Authored by Simon L. Yang
California employers had reason to celebrate over the weekend, as Governor Jerry Brown signed legislation to curb frivolous “PAGA” lawsuits alleging noncompliance with itemized wage statement requirements in California Labor Code section 226(a). Unlike when they woke up last Friday, employers now have a means to avoid PAGA lawsuits alleging that wage statements lacked either the inclusive dates of pay periods or the employer’s legal name and address.
PAGA—a four-letter word familiar to California employers that is short for California’s Labor Code Private Attorneys General Act—permits any aggrieved employee to sue on a representative basis to recover penalties that could be assessed by the state labor commissioner. While PAGA raises numerous problematic issues requiring legislative attention, Assembly Bill 1506 at least addresses two wage statement violations used by plaintiff’s attorneys as the basis for a current PAGA action du jour.
While wage statement claims previously had been tagalong claims to other wage and hour allegations, California employers and courts have been flooded with PAGA lawsuits alleging only that employees received wage statements that lacked either the inclusive dates of pay periods or the employer’s legal name and address. The uptick in the number of these lawsuits is not surprising, since plaintiff’s attorneys—ever vigilant for arguments to obtain PAGA penalties—focused their attention on California’s itemized wage statement provisions following a January 1, 2013 amendment to section 226. While we’ve previously suggested the amendment didn’t change the law and that the plain text of PAGA does not even authorize separate PAGA penalties for Labor Code section 226(a) violations (apart from preexisting penalties in California Labor Code section 226(e)), PAGA lawsuits alleging wage statement violations only are increasingly common.
Prior to the amendment, once an employee provided notice of these wage statement issues, employers had no means to avoid a PAGA action. And the reality is that many employers—rather than endure lengthy litigation and incur legal fees—felt forced to settle these lawsuits. Now, the Governor’s signature on Assembly Bill 1506, which was deemed an urgency bill and immediately amends PAGA, provides employers a 33-day window to cure these wage statement issues and preclude a PAGA lawsuit. To do so, an employer must provide fully compliant itemized wage statements to all allegedly aggrieved employees for the three years preceding notification of the PAGA claim.
While it makes little sense to require an employer to provide three years of wage statements (since the statute of limitations for PAGA penalties is one year), a burdensome way out (even if impracticable) must be better than no way out? California employers will take it—especially since the California legislature hasn’t generally provided employers a cure for any of the other sick aspects of PAGA.