbursements, meal period waivers, and/or on-duty meal period agreements. What Is a PAGA Settlement? If the Labor Code already provides for a civil penalty for the underlying violation, the employee can sue to recover that penalty on behalf of similarly aggrieved employees and the State. specifies 10 items that must be listed on the wage statements that are provided to employees each payday. Failure to pay overtime, failure to provide meal breaks and failure to provide rest breaks carry an initial PAGA penalty of $50.00, and a subsequent penalty of $100.00. (Troester v. Starbucks Corp. (2018) 5 Cal.5th 829, 835.). Please enable scripts and reload this page. A violation occurs each time an individual . Is there any indication that meal periods are automatically deducted from the employees time? var currentUrl = window.location.href.toLowerCase(); In addition, employees are entitled to an unpaid 30-minute meal break once they work five hours. $(document).ready(function () { In its notice of removal, defendant alleged that the amount in controversy was $6,280,675, which included $2,286,900 in statutory penalties under PAGA. Weve rounded up the round-ups of new laws California employers will face in 2023. When California employers fail to accurately provide certain details on pay stubs, they might incur steep fines under state law. On the other hand, an individual bringing a claim for damages under section 558 would be able to recover unpaid wages. This is in contrast to penalties under the Private Attorneys General Act. Are there any facially unlawful policies? Code, 226, subd. PAGA claims include technical wage statement violationsfor example, a business may face penalties for improperly listing the name under which it does business instead of its legal name. The damages period is governed by the statute of limitations for the causes of action alleged in your clients complaint. Use an expert or staff member to go through the wage statements to determine if the employees were properly paid for all overtime and double-time. Paga is a city in Ghana, well-known for its crocodile pools. The PAGA does not create a private right of action to directly enforce a wage order but PAGA actions can serve to indirectly enforce certain wage order provisions by enforcing statutes that require compliance with wage orders. (Thurman, supra, 203 Cal.App.4th, at p. For example, an employee who went on disability leave more than a year before the date of the PAGA lawsuit would not have worked within the past year that would serve as the basis for any meal and rest violations. Lab. (Lab. PAGA Law. Overturning the ruling of two lower courts, on July 15, 2021, the Court held in Ferra v.Loews Hollywood Hotel, LLC that meal and rest premiums must be paid at the "regular rate" not the base hourly rate. The PAGA applies a default penalty of $100.00 for initial violations and $200.00 for subsequent violations unless the predicate Labor Code section that has been violated expressly provides for a different civil penalty. Code, 2699, subd. PAGA provides for a default penalty of $100 for initial violations and $200 for subsequent violations unless the Labor Code specifically provides for a different penalty. The focus of the case has shifted from pre-certification discovery to gathering information, documents, and data to present your damages and penalties claims to the mediator. Code, 226.7, subd. You owe the employee one hour of pay if the employee is unable to take one or more meal breaks. When faced with this argument, plaintiffs can point to the PAGA notice, prior employee complaints, prior lawsuits, internal or third-party payroll audits, the employers retention of third-party human resource agencies, or any other evidence that shows the employer acted willfully or had knowledge of the Labor Code violations in the workplace. Lab. The defense has expressed an interest in resolving your wage-and-hour class and/or representative action. Moreover, plaintiffs can recoup attorney fees under PAGA. On July 15, 2021, in Ferra v.Loews Hollywood Hotel, LLC, the Supreme Court of California set forth a new rule requiring that premiums for meal, rest, and recovery break violations be paid at the regular rate of pay. You should review wage statements going back one year from the date of the PAGA notice for compliance with the requirements under Labor Code section 226(a), ensuring they provide: gross wages earned; total hours worked; the number of piece-rate units earned and the applicable piece rate if the employee is paid on a piece-rate basis; all deductions; net wages earned; start and end dates of the pay period; the name of the employee and the last four digits of their social security number or an employee ID number; the name and address of the employing legal entity; and all applicable hourly rates and the corresponding hours worked at each hourly rate. 1132.) Another wrinkle in the law is that penalties are assessed per paycheck, Sarchet explained. 43.) Plaintiffs can assert those individual claims on behalf of themselves, or they can also assert them as a class action on behalf of similarly situated employees. Last week the California Court of Appeal, Fourth Appellate District, dropped a bombshell on employers by opining that an employee has standing to pursue PAGA penalties even if she only claims to have suffered a Labor Code violation outside the applicable one-year statute of limitations period.The holding, should it stand, would likely increase the volume of PAGA lawsuits and make them even . Interest!? Code, 1194.2.). temp_style.textContent = '.ms-rtestate-field > p:first-child.is-empty.d-none, .ms-rtestate-field > .fltter .is-empty.d-none, .ZWSC-cleaned.is-empty.d-none {display:block !important;}'; Additionally, PAGA establishes a penalty of $250 per employee, per pay period in which a wage statement violation occurred, with no cap on the total PAGA penalties that might accrue. This article shows how PAGA penalties for common wage and hour violations are calculated and compares them to class action damages so that the reader can assess potential exposure for wage and hour violations. As such, you should demand production of all employee handbooks and standalone policies regarding timekeeping, meal and rest breaks, payroll practices, overtime compensation, and expense reimbursements that were in effect at any time during the applicable damages period. The number of these PAGA notices the LWDA received each year has significantly increased, from 4,000 in 2014 to what is expected to exceed over 7,000 filings in 2022. Note that the amount is doubled because employees are entitled to liquidated damages in the amount of the total unpaid minimum wages. The reason why the statute of limitations is short is that unpaid wages are given more priority than penalties. You have 33 days from the postmark date of the notice to complete the cure. } Assess whether your client will make an adequate class representative. The Labor Code may or may not provide a specific civil penalty for the violation. It also held that the subsequent violation rate applied to calculate PAGA penalties for dates after Sept. 26, 2015. If the plaintiff filed a class action in addition to a PAGA action, the potential exposure to the employer would increase. (a)(1)-(2).) You must also file a notice of the cure that includes a description of actions taken with the LWDA ( 2699.3(c)(2)(A)). The penalties under PAGA can add up very quickly. Specifically, the court in Bernstein decided that heightened penalties for "subsequent violations" under California's Private Attorney General Act (PAGA) cannot be imposed until the Labor Commissioner or a court notifies the employer in question of the Labor Code violation (s) at issue. If a pattern and practice is found, penalties between . If putative class members have told you that employees were required to be on-call during their rest breaks, uptick the quantifier. Code, 1194.) If the answers to these questions are yes, or the general quality of the employee handbook is poor, you should give your per-workweek quantifier a boost. The number of these PAGA notices the LWDA received each year has significantly increased, from 4,000 in 2014 to what is expected to exceed over 7,000 filings in 2022.2 For more information about what to do if you receive an LWDA letter and how to cure (i.e., fix) certain violations, please refer to the article, So You Were Copied on an LWDA Letter What Do You Do?. (United Parcel Service, Inc. v. Superior Court (2011) 196 Cal.App.4th 57, 69.). Code 226(a)(6)); and (2) failure to provide the name and address of the employing legal entity (226(a)(8)). An employee may seek civil penalties under PAGA on behalf of themselves and other current or former employees so long as they have suffered at least one alleged Labor Code violation. The class damages for unpaid overtime would be 26,000 x $37.50 = $975,000. 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