With voters set to decide whether to repeal and replace PAGA in the November 2024 election, Governor Newsom has been quietly working with legislative leadership, the California Chamber of Commerce, and labor groups to try to hammer out a compromise that would eliminate the need for the ballot measure. On Tuesday, the Governor’s office issued a press release announcing that a deal had been reached. The negotiated agreement will be written up as a bill and must be approved by the legislature and signed before it can take effect. The proposed bill must be published by Monday, June 24 if lawmakers are going to vote on it prior to a June 27 deadline to remove the PAGA repeal initiative from the November ballot.

Although all parties involved have lauded the agreement, its exact terms have not been publicized and the summaries show that some unfortunate provisions remain – like the private right of action – and other possible relief apparently was left on the table or not considered. Current announcements from the Governor’s office are too vague to predict just how meaningful this reform will be.

What We Know So Far

Should the measure pass the legislature, individual employees and their attorneys will still have a private right of action to assert claims against employers. In addition, courts will now be able to award injunctive relief mandating that the employer fix violations.

The ability to cure violations will be expanded, and penalties will be capped for employers who act quickly to cure. And, the agreement would codify the “manageability” requirement, one of the only ways a court could limit a PAGA claim until the California Supreme Court eliminated it in Estrada v. Royalty Carpet Mills, Inc. earlier this year. The agreement would also restore the requirement that a representative plaintiff must have experienced the violations alleged in the lawsuit, a basic standing requirement that California courts had also recently eliminated.

There does not seem to be any relief for employers on getting a more stringent pleading requirement.

Impact on Pending Litigation

Naturally, employers currently involved in PAGA litigation are eager to know if the reform measure will impact the suits against them that have already been filed. Unfortunately, the answer is likely not. Typically, new laws are not made retroactive, and so far there is no indication that this one will be an exception, especially given the myriad of issues such retroactivity would raise.

We will post again with an analysis of the new legislation when the proposed bill is published.