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Legislature Approves Bills Reforming PAGA System

Negotiations Improve Process for Workers, Employers

sacramento capitalMonths of negotiations between a coalition of business partners, labor and legislative leaders, convened by the Governor’s office, culminated this week in the passage of legislation to reform the lawsuit-first Private Attorneys General Act (PAGA) system.

California Chamber of Commerce-supported SB 92 (Umberg; D-Santa Ana) and AB 2288 (Kalra; D-San Jose) passed the floors of both houses on June 27.

“We are grateful to Assembly Speaker Rivas, Senate President Pro Tempore McGuire and the Legislature for passing this reform package in an expeditious manner, providing immediate relief for employers,” said CalChamber President and CEO Jennifer Barrera. “Today is a historic day where we recognize an important step forward to curtail lawsuit abuse under PAGA that was hurting California businesses, our workers and our economy.”

She added, “The measures passed today return common sense to the process, will improve California’s business climate and ensure workers have robust labor law enforcement against the bad actors.”

The bills now move to the Governor’s desk for signature. Governor Gavin Newsom helped facilitate negotiations on PAGA reform.

Both bills passed the policy committees on June 25. The same day, Governor Newsom touched on the issue during his State of the State video address, noting PAGA reform was a thorny subject that had eluded compromise for decades.

“…California is enacting rational reforms and important labor protections, while sensibly managing reasonable concerns from small businesses,” he said.

Committee Testimony

In concluding remarks before the SB 92 vote in the Assembly Judiciary Committee on June 25, Senator Tom Umberg thanked the California Chamber of Commerce and the California Labor Federation for their collaboration in the reform proposal.

“[SB 92] is a monument to how we can get things done when we spend time collaborating and negotiating,” the state Senator said. “I do think this is a great improvement for employees, as well as employers and I’m, of course, proud to have my name on it.”

Watch video of Senator Umberg’s closing remarks.

Testifying before the Senate Judiciary Committee for the AB 2288 hearing, CalChamber Senior Policy Advocate Ashley Hoffman reiterated the need for PAGA reform, explaining that due to the way that PAGA is structured, many small businesses and nonprofits end up paying millions of dollars in penalties that they simply cannot afford.

“What was once a well-intentioned law has unfortunately been manipulated by certain trial attorneys at the expense of workers, businesses and nonprofits who serve our most vulnerable Californians,” she said. “What’s in this bill…represents historic reforms…that address employers’ concerns, but also ensure that California workers can feel confident that there is robust labor law enforcement against the bad actors.”

Watch video of Hoffman’s testimony.

The PAGA reform package was negotiated between business, labor, and legislative leadership. Together, SB 92 and AB 2288 bring long overdue reform to PAGA, a law that was intended to bolster labor law enforcement, but has been manipulated over its 20-year history by certain trial attorneys as a money-making scheme.

This reform package will ensure that workers are having claims resolved more quickly and that businesses and non-profits which comply with the law are not penalized. Employers will now have the means to better defend PAGA claims.

Staff Contact: Ashley Hoffman

Ashley Hoffman

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