The Private Attorneys General Act (PAGA), enacted in California over a decade ago, was designed to empower employees to act as “private attorneys general” by suing employers on behalf of the state for alleged Labor Code violations. While intended to bolster worker protections, PAGA evolved into a litigation powerhouse, often criticized for spawning a flood of expansive, costly lawsuits that burdened businesses with unpredictable penalties and discovery demands, sometimes reaching into the millions for minor infractions.

In a pivotal shift, California lawmakers passed comprehensive PAGA reforms in 2024, which took effect about 18 months ago. These changes were no small tweak; they fundamentally recalibrated the scales of justice. Key provisions include:

– – A Strict One-Year Limitations Period: Plaintiffs must now prove they personally suffered violations within the year leading up to filing, curbing the “ancient history” claims that once ballooned cases.
– – Judicial Tools for Manageability: Courts gained explicit authority to narrow claim scopes, limit evidence, and dismiss unwieldy allegations, preventing trials from devolving into fishing expeditions.
– – Penalty Reallocations and Standing Rules: Penalties are now split more equitably – 35% to aggrieved employees (up from 25%) and 65% to the state – while stricter standing requirements weed out opportunistic suits.

These reforms were a direct response to years of advocacy from business groups like the California Chamber of Commerce (CalChamber), who argued that the old system was “broken” and disproportionately harmed employers without meaningfully aiding workers.

How are they working? A new statement just posted by the CalChamber does not mince words on the broader ripple effects: Litigation volumes are down, compliance is up, and the entire ecosystem is healthier. They quote recent employer defense industry reports as evidence that these reforms are “confirming the positive impact on the system for both parties,” with early data suggesting a 20-30% reduction in filed PAGA actions since implementation.

For employers, it’s a breath of fresh air – less fear of rogue suits, more room to innovate and hire. For California, it’s proof that targeted tweaks can restore sanity to a system teetering on the edge.

Key early successes reported by the employer defense industry:

– – Employers Doubling Down on Compliance Efforts. Employers have ramped up their compliance efforts, conducting audits more frequently while training managers and updating policies proactively.
– – Narrower Standing Reduces Frivolous Lawsuits. Employers and defense lawyers report they are now routinely knocking out claims early by proving the plaintiff didn’t experience certain violations, dramatically shrinking exposure. Claims are resolved faster and for less money because legal disputes are narrower and more manageable.
– – More Money & Faster Resolution for Employees. PAGA reforms increased the employee share of penalties from 25% to 35%, with the state receiving 65%. The early resolution process through the state’s Labor and Workforce Development Agency (LWDA) also limits the need for extended and costly litigation.
– – Reduced Penalties for Employers. Reduced penalties now balance fairness with enforcement. Defense firms report significantly reduced penalties on employers because of the PAGA reforms.
– – One-Year Limitations Period. PAGA reforms clarified standing law that a plaintiff must have experienced a violation within the past year to bring a claim.
– – Ability to Limit the Scope of Claims and Evidence to Ensure Manageability. Courts now have explicit authority to limit the evidence to be presented at trial or otherwise limit the scope of a PAGA claim to ensure cases remain manageable for trial.