First, although the majority of courts have held that PAGA penalties can be recovered alongside other statutory penalties (such as meal break premiums), some courts hold that a PAGA penalty cannot be recovered if another penalty is available. 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. Members may download one copy of our sample forms and templates for your personal use within your organization. The employee can also seek penalties under PAGA for Labor Code violations that do not carry their own penalties. 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. 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. Defendants often ask for a stay on formal discovery until mediation takes place. If you are given anything other than the actual paystubs employees received each pay period, such as yearly or monthly pay summaries, ask the defense for exemplars of every type of wage statement that was issued during the penalty period so that you can determine what, if anything, was missing from the actual wage statements in violation of Labor Code section 226, subdivision (a). What Are PAGA Penalties? 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. In a straight wage-and-hour class action, the damages period is three years prior to the filing of the lawsuit to the present. ; 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. of PAGA penalties and a trial court's consideration regarding same. The class damages for unpaid overtime would be 26,000 x $37.50 = $975,000. 50 employees x 26 pay periods = 1,300 violations. 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. For Labor Code provisions that do not specify the penalty amount, PAGA provides default civil penalties at $100 for every employee for every pay period for the first violation, and $200 for each violation thereafter (though case law may provide an argument that PAGA penalties are limited to violations that occur after the PAGA notice). Code, 1194.) Although you are not required to file a response addressing the charges in the PAGA notice, standard practice for many counsel is to file a written response with the LWDA. Mr. Rhodes completed his fellowship with the Los Angeles Chapter of the American Board of Trial Advocates, and he graduated magna cum laude from Southwestern Law School. else if(currentUrl.indexOf("/about-shrm/pages/shrm-mena.aspx") > -1) {
(e).) 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. The employer has 33 days from the date of the letter to make pay stub corrections. (Lab. 2021 Hoge Fenton, Silicon Valley 408-947-2435 | Download v-card, Silicon Valley 408-947-2434 | Download v-card, 411 Borel Avenue, Suite 310
There are time limits to cure discreet Labor Code violations, more fully discussed below. California's Private Attorney General Act of 2004-or PAGA-gives private citizens the ability to pursue penalties against employers for violations of the California Labor Code.In cases in which plaintiffs successfully bring PAGA claims, 75% of these penalties go . There are many free resources online to help you yield a truly random and statistically significant class size, including calculators that determine acceptable deviations, margins of error, and other statistical factors. Code, 3289.) The amount in controversy was often easy to establish, as PAGA penalties mount rapidly: $100 per employee per pay period, even if one counts only the 25% of the penalties that go to the employees (75% go to the State of California). The penalties under California law can add up quickly. The Labor Code may or may not provide a specific civil penalty for the violation. For cases that require deeper investigation, consider producing your client for deposition and/or taking the deposition of the defendants person(s) most knowledgeable regarding its wage-and-hour policies, practices, and procedures. (See Mamika v. Barca (1998) 68 Cal.App.4th 487, 492 [Penalties accrue not only on the days that the employee might have worked, but also on non-workdays.]. The plaintiff in Ferra v. Loews . (Lab. This installment addresses the penalties associated with wage statement violations. PAGA Penalties and Labor Code 226 Claims. Code, 226.7, subd. Remember, 75% of PAGA penalties, which are all up to . When the economy is unstable, employers are faced with difficult decisions around staffing, pay and benefits. Calculating PAGA penalties. PAGA Law. The second part of PAGA imposes a monetary penalty for every violation an employer commits, including violations committed against other employees. Lab. Under PAGA, an initial violation carries a $100 penalty per employee per pay period. (Ibid.) 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. 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. (Code Civ. Moreover, in calculating PAGA penalties, Dr. Kriegler did not make the same mistake as discussed above regarding the statute of limitations date for the PAGA penalties. 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 San Mateo, CA, 94402-3535, 55 South Market St., Suite 900
PAGA Penalties. Because separate penalties may be assessed for each Labor Code violation in the same pay period for the same underlying violation, the PAGA penalty exposure for the client can grow exponentially. Thus, two late payments of wages totaling $2,000 will result in a penalty of $800 ($100 for the first violation plus $200 for the subsequent violation + $500 [$2,000 x .25]). Id.Id. . [SHRM members-only toolkit:Complying with California Wage Payment and Hours of Work Laws]. PAGAprovides civil penaltiesfor violationsof the Labor Code. Under AB 673, these penalties are . This trend reflects the realities of litigation, in that the parties, after 2.5 years of formal litigation, are likely to have invested significant time and money into the case, and are thereby less willing to compromise their position for settlement. 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. The Court justified its decision by illustrating there . hbbd``b`j@1` ,DF-HO L[@+ N
Accordingly, each predicate violation is entitled to its own PAGA penalty calculation. The employee must give 75% of the collected penalties to the Labor and Workforce Development Agency, and the remaining 25% is to be distributed among the employees affected by the violations. While reviewing the timesheets, ask yourself if the records evince other unlawful wage-and-hour practices. The Private Attorneys General Act (PAGA) allows aggrieved employees to bring claims on behalf of themselves, other employees, and the State of California. Defending against PAGA claims, class action lawsuits, or other legal action, Managing challenging employee situations such as leaves of absence, a remote workforce, or complaints of harassment, Other legal issues related to hiring, compensating, managing, and separating employees. First, the PAGA provides two tiers of civil penalties an amount for an initial violation and an amount for a subsequent violation. Special considerations regarding PAGA penalties. You have successfully saved this page as a bookmark. Code 2699.3(a)(1)(A)). 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. 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. (Lab. $100/ penalty for subsequent violations x 35/aggrieved former and current employees x 25/subsequent pay periods = $87,500. Cal. Copyright Send a letter to the defense outlining the documents, data and/or additional materials you need as soon as the mediation discussion begins. Talk to your client to find out everything he or she recalls about the workplace conditions and to assess which Labor Code violations were most prevalent. (Lab. 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