SACRAMENTO — The California Legislature on Thursday approved bills that would amend a two-decade-old law that allows workers to sue their bosses for labor violations and require employers to pay fines to the state.
The legislation would reform the Private Attorneys General Act, which came into effect in 2004. It has come under fire from business groups who say the law has been abused. Critics also say that litigating alleged violations of the law is often time-consuming and expensive.
The bills would reduce the financial penalty for some employers and force them to correct violations. They emerged from a deal among Gov. Gavin Newsom, lawmakers, business groups and labor leaders to scrap a ballot measure that asked voters to repeal and replace the law.
Newsom, a Democrat, praised the deal in his State of the State address Tuesday, calling the law reform a “complicated, difficult issue that has been beyond compromise for decades.”
“We’ve accomplished something that seemed impossible,” he said. “It’s easier to tackle simple problems, but that’s not the California way.”
Newsom has said he will sign the bills, which would take effect immediately.
The Senate and National Assembly approved the proposals without any lawmakers voting against them. One of the bills would give companies with fewer than 100 employees the right to correct violations and allow larger companies to request an early review of the alleged violation. The other bill would reduce penalties for less serious labor law violations and increase penalties for more serious violations.
Under the 2004 law, employers who violate California’s labor law must pay a fine. A quarter of that money goes to employees and the rest to the Labor and Workforce Development Agency for law enforcement and worker safety education.
But under the new legislation, 35% of the money would go to affected workers. The original law also does not allow employers to correct violations to avoid fines.
The debate over the 2004 law has raised questions about what the state does with the money it collects from businesses in fines and settlements related to violations. In 2022-23, the state left $197 million of that money unspent, CalMatters reported earlier this month.
Democratic Assembly member Ash Kalra, author of one of the bills, said the deal “demonstrates how things should be done when all parties come together to solve a long-standing problem of division.”
Ashley Hoffman, a policy attorney for the California Chamber of Commerce, said this week at a hearing on one of the bills that the original law was “well-intentioned” but “has been manipulated to the detriment of workers, businesses and nonprofits that serve vulnerable Californians.”
“What is in this bill and the accompanying bill represent historic reforms to address these concerns,” Hoffman said, adding that “California workers can be confident that there is robust enforcement of labor laws.”
The proposed ballot measure, which was supported by many business groups, would have repealed the 2004 law. It would have required the state to provide resources to employers to help them comply with labor laws; that only the labor commissioner could impose civil penalties on employees of at least $100 per pay period, with some exceptions; that employers be able to correct violations without fines; and that employees receive 100 percent of the money from penalties imposed on employers, instead of 25 percent.
Sara Flocks, campaign director for the California Labor Federation, said at a hearing this week that the original law, often called PAGA, was a “response to a crisis in labor law enforcement.” The law was created to strengthen the rights of migrant workers, low-wage workers, agricultural workers and other vulnerable workers, she said.
“The two bills we negotiated with the House preserve PAGA as a unique enforcement tool while updating it to improve outcomes for workers and encourage employer compliance, which is our ultimate goal,” Flocks said.
The deal follows a big year for unions, in which Newsom signed legislation to raise wages for fast-food and healthcare workers, increase the number of paid sick days and allow lower-level legislative staff to unionize.
