Are the policies bareboned or do they fail to adequately inform employees of their rights and/or the employers obligations? PAGA Law. Accordingly, each predicate violation is entitled to its own PAGA penalty calculation. And none of the employee's recovery has to be shared with the state. Code, 2698 et seq. There are 17 such orders that are also known as IWC Orders, or Wage Orders. (Ibid.) PAGA allows aggrieved employees to sue over alleged labor code violations on behalf of themselves and other employees and to step into the shoes of state regulators to recover civil penalties. The formula used to calculate PAGA penalties is therefore the same regardless of the predicate violation: (Initial violation penalty x total number of employees in the one-year period) + (subsequent violation penalty x [total number of pay periods in the one-year period total number of employees in the one-year period]). SHRM Online that even hypertechnical violations may be costly for employers. 2 PAGA fines can be significant. While reviewing the timesheets, ask yourself if the records evince other unlawful wage-and-hour practices. If the defendant raises any privacy concerns with respect to the time and wage records, offer to stipulate to a protective order or suggest substituting any identifying information, like names and social security numbers, with generically assigned employee numbers. He can be reached at arhodes@spattorneys.com. hUN0K$KxH!Z"-Y Llc[>3`3%<3IkS1id|_7*an1MjF/gZ9fZ"BWWtk|se[&ISIi8FV}'lhY_ Euu8]o0hyylpt[oM<15Otg?~}h( 2) Determine the appropriate penalty (see below). (Lab. 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. (Ibid.) Calculation of PAGA penalties is based on each employee and each Labor Code violation on a per-pay-period basis. What Are PAGA Penalties? 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. (Lab. Moreover, for such claims: Taking the same example (50 employees who did not receive compliant wage statements and were not paid 30 minutes of overtime per workday who were each paid $25 per hour) and assuming these violations occurred over the course of four years, the class action liability could be $1,102,500: Combining the class damages with the stacked PAGA claims of $260,000, the potential liability exposure is now $1,362,500. Posted in Civil rights in the workplace, Employee Rights, Employment Law on April 14, 2014. This information is readily available for most employers, and the defense should provide the requested data without objection or hesitation in any class or representative action that is headed to mediation. Wage and Hour Class Actions vs. PAGA Lawsuits. Code, 1194.) For more information, contact the author at SLee@fisherphillips.com or (213) 402-9553. This is a big procedural hurdle for plaintiffs to overcome. (f)(2).) $(document).ready(function () { Proc., 338.) Second, while a court cannot reduce the amount of penalties assessed against the employer to zero, courts do have discretion to award a lesser amount than the maximum civil penalty amount if to do otherwise would result in an award that is unjust, arbitrary and oppressive, or confiscatory. (Lab. Your call to action is often triggered before you even receive a PAGA notice. Cal. Under PAGA, the penalty for an initial violation is $100 per pay period, while the penalty for a subsequent penalty doubles to $200 per pay period. First, the PAGA provides two tiers of civil penalties an amount for an initial violation and an amount for a subsequent violation. Further, these fines reoccur per employee per pay period. For example, if an employer didn't provide a worker with a meal break, the employer would have to pay a penalty to the employee for the missed break and would also face a fine for failing to report the meal-break penalty on the pay stub. Civil penalties are assessed for violations of the Labor Code; 75% of the penalties go to the State, and 25% are paid to the aggrieved employees. 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. On Friday, Michael Gray of Jones Day painstakingly questioned David Breshears about how he came to that conclusion, asking him about differences between his deposition testimony and earlier reports, and questioning if any court had ever actually confirmed that his method of calculating PAGA penalties was valid. Speak with your client and/or other putative class members to discover any significant off-the-clock work that was being performed, such as bag checks, preparation of work areas, gathering tools, customer service, clean up, attending training seminars or work meetings, travel time and commuting, or donning and doffing personal protective equipment. Cal. 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. This means $100 for a first offense and $200 for any subsequent violation on the same infraction. 1 Over the last 15 years, more than 35,000 PAGA notices have been sent to employers. First, review the time records for meal-break violations, i.e., short, late, or missed meal breaks, and compare them with the corresponding wage statements for payment of meal-break premiums. Code 2698, et seq. 50 0 obj <>stream 37 0 obj <> endobj (e)(2). If the employer pays the employee late (a first violation), the employee can recover $400 ($100 penalty plus 25 percent of $1,200, or $300). Accordingly, each predicate . The penalties under California law can add up quickly. Waiting time penalties: (Total number of employees who were terminated or quit during the three-year period) x (30 x average hourly rate x average number of hours worked per work day). Wage statement violations arguably are calculated at a rate of $250.00 for the initial violation, and $1,000.00 for every subsequent violation thereafter! 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. The penalty period for actions brought under the Private Attorneys General Act of 2004 (PAGA) is one year prior to the date of filing, plus 65 days for the PAGA notice period. Id.Id. Several issues on the calculation of penalties remain unresolved. Regardless of the sample size, going through the records will be time consuming and costly. Have you ever paid a meal or rest period premium. Interest!? . 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. Your session has expired. SHRM offers thousands of tools, templates and other exclusive member benefits, including compliance updates, sample policies, HR expert advice, education discounts, a growing online member community and much more. %%EOF This was the third in a three-part series of articles on California wage statement laws. (Code Civ. This penalty is in addition to any statutory penalties that may be assessed. Code, 1194.) Several bills to further reform PAGA are currently making their way through the state legislature, Sarchet noted. (Belaire-West Landscape, Inc. v. Superior Court (2007) 149 Cal.App.4th 554.). $("span.current-site").html("SHRM MENA "); $100/ penalty for subsequent violations x 35/aggrieved former and current employees x 25/subsequent pay periods = $87,500. var temp_style = document.createElement('style'); 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. . Worse, the Labor Code doesn't need to cover a penalty stipulation, PAGA places fines on anything not covered. A Congressional committee has approved maximum penalties of $70,000 for serious items and $700,000 for repeated, willful, and failure-to-abate items for violations of Occupational Safety and Health Administration (OSHA) standards. PAGAprovides civil penaltiesfor violationsof the Labor Code. (Lab. They contain evidence of unpaid wages, unpaid premiums, meal and rest break violations, and unlawful timekeeping practices, such as rounding or auto-deductions, among other things. 1) Determine the number of Labor Code violations within the statutory period. 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. ; PAGA),1 which sought civil penalties on behalf of herself and other "aggrieved employees" for Labor Code violations.2 In this appeal, we are 1 Undesignated statutory references are to the Labor Code. Are the shifts or lunch breaks rounded or exactly eight hours or 30 minutes, respectively? 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 Court's opinion can be found here. 2.PAGA cases are representative claims, which are different than class actions. Meal Break and Rest Break. In this case, the penalty calculation could be: As evidenced by this example, PAGA penalties can quickly accumulate. In most cases, the employees counsel will send you a request for the employees personnel file long before any notice is filed with the LWDA. Note that the California Supreme Court recently held that the de minimis defense is not applicable to off-the-clock wage-and-hour claims. 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. Additional factors in assessing the quantifier include the likelihood of success on class certification and the outcome of any depositions taken prior to mediation. Wage statement violations: ($50.00 x total number of employees during the one-year period) + ($100.00 x [total number of pay periods in the one-year period total number of employees in the one-year period]). 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. In this case, the penalty calculation could be: 1 violation (non-compliant wage statement) x $100 penalty x 26 affected pay periods x 50 aggrieved employees = $130,000 1 violation (unpaid overtime) x $100 penalty x 26 affected pay periods x 50 aggrieved employees = $130,000 Total: $130,000 + $130,000 = $260,000 43.) One employee can bring a class action on behalf of other employees. ), Third, there is some uncertainty as to whether multiple predicate violations, and the penalties related thereto, can be stacked each period or if only one penalty can be assessed each pay period regardless of how many predicate violations occurred during that same pay period. Lab. at p. If the wage statement violations have been cured, the law bars the employee from bringing a civil action pursuant to Section 2699 against you. 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. The district court then ruled against Walmart on the three claims and awarded Magadia and the two remaining classes over $100 million in damages and penalties. Weve Received A PAGA Notice Now What?An Employers 10-Step Guide, the absence of class certification requirements, a series of statutes codified in Sections 2698 through 2699.6 of the California Labor Code, is limited to one year before the date of filing of the PAGA lawsuit. The employer's allegedly unlawful practice had ended on June 17, 2007, and hence the one-year statute of limitations for the PAGA claim lapsed on June 17, 2008. On top of all that, one employee can sue on the behalf of others. An experienced PAGA practitioner should be able to chart the best course of action and guide you through the legal terrain. Mr. Rhodes has successfully represented thousands of employees individually and on a class-wide basis in actions arising out of the FEHA and Labor Code. Luckily, there is a 10-step process you can take if you receive such a notice to put your organization in the best possible position. Members may download one copy of our sample forms and templates for your personal use within your organization. This will save you and/or your expert a significant amount of time when it comes to analyzing the voluminous records. PAGA penalties are assessed per pay period for each violation of any code section enumerated in Labor Code section 2699.5. 2021 Hoge Fenton, Silicon Valley 408-947-2435 | Download v-card, Silicon Valley 408-947-2434 | Download v-card, 411 Borel Avenue, Suite 310 The foundational data needed to evaluate damages or penalties in any class or representative action consists of the class size, workweeks, and pay periods during the applicable damages period. (Troester v. Starbucks Corp. (2018) 5 Cal.5th 829, 835.). Build specialized knowledge and expand your influence by earning a SHRM Specialty Credential. 2 Under PAGA, "an 'aggrieved employee' may bring a civil action personally and on 3. PAGA incentivizes this type of lawsuit by authorizing the aggrieved employee to keep 25 percent of any civil penalties collected, while 75 percent goes to the state (Cal. A different approach to evaluating damages is to create damages models based on your assessment of the minimum and maximum exposure for each Labor Code violation. (Lab. Under PAGA, an initial violation carries a $100 penalty per employee per pay period. An experienced attorney will help you calculate all of the . But that would be effective January 2021 in all likelihood, as the current session is over. You must also give nonexempt employees an opportunity to take a 10-minute . If you receive correspondence from a court or other enforcement authority indicating potential Labor Code violations, please consult with legal counsel to discuss its implications and next steps. When the economy is unstable, employers are faced with difficult decisions around staffing, pay and benefits. Many defendants interpret the Amaral decision narrowly to stand for the position that subsequent violations do not trigger until a court or the Labor Commissioner gives notice of the violation to the employer. If the defense does not provide you with the average hourly rate, you can determine that figure by adding all the hourly rates provided in the sampling and dividing that figure by the total number of employees included. San Mateo, CA, 94402-3535, 55 South Market St., Suite 900 Code, 3289.) Some of the common predicate violations subject to the default PAGA penalty include failure to provide meal and/or rest break premiums, failure to pay all wages owed during employment and failure to reimburse necessary business expenses. Give yourself enough time to work out an agreement regarding the scope of the exchange and set reasonable production deadlines so that youre not stuck sifting through thousands of pages of time and wage records at the eleventh hour. PAGA Penalties. 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. Depending on the type and extent of the wage and hour violations, some claims should be litigated, while others are better left tabled. "Employers should understand that the penalties for wage statement violations can be very high," he noted. Given the complexities of the Labor Code and the Industrial Welfare Commission Wage Orders, you should contact your employment legal counsel for guidance on how they apply to your business. The Labor Code Private Attorneys General Act (PAGA) authorizes aggrieved employees to file lawsuits to recover civil penalties on behalf of themselves, other employees, and the State of California for Labor Code violations.Those who intend to pursue PAGA cases must follow the requirements specified in Labor Code Sections 2698 - 2699.5. Unpaid overtime: Total workweeks over the four-year period x average hours of unpaid overtime per week x average overtime premium rate. Example: If the employee is paid minimum wage ($8/hour as of 2008) and works 8 hours per day, the daily penalty is $8 x 8 hours = $64. When California employers fail to accurately provide certain details on pay stubs, they might incur steep fines under state law. Dubbed the bounty hunter law, PAGA, or the Labor Code Private Attorneys General Act of 2004, is actually a series of statutes codified in Sections 2698 through 2699.6 of the California Labor Code that authorizes aggrieved employees to file lawsuits to recover civil penalties on behalf of themselves, other employees, and the State of California for Labor Code violations. The employee suing under PAGA acts as the proxy or agent of Californias labor law enforcement agency, the Labor and Workforce Development Agency (LWDA), in policing Labor Code violations. You have 33 days from the postmark date of the notice to complete the cure. 2010) 2010 WL 1838726 at **2-6. (l)(2).). Virtual & Washington, DC | February 26-28, 2023. 3The statute of limitations for PAGA penalties goes back one year from the date of the notice to the LWDA, but PAGA penalties continue to accrue, so they could exceed a one-year period. 2023 Fisher & Phillips LLP. 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 Penalties for Missed Meal and Rest Breaks California law requires employers to give employees a paid ten-minute rest break for every four hours worked (or major fraction of four hours). Please purchase a SHRM membership before saving bookmarks. Another wrinkle in the law is that penalties are assessed per paycheck, Sarchet explained. Cal. You can also demand a Belaire-West administration, which will give you access to putative class members who may provide supporting declarations prior to mediation. The second part of PAGA imposes a monetary penalty for every violation an employer commits, including violations committed against other employees. 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. A case with a high meal-break violation rate without payment of premiums deserves a higher quantifier per workweek. This formula assumes that the predicate violation occurs at least once per pay period. One employee can bring a PAGA claim on behalf of other aggrieved employees. Therefore, until an employer has such notice, in our example, each pay period with a non-compliant wage statement would be an initial violation. What constitutes sufficient notice triggering the heightened penalties is not clearly defined. (Kirby v. Immoos Fire Protection, Inc. (2012) 53 Cal.4th 1244, 1256.) The statute of limitations is based on the date of the violation. Class damages reasonable quantification per workweek. Keep up with the latest news and events from Hoge Fenton, https://esd.dof.ca.gov/Documents/bcp/1920/FY1920_ORG7350_BCP3230.pdf, https://www.populardemocracy.org/sites/default/files/sPAGA%20Report_WEB.pdf, https://advocacy.calchamber.com/policy/issues/private-attorneys-general-act/. What do the two, other than a shared moniker, have in common? For example, in a PAGA action for unpaid wages under Labor Code section 558, an aggrieved employee is able to recover civil penalties, but not able to recover unpaid wages. Remember, 75% of PAGA penalties, which are all up to . (United Parcel Service, Inc. v. Superior Court (2011) 196 Cal.App.4th 57, 69.). One copy of our sample forms and templates for your personal use your! Rights and/or the employers obligations Protection, Inc. ( 2012 ) 53 Cal.4th 1244, 1256. ),.. 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