What is PAGA?
Labor Code 2698
Labor Code 2698 states, “This part shall be known and may be cited as the Labor Code Private Attorneys General Act of 2004.”
The Private Attorneys General Act of 2004 (PAGA), Lab. Code, § 2698 et seq., empowers employees to sue on behalf of themselves and other aggrieved employees to recover civil penalties previously recoverable only by the California Labor Commissioner — including those in Lab. Code, § 558. Lab. Code, § 2699, subd. (a). The PAGA also has created civil penalties, equally enforceable by aggrieved employees, for most other California Labor Code violations that previously did not carry such penalties. § 2699, subds. (f), (g)(1).
A claim under the Labor Code Private Attorneys General Act of 2004 (PAGA), Lab. Code, § 2698 et seq., is legally and conceptually different from an employee’s own suit for damages and statutory penalties. An employee suing under PAGA does so as the proxy or agent of the state’s labor law enforcement agencies. Every PAGA claim is a dispute between an employer and the state. Moreover, the civil penalties a PAGA plaintiff may recover on the state’s behalf are distinct from the statutory damages or penalties that may be available to employees suing for individual violations. Relief under PAGA is designed primarily to benefit the general public, not the party bringing the action. A PAGA representative action is therefore a type of qui tam action, conforming to all traditional criteria, except that a portion of the penalty goes not only to the citizen bringing the suit but to all employees affected by the Labor Code violation. The government entity on whose behalf the plaintiff files suit is always the real party in interest.
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Standing Requirement
With regard to a suit under the Labor Code Private Attorneys General Act of 2004 (PAGA), Lab. Code, § 2698 et seq., not every private citizen can serve as the state’s representative. Only an aggrieved employee has PAGA standing. Lab. Code, § 2699, subd. (a). An “aggrieved employee” is defined as any person who was employed by the alleged violator and against whom one or more of the alleged violations was committed. Lab. Code, § 2699, subd. (c). Employee unions lack standing to bring PAGA claims because the associations are not employed by the defendants. § 2699, subd. (c)
A standing requirement ensures that courts will decide only actual controversies between parties with a sufficient interest in the subject matter of the dispute to press their case with vigor. When a cause of action is based on statute, standing rests on the provision’s language, its underlying purpose, and the legislative intent.
Lab. Code, § 2699, subd. (c), defines an “aggrieved employee” as any person who was employed by the alleged violator and against whom one or more of the alleged violations was committed. It does not require the employee to claim that any economic injury resulted from the alleged violations.
With regard to standing to pursue a claim under the Labor Code Private Attorneys General Act of 2004, Lab. Code, § 2698 et seq., the plain language of Lab. Code, § 2699, subd. (c), has only two requirements for PAGA standing. The plaintiff must be an aggrieved employee, that is, someone who was employed by the alleged violator and against whom one or more of the alleged violations was committed. § 2699, subd. (c).
Definition of Standing
The legislature has defined standing under the Labor Code Private Attorneys General Act of 2004 (PAGA), Lab. Code, § 2698 et seq., in terms of violations, not injury. An employer becomes an aggrieved employee, and has PAGA standing, when one or more Labor Code violations are committed against him or her. Lab. Code, § 2699, subd. (c). A settlement does not nullify these violations. The remedy for a Labor Code violation, through settlement or other means, is distinct from the fact of the violation itself. For example, employers can pay an additional hour of wages as a remedy for failing to provide meal and rest breaks. Lab. Code, § 226.7, subd. (c). But payment of this statutory remedy does not excuse a § 226.7 violation.
PAGA Remedies
Under the Private Attorneys General Act, Lab. Code, § 2968 et seq., an aggrieved employee may bring a civil action personally and on behalf of other current or former employees to recover civil penalties for California Labor Code violations. Lab. Code, § 2699, subd. (a).
The representative action authorized by the PAGA is an enforcement action, with one aggrieved employee acting as a private attorney general to collect penalties from employers who violate the California Labor Code. Such an action is fundamentally a law enforcement action designed to protect the public and penalize the employer for past illegal conduct. Restitution is not the primary object of a PAGA action, as it is in most class actions. The PAGA has attempted to remedy the understaffing of California’s labor law enforcement agencies by granting employees the authority to bring civil actions against their employers for Labor Code violations. California’s Supreme Court has distinguished class actions from representative PAGA actions in holding that class action requirements do not apply to representative actions brought under the PAGA.
Of the civil penalties recovered, 75 percent goes to the Labor and Workforce Development Agency, leaving the remaining 25 percent for the aggrieved employees. § 2699, subd. (i). Before bringing a civil action for statutory penalties, an employee must comply with Lab. Code, § 2699.3. That statute requires the employee to give written notice of the alleged Labor Code violation to both the employer and the Labor and Workforce Development Agency, and the notice must describe facts and theories supporting the violation. § 2699.3, subd. (a). If the agency notifies the employee and the employer that it does not intend to investigate, or if the agency fails to respond within 33 days, the employee may then bring a civil action against the employer. § 2699.3, subd. (a)(2)(A). If the agency decides to investigate, it then has 120 days to do so. If the agency decides not to issue a citation, or does not issue a citation within 158 days after the postmark date of the employee’s notice, the employee may commence a civil action. § 2699.3, subd. (a)(2)(B).
All claims under the Private Attorneys General Act of 2004 (PAGA), Lab. Code, § 2698 et seq., are representative actions in the sense that they are brought on the state’s behalf. The employee acts as the proxy or agent of the state’s labor law enforcement agencies and represents the same legal right and interest as those agencies — namely, recovery of civil penalties that otherwise would have been assessed and collected by the Labor Workforce Development Agency. The employee may therefore seek any civil penalties the state can, including penalties for violations involving employees other than the PAGA litigant herself.
Not all statutory remedies for California Labor Code violations are civil penalties recoverable in an employee’s Private Attorneys General Act of 2004 (PAGA), Lab. Code, § 2698 et seq., action. Civil penalties were previously enforceable only by the state’s labor law enforcement agencies before the PAGA. That was because an action for civil penalties is fundamentally a law enforcement action designed to protect the public and not to benefit private parties. Other remedies, such as restitution of unpaid wages, were recoverable directly by employees well before the PAGA. Civil penalties are additional to actual losses incurred. They are intended to punish the employer for wrongdoing, often without reference to the actual damage sustained. Statutory damages, on the other hand, primarily seek to compensate employees for actual losses incurred, though like penalties they might also seek to shape employer conduct as a secondary objective.
Liquidated Damages
Penalties under the Private Attorneys General Act of 2004 (PAGA), Lab. Code, § 2698 et seq., are unique to that statute. The civil penalties recovered on behalf of the state under PAGA are distinct from the statutory damages to which employees may be entitled in their individual capacities. Therefore, a suit to recover statutory civil penalties under PAGA is fundamentally a law enforcement action designed to protect the public and not to benefit private parties.
Federal Arbitration Act, Arbitration Agreement
An employer is not permitted to impose arbitration provisions that impede an aggrieved employee’s ability to bring a Private Attorneys General Act of 2004 (PAGA), Lab. Code, § 2698 et seq., claim, which is fundamentally a law enforcement action designed to protect the public. Under this public policy rationale, an arbitration provision is unenforceable if it circumvents PAGA’s intent to empower employees to enforce the California Labor Code as agency representatives and harms the state’s interest in enforcing the Labor Code. A private agreement requiring an employee to litigate his or her PAGA claim in multiple forums that have been selected based solely on the employer’s own preferences interferes with the state’s interests in enforcing the Labor Code and is therefore against public policy. Whether or not PAGA claims are categorically exempted from private arbitration agreements, California law precludes an employer from requiring an employee to individually arbitrate whether he or she qualifies as an aggrieved employee within the meaning of PAGA, while simultaneously preserving its right to a judicial forum for all other aspects of the claim.
As a matter of state law, an employee’s predispute agreement waiving the right to bring representative claims under the Private Attorneys General Act of 2004 (PAGA), Lab. Code, § 2698 et seq., is unenforceable. Requiring employees to forgo PAGA claims in this way contravenes public policy by serving to disable, through private agreement, one of the state’s primary mechanisms for enforcing the California Labor Code. The Federal Arbitration Act, 9 U.S.C. § 1 et seq., does not preempt this rule or otherwise require enforcement of such a waiver in an arbitration agreement.
Employers cannot compel employees to waive their right to enforce the state’s interests when the Private Attorneys General Act of 2004 (PAGA), Lab. Code, § 2698 et seq., has empowered employees to do so. But for this rule to apply, the state must in fact have delegated enforcement of its interests to private citizens. The Legislature used the PAGA to delegate enforcement of civil penalties. In contrast, the “amount sufficient to recover underpaid wages” authorized in Lab. Code, § 558, subd. (a), constitutes compensatory relief — a type of recovery separate from its civil penalties. Section 558 has no private right of action. Nor can employees recover the unpaid wages described in § 558 in a PAGA claim — even though § 558 permits the Labor Commissioner to include that amount in a citation.
Attorney Fees
The Legislature provided two financial incentives for aggrieved employees to pursue the recovery of civil penalties under the Private Attorneys General Act of 2004 (PAGA), Lab. Code, § 2698 et seq. First, when a civil penalty is recovered under PAGA, 75 percent goes to the Labor and Workforce Development Agency and the remaining 25 percent goes to the aggrieved employees. Lab. Code, § 2699, subd. (i). Second, any employee who prevails in an action is entitled to his or her reasonable attorney fees and costs. § 2699, subd. (g)(1).