PAGA Reform

Private Attorneys General Act

S.B. 92 and A.B. 2288 were ​signed into law by Gov. Gavin ​Newsom (D) on July 1, 2024.

During the 2024 legislative session, state ​lawmakers and California Gov. Newsom worked ​together on reform legislation to amend the ​state’s Private Attorneys General Act, which ​deputizes private parties to enforce the state’s ​labor code on behalf of the state. Both bills were ​passed unanimously by the full legislature.

The PAGA reforms represent a positive step ​toward balancing the interests of employees and ​employers in California. Key changes include:

Increased Employee Share of Penalties:

• Employees will now receive 35% of any penalties awarded, up from 25%. This change aims to ensure ​that workers benefit more directly from successful claims.
  

Stricter Requirements for Filing Claims:

• Employees must have personally experienced the alleged violations to file a claim.
  
• Claims must be based on violations that occurred within the last year, reducing the potential for ​outdated or speculative claims.
  

Limits on Penalties for Proactive Employers:

• Employers who take steps to comply with the Labor Code before receiving a notice will face a maximum ​penalty of 15% of the applicable amount.
  
• Employers who correct issues after receiving a PAGA notice will face a maximum penalty of 30%.
  
• These limits incentivize employers to proactively address and rectify issues, potentially reducing ​litigation and fostering a more compliant workplace environment.
  

Leveling the Playing Field:

• The reform ensures that penalties are adjusted for employers who pay weekly, preventing them from ​being unfairly penalized at twice the amount due to the frequency of pay periods.
  
• This adjustment helps create a fairer system and prevents disproportionate penalties for certain ​payment practices.
  

Expanded Employer Right to Cure:

• More Labor Code sections can now be cured, allowing employers to quickly address and rectify issues, ​thus making employees whole faster.
  
• Small employers benefit from a more robust right to cure process through the state labor department, ​reducing litigation and associated costs.
  
• Larger employers have opportunities for early resolution in court, promoting quicker settlements and ​reducing prolonged legal battles.
  

Judicial Discretion and Injunctive Relief:

• Judicial Discretion: Courts can now limit the scope of claims and the evidence presented at trial, which ​helps manage cases more effectively and prevents them from becoming overly burdensome.
  
• Injunctive Relief: Courts are now empowered to order changes in employer practices, not just financial ​penalties, promoting better compliance and workplace standards.
  

By limiting penalties, introducing stricter filing requirements, and providing more opportunities for ​employers to cure violations, the reforms aim to reduce frivolous lawsuits and the financial burden on ​businesses. These changes help create a more balanced and fair legal environment, encouraging ​compliance without unduly punishing employers for minor infractions.

Arbitration and Mediation

Consumer Arbitration Restriction

S.B. 940

This bill would undermine and restrict the availability ​of arbitration and mediation, making it harder to ​resolve claims in a cost effective and timely manner.

Mediation Expansion Reform

S.B. 1141

This bill aimed to expand the use of mediation in California's legal system by ​increasing the maximum amount in controversy for cases that can be ordered to ​mediation from $50,000 to $150,000.

By raising the threshold and streamlining the ​process, this bill would have helped reduce court ​congestion, lower litigation costs, and promote ​faster resolution of disputes.

It would have offered more cases the opportunity ​to be resolved through mediation, which is often ​quicker and less expensive than going to trial.

ADA Lawsuit Reform ​for Businesses

S.B. 585

This bill would have addressed lawsuit abuse targeting small businesses under ​California's Unruh Civil Rights Act, specifically related to accessibility claims.

The bill proposed that before a small business (50 or fewer employees) could be ​sued for accessibility violations, the business must first receive a detailed letter ​outlining the alleged violations and be given 120 days to fix them.

If the violations were corrected within this ​period, the business would not be liable for ​statutory damages, attorney’s fees, or costs.

This measure was intended to reduce frivolous ​lawsuits and give small businesses a fair chance ​to comply with accessibility standards without ​facing immediate litigation.

Several pending bills would expand liability under the state's consumer ​protection statute and create new theories of liability.

Many of the bills increase the burden on businesses under the

California Consumer Protection Act of 2018.

Data Privacy

A.B. 1949

This bill would increase the age threshold under the California Consumer ​Privacy Act (CCPA) for which businesses must obtain explicit consent before ​selling or sharing personal information from 16 to 18 years old.

This bill would significantly expand liability for businesses by imposing ​stricter data handling requirements and increasing the risk of litigation. The ​extended data protection requirements could lead to higher compliance ​costs and more frequent lawsuits, potentially impacting businesses' ​operations and financial stability.

Digital Discrimination

A.B. 2239

This bill aims to address "digital discrimination of access" by prohibiting internet ​service providers and related entities from engaging in practices that differentially ​impact consumers' access to broadband based on race, ethnicity, color, religion, or ​national origin, unless justified by legitimate business reasons.

This bill could significantly expand liability for businesses involved in providing ​broadband services.

The broad definitions and ​stringent prohibitions may ​lead to increased litigation ​risks, compliance costs, and ​potential legal challenges, ​burdening businesses and ​stifling innovation in the ​critical broadband sector.

Automated Decision Tools

A.B. 2930

This bill would significantly expand liability for businesses using or developing ​artificial intelligence and automated decision tools by:

• Mandating impact assessments: Requires developers and deployers to conduct regular impact ​assessments on automated decision tools, creating new compliance burdens and potential liability if ​not done properly.
• Expanding notification requirements: Forces businesses to notify individuals when automated tools are ​used for "consequential decisions," adding administrative overhead and litigation risks.
• Creating new consumer rights: Gives individuals rights to correct data, opt out of automated decisions, ​and request alternative processes, potentially disrupting business operations and increasing costs.
• Prohibiting "algorithmic discrimination": Introduces a broad definition that could lead to increased ​litigation over alleged discriminatory impacts of AI tools.
• Authorizing new enforcement actions: Allows the Attorney General, Civil Rights Department, and other ​public attorneys to bring civil actions for violations, with penalties up to $25,000 per violation for ​algorithmic discrimination.

This bill would create significant new litigation risks and compliance costs for businesses using AI and ​automated decision tools, potentially stifling innovation and economic growth in California's tech sector. ​The broad definitions and enforcement mechanisms could lead to a flood of lawsuits and administrative ​actions against companies trying to implement cutting-edge technologies.

Data Privacy

A.B. 3048

This bill would introduce new requirements for businesses regarding consumer privacy ​preferences, which could significantly expand liability and compliance burdens.

This bill could lead to increased litigation and regulatory actions against businesses, ​driving up costs and stifling innovation. The broad and evolving regulatory framework ​may create uncertainty and make it difficult for businesses to ensure ongoing ​compliance, potentially leading to more lawsuits and enforcement actions.

Social Media Addiction

S.B. 976

This bill would create significant new litigation risks for social media and tech ​companies, particularly around claims of harm to minors' mental health. The ​broad definitions and strict requirements could lead to a flood of lawsuits ​against social media platforms and app developers.

The bill's overly burdensome provisions could stifle innovation in the tech sector and create operational ​challenges for companies trying to provide services to both adults and minors. The bill's lack of liability ​protection even with parental consent is particularly concerning as it could encourage speculative litigation.

This bill would broadly expand liability and could have unintended consequences for California's tech ​industry and economy.

PFAS in Menstrual Products ​Liability Expansion

A.B. 2515

This bill would introduce new regulations on menstrual products containing ​perfluoroalkyl and polyfluoroalkyl substances (PFAS), which could significantly ​expand liability for manufacturers and distributors.

The bill authorizes the Department of Toxic Substances Control to issue notices of violation and impose civil ​penalties, with potential enforcement actions by the Attorney General, city attorneys, county counsels, or city ​prosecutors, leading to increased litigation risks. Penalties for violations can be as high as $250,000, posing a ​significant financial threat to businesses.

This bill could lead to significant new litigation risks and compliance costs for businesses involved in not only ​the production but also the sale of menstrual products. The stringent requirements and broad enforcement ​mechanisms may result in increased legal challenges and financial burdens, potentially driving up costs for ​consumers and stifling innovation in product development.

Expanded Liability

for Elder Care Facilities

A.B. 2773

This bill significantly lowers the burden of proof in elder abuse cases against ​residential care facilities and skilled nursing homes, which could lead to a ​substantial increase in lawsuits and liability costs. Key concerns include:

• Lowered Evidentiary Standard: Changes the standard of proof from "clear and convincing evidence" to ​"preponderance of the evidence" in cases where spoliation of evidence has occurred. This makes it easier ​for plaintiffs to win cases and could encourage more lawsuits.
  

• Increased Litigation & Lawsuit Abuse Risk: The lower standard of proof may lead to more cases being ​filed, even those with weaker evidence, putting additional legal and financial pressure on care facilities. ​The bill may inadvertently incentivize frivolous lawsuits or overly aggressive legal tactics, as the ​threshold for proving cases becomes lower.
  

• Potential for Reduced Access to Care: Higher operating costs due to increased litigation could force ​some facilities to close or reduce services, potentially limiting access to elder care.
  

If enacted, A.B. 2773 could lead to a flood of lawsuits against care facilities, driving up costs for the entire ​elder care industry and potentially reducing the quality and availability of care for seniors in California.

Several pending bills would expand workplace and ​employment liability, create new rights of action and new ​barriers for employers to provide meaningful defenses.

Expanded Liability for ​Janitorial Service Contractors

A.B. 2374

Authored by

Asm. Matt Haney (D)

This bill would significantly expand potential liability and regulatory burdens for janitorial service ​contractors in California. The bill's addition of treble damages for willful violations could lead to more ​litigation while granting the Labor Commissioner new enforcement powers creates another avenue for ​potential actions against businesses.

If enacted, this bill could create a more hostile business environment, potentially leading to increased costs ​for janitorial services, reduced competition, and fewer job opportunities as some businesses may choose to ​avoid operating under these stringent conditions.

The expanded liability and new rights of action could lead to a surge in lawsuits against janitorial service ​contractors, further burdening the court system and increasing costs for businesses.

Expanded Liability for ​Public Employers

A.B. 2421

If enacted, this bill would create an overly burdensome environment for public ​employers, potentially leading to increased costs for taxpayers, reduced efficiency ​in public services, and a more adversarial relationship between employers and ​employees. The expanded liability and new rights of action could result in a surge ​of complaints and lawsuits against public employers, further straining government ​resources and the court system.

Paid Sick Leave & Employer ​Liability Expansion

A.B. 2499

This bill would significantly expand employer liability and burden small ​businesses.

The bill broadens certain definitions to include family members, potentially ​increasing the number of employees eligible for accommodations and time ​off. It further expands protected activities for which employees can take ​time off and extends the reasonable accommodation requirements to ​cover not only employees in certain situations but also their family ​members.

Overall, this bill could lead to increased costs, operational difficulties, and a surge in lawsuits against ​businesses, particularly burdening smaller employers who may struggle to accommodate these extensive ​new requirements. The bill's provisions could make California a more challenging environment for ​businesses, potentially impacting job creation and economic growth.

Worker Classification & Liability ​in Transportation Sector

A.B. 2754

This bill significantly expands potential liability for businesses ​in the transportation sector in California.

It would extend liability to customers who use trucking companies for port-related services, making them ​responsible for labor violations even if the trucking company is not on the state's list of offenders. This ​creates new risks for businesses that may have no direct control over a trucking company's employment ​practices. It also broadens the types of labor violations for which customers can be held responsible, ​including misclassification of truck drivers as independent contractors.

It would create an overly burdensome environment for businesses involved in port logistics, potentially ​leading to increased costs, operational difficulties, and a surge in lawsuits. The expanded liability could ​discourage companies from doing business through California ports, potentially impacting the state's ​economy and competitiveness in global trade.