AB 594: PAGA wage-and-hour update

Assembly Bill 594 adds and amends California Labor Code sections 180, 181, 182, 218, and 226.8 by authorizing “public prosecutors” (e.g., the Attorney General, district attorneys, city attorneys, and county counsel) to “independently” enforce the State’s wage-and-hour laws. Starting Jan. 1, 2024, public prosecutors will be authorized to file actions against employers to recover wages and penalties. Under new Labor Code section 181, “[m]oneys recovered by public prosecutors under this code shall be applied first to payments, such as wages, damages, and other penalties, due to affected workers” and “civil penalties recovered by a public prosecutor pursuant to this chapter shall be paid to the General Fund of this state….”

According to the legislative history, prior to this bill local prosecutors expressed a lack of clarity about their authority to bring actions to enforce the Labor Code, which contains several criminal statutes in addition to civil penalties. With the passage of Assembly Bill 594, the Legislature has now made clear that it is deputizing state and local prosecutors outside of the Labor & Workforce Development Agency (LWDA) to file Labor Code claims. Assembly Bill 594 supplements existing enforcement mechanisms, including wage claims filed before the Labor Commissioner and penalty claims under the Private Attorneys General Act (PAGA).

This bill comes in the wake of major challenges to the PAGA. The PAGA, codified at Labor Code sections 2698 et seq., deputizes aggrieved employees to stand in the shoes of the LWDA to seek penalties that were previously enforceable only by those agencies. Most of the penalties (75%) go to the State, and the other 25% goes to the affected employees. Efforts by employers to dismantle the PAGA one way or another have largely failed, until recently. In Viking River Cruises, Inc. v. Moriana (2022) 142 S.Ct. 1906, the U.S. Supreme Court gave employers a major victory. The Court held that employers could limit enforcement if a PAGA action was brought by an employee subject to an arbitration agreement.

The outcome was far from certain when the Court granted certiorari in the Viking case on Dec. 15, 2021. The employment law community was abuzz about how the Court would shape the PAGA landscape. Many were concerned that the Court would bar PAGA actions outright if there was an arbitration agreement. And the Legislature took notice.

Within two months after the Viking River Court granted certiorari, Assemblymember Brian Maienschein introduced Assembly Bill 594. According to the author, “[t]he current system of labor law enforcement is inadequate to meet the needs of California’s immense workforce. … California must do better in protecting workers’ rights and holding abusive companies accountable.” Lawmakers cited the massive backlog of cases before the Labor Commissioner’s Office.

Legislative hearings on the bill also noted that private enforcement is currently inadequate. “Arbitration agreements effectively prevent employees from bringing claims in court either independently, or as a class.” In response to this observation and Viking River, Labor Code section 182 provides that arbitration agreements will have no effect on public prosecutor actions.