Private Attorneys General Act (PAGA) claims in California have shot up 34.5% from 2022 to 2023, reaching a record 7,826 PAGA notices last year, according to a new tally of both PAGA and class-action filings by the Ogletree Deakins law firm.
PAGA, which was passed during the state Legislature's 2003 session, allows employees to file lawsuits against their employers over state labor law violations, provided workers notify the state of the alleged violations, with the state declining to investigate.
Business groups have complained that private attorneys are reaping excessive damages awards in these cases at the expense of employees. The growing number of these cases in the wake of the COVID-19 pandemic are concerning for California employers, according to Ogletree Deakins, due to rising risks of expensive litigation.
“Particularly, PAGA enables one disgruntled employee to bring claims on behalf of all employees at the business often for technical violations of California’s extensively detailed labor code,” which governs issues such as break and meal times, the law firm’s study states.
Michael Nader, co-chair of Ogletree Deakins’ California Class Action and PAGA Practice Group and one of the study's authors, said the majority of PAGA filings are filed in Southern California.
“Of the 5,117 employment class actions filed in California in 2023, 3,089 (60%) were filed in Southern California,” including 1,323 filings in the Los Angeles area, Nader told Southern California Record in an email. “... Because PAGA notice filings usually accompany class-action filings, this data indicates that a majority of PAGA notices are filed in Southern California.”
In both 2022 and 2023, the share of PAGA notices filed by the top 20 plaintiffs’ firms was 38% (2,210 out of 5,817 in 2022 vs. 2,946 out of 7,826 in 2023), he said.
“So even though there has been an increase in PAGA notice filings, a substantial percentage continue to be filed by a relatively small group of firms,” Nader said. “... Also worth noting, the top 20 plaintiffs’ firms from 2022 only account for 2,028 of the PAGA notice filings in 2023 (25%) – indicating a slight changing of the guard as far as the top 20 firms in 2023.”
The report identifies several possible reasons for the spike in PAGA filings last year.
“First, the Supreme Court of California has issued several decisions in recent years favorable to employee plaintiffs, opening the door for more claims against employers,” the report states.
Specifically, the state’s high court last year held that PAGA plaintiffs can pursue such claims even when an individual worker is compelled to use arbitration, according to Ogletree Deakins.
From the employers’ perspective, one hopeful sign of reform is the California Employee Civil Action Law Initiative, a ballot measure ballot measure that will go before voters in November. That measure would repeal PAGA, require the state Division of Labor Standards Enforcement to be a party in all labor-law complaints and require that all monetary penalties obtained be awarded to employees who were harmed by violations – and not private attorneys.
The latest data tallied by Ogletree Deakins could help supporters of the initiative, according to Nader.
“If advocates for PAGA reform assert that a higher rate of PAGA litigation impairs economic development and job creation in California, then this data could potentially support advocates of PAGA reform,” he said.
PAGA settlements over the last six years have cost California employers $8 billion, according to an article authored last year by the president and CEO of the California Chamber of Commerce, Jennifer Barrera. Employees rarely see any of that money due to the share taken by attorneys, according to Barrera.