©2024 Seyfarth Shaw LLP www.seyfarth.com 2024 Cal-Peculiarities | 121 gives notice that it does not intend to investigate or the LWDA does not act with 65 days, then the employee may file a PAGA action.427 For a few specified violations, the employer has an opportunity to cure the violation within a limited time after the employee’s notice.428 A PAGA claim is deficient if the notice to the LWDA and the employer failed to provide sufficient “facts and theories” for the alleged Labor Code violation.429 The Court of Appeal thus held that a PAGA plaintiff who complains of untimely payment of termination wages on behalf of all aggrieved employees cannot proceed if the LWDA notice refers only to the plaintiff’s own situation.430 A 2020 Court of Appeal decision, however, reasoned that the “facts and theories” alleged in an LWDA letter “need not ‘satisfy a particular threshold of weightiness,’” and held that a PAGA plaintiff had adequately exhausted administrative remedies by alleging in his LWDA letter that the employer had knowingly permitted employees to work off the clock, had unlawfully rounded work time, had automatically deducted 30 minutes of pay for meal periods not taken, and had manipulated time to avoid overtime wages.431 Courts have further diminished the significance of PAGA exhaustion requirements by holding that plaintiffs may pursue certain penalties without first contacting the DLSE. These are “statutory penalties” — those that employees could collect directly, pre-PAGA (e.g., waiting-time penalties). These courts would apply the exhaustion requirement only as to “civil penalties,” defined as those penalties that only the Labor Commissioner can collect absent a PAGA action. Courts thus have held that while employees must exhaust LWDA remedies as to any claim for “civil penalties,” employees need not contact the LWDA before suing for “statutory penalties.”432 Of some concern with respect to the exhaustion requirement was a 2008 Court of Appeal decision holding that PAGA claims added in an amended complaint relate back to the original complaint, if the claims rest on the same misconduct and the same injury.433 But this decision failed to address the exhaustion requirement, and courts since have recognized that the failure to properly notify the LWDA and the employer is fatal to a PAGA claim.434 Judicial discretion to reduce penalties. Courts may exercise discretion to reduce the amount of PAGA penalties if the amount otherwise would be “unjust, arbitrary and oppressive, or confiscatory.”435 In exercising that discretion, courts have considered such factors as the corresponding amount of statutory penalties, the employer’s attempts to comply with the law, the uncertainty of the law, and the employer’s ability to pay.436 Court approval of settlements. The court must “review and approve any settlement” of a PAGA action, regardless of whether the settlement includes an award of penalties.437 Further, a copy of a proposed settlement must be provided to the LWDA when it is submitted to the court.438 Courts have approved PAGA settlements involving payments to the LWDA of less than 0.1% of a common settlement fund.439 But one federal district court rejected a $100 million class action settlement because it allocated only 1%—$1,000,000—to PAGA penalties.440 Exemption for notice, posting, and filing violations. Employees cannot maintain PAGA lawsuits for petty violations such as failures to post notices or file notices, although this exemption does not cover “mandatory payroll or workplace injury reporting.”441 Repeal of job-application provision. Employers no longer must (as was once required by former Labor Code section 431) file a copy of their job application forms with the DLSE. The Legislature thus removed the basis for what would be a particularly annoying “gotcha” PAGA lawsuit. Exemption for unionized construction employers. Legislation effective in 2019 created a PAGA exemption for construction employers whose employees are covered by a collective bargaining agreement.442 Exemption for some unionized janitorial employers. Legislation effective in 2022 created a PAGA exemption for some janitorial employers whose employees are covered by a collective bargaining agreement.443
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