Code, 2699, subds. In addition to the difference between their base and regular rate of pay, these employees can bring claims for wage statement violations, unpaid wages, PAGA penalties and (for former employees) waiting time penalties. If a PAGA plaintiff employee is successful, 75% of any penalty recovered is paid to the Labor and Workforce Development Agency (LWDA), with the remainder going to the PAGA plaintiff employee or distributed among the aggrieved employees. 1 violation (non-compliant wage statement) x $100 penalty x 26 affected pay periods x 50 aggrieved employees =, 1 violation (unpaid overtime) x $100 penalty x 26 affected pay periods x 50 aggrieved employees =. Defendants often ask for a stay on formal discovery until mediation takes place. ; 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. Because PAGA actions are generally a product of a copious amount of information that has been amassed by the employees counsel prior to providing the PAGA notice, you should also use counterinvestigative strategies, such as encouraging employees to report any outside contact inquiring about working conditions, or wage and hour matters. Even though an individual cannot seek penalties, the California Labor Commissioner can take action to recover penalties in the amount of $50 for "each employee or person whose rights under this article were violated for each day or portion thereof that the violation occurred" with a cap of $4,000. Failure to pay overtime, failure to provide meal breaks and failure to provide rest breaks carry an initial PAGA penalty of $50.00, and a subsequent penalty of $100.00. 5For purposes of damages under Labor Code section 226, initial violation and subsequent violation are defined differently such that there is only one initial violation per employee. Under PAGA, the civil penalty against the company for an individual violation is $100 per worker for each pay period. SHRM Online that even hypertechnical violations may be costly for employers. Members can get help with HR questions via phone, chat or email. Additional data that will be helpful to your analysis includes: 1) the average hourly rate for non-exempt employees; 2) the average hours worked by non-exempt employees each shift; 3) the total number of shifts greater than five, but less than 10 hours; 4) the total number of shifts greater than 10 hours; and, 5) the percentage of shifts that are eight hours or longer. by the author. var currentLocation = getCookie("SHRM_Core_CurrentUser_LocationID"); (c).) You should consult a seasoned labor and employment counsel to flag potential wage and hour violations and develop a game plan prior to receiving the inevitable PAGA notice. Mr. Rhodes has successfully represented thousands of employees individually and on a class-wide basis in actions arising out of the FEHA and Labor Code. A case with a high meal-break violation rate without payment of premiums deserves a higher quantifier per workweek. A 30 day penalty is $64 x 30 days = $1,920. This formula assumes that the predicate violation occurs at least once per pay period. Code, 1197.1, subds. When California employers fail to accurately provide certain details on pay stubs, they might incur steep fines under state law. 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. Civil penalties under PAGA can be eye-popping. This will save you and/or your expert a significant amount of time when it comes to analyzing the voluminous records. (Lab. A employee may bring a PAGA claim by filing a civil lawsuit against their employer. Overturning the ruling of two lower courts, on July 15, 2021, the Court held in Ferra v.Loews Hollywood Hotel, LLC that meal and rest premiums must be paid at the "regular rate" not the base hourly rate. PAGA provides for a default penalty of $100 for initial violations and $200 for subsequent violations unless the Labor Code specifically provides for a different penalty. Second, while a court cannot reduce the amount of penalties assessed against the employer to zero, courts do have discretion to award a lesser amount than the maximum civil penalty amount if to do otherwise would result in an award that is unjust, arbitrary and oppressive, or confiscatory. (Lab. When determining the average number of violations per workweek, note that an employee can only collect one meal and one rest period penalty each shift, for a maximum of two premium payments per workday. 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). $('.container-footer').first().hide(); Keep up with the latest news and events from Hoge Fenton, https://esd.dof.ca.gov/Documents/bcp/1920/FY1920_ORG7350_BCP3230.pdf, https://www.populardemocracy.org/sites/default/files/sPAGA%20Report_WEB.pdf, https://advocacy.calchamber.com/policy/issues/private-attorneys-general-act/. Lab. This installment addresses the penalties associated with wage statement violations. Class action certification is not required, but plaintiffs must exhaust their administrative remedies by first notifying the State of the violations to give the State the opportunity to address the violations itself. Although this appears to be a low threshold, the applicable statute of limitations as to each claim should be analyzed by counsel. $1,750 + $87,500 = $89,250 in Total PAGA Penalties document.head.append(temp_style); You may be trying to access this site from a secured browser on the server. (Lab. Under PAGA, an initial violation carries a $100 penalty per employee per pay period. Finally, the Court of Appeal also decided in the same case that the hotel's rounding practice was lawful. Lab. (Lab. Where such requisite information is missing from the wage statements, you should strongly consider undertaking the cure option, as there are few viable defenses to such violations. Unfortunately, evaluating an employers exposure in a wage-and-hour class and/or PAGA action requires a fair amount of number crunching. Non-Compliant Wage Statements (e.g., non-itemized deductions) for 50 employees for one year (26 pay periods). If the defense is being difficult or resistant, remind them that class action and PAGA settlements are subject to court approval and that, without a reasonable exchange, any settlement reached might not withstand judicial scrutiny during the approval process. Please enable scripts and reload this page. But the . 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. endstream endobj startxref If putative class members have told you that employees were required to be on-call during their rest breaks, uptick the quantifier. (Lab. (Ibid.) Where such requisite information is inaccurate on the wage statements, you should weigh the cost and benefit of the cure option with your counsel. We use cookies on our site to analyze traffic, enhance your experience, and provide you with tailored content. PAGA Overview. In simpler terms, PAGA confers a private right of action to individuals to prosecute Labor Code violations. Code, 2669.3, subd. Civil penalties are assessed for violations of the Labor Code; 75% of the penalties go to the State, and 25% are paid to the aggrieved employees. The most streamlined approach to calculating class-wide damages is to multiply the total number of workweeks during the applicable damages period by a reasonable quantifier. A penalty of $100 is imposed for the first violation, per worker for each pay period and $200 per worker for each subsequent violation. It also held that the subsequent violation rate applied to calculate PAGA penalties for dates after Sept. 26, 2015. California law Cal. Fifth, paying meal period premiums under Labor Code section 226.7 does not excuse the failure to provide the meal period. For subsequent, willful, or intentional violations, the new law imposes a penalty of $200 plus 25% of the unlawfully withheld amount. The requirement for fully compliant corrected wage statements should be interpreted to mean wage statements that comply with all nine requirements set forth in Labor Code section 226(a). Wage statement violations: ($50.00 x total number of employees during the one-year period) + ($100.00 x [total number of pay periods in the one-year period total number of employees in the one-year period]). 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. 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). Failure to pay minimum wages during employment gets $100.00 for the initial penalty and $250.00 for subsequent violations. An experienced PAGA practitioner should be able to chart the best course of action and guide you through the legal terrain. The class-wide data, sampling of time and wage records, and written policies and procedures should provide most attorneys, and the mediator, with the framework needed to evaluate damages prior to reaching a reasonable settlement on behalf of the class representative and all others similarly situated and/or aggrieved. Please log in as a SHRM member. Learn how SHRM Certification can accelerate your career growth by earning a SHRM-CP or SHRM-SCP. at p. 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. (Lab. Moreover, for such claims: Taking the same example (50 employees who did not receive compliant wage statements and were not paid 30 minutes of overtime per workday who were each paid $25 per hour) and assuming these violations occurred over the course of four years, the class action liability could be $1,102,500: Combining the class damages with the stacked PAGA claims of $260,000, the potential liability exposure is now $1,362,500. The time and wage records are critical to your damages analysis. Requires that the plaintiff suffered a typical and common violation similar to the other members. It comes to analyzing the voluminous records wage Statements ( e.g., non-itemized deductions ) for 50 employees one! 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