Plaintiff attorneys miss deadline for PAGA filings

Plaintiffs' attorneys have filed a flood of Private Attorney General Act notices after the announcement of a deal to overhaul the two-decade old labor law.

But if the goal was to avoid trying these cases under the new rules, it didn't work. According to the office of Sen. Tom Umberg, D-Santa Ana, the new rules will apply to any case filed on or after June 19.

"When the governor announced the reform deal, the big question was 'How is this going to apply to existing cases?'" said Anthony J. Zaller, who defends employers as the founding partner of Zaller Law Group PC in El Segundo.

"It is our understanding that the changes will not be retroactive," Scott​​​​ P. Jang, who represents employers as a principal with Jackson Lewis P.C. in San Francisco, wrote in an email. "As such, it would make sense that plaintiff's counsel may want file cases now."

The changes were written on Friday into two existing bills: SB 92 by Umberg, D-Santa Ana, and AB 2288 by Assemblymember Ash Kalra, D-San Jose. Each chairs the Judiciary Committee in their house.

Both bills were amended to include new rules on PAGA cases. Each includes this provision: "This bill would apply its provisions to a civil action brought on or after June 19, 2024." AB 2288 was originally written to allow judges to order injunctive relief in PAGA cases, and continues to include that provision after the changes.

Neither bill had been amended by press deadline on Friday. The revised bills must be in print by Monday and passed by Thursday to meet a deadline to remove a PAGA repeal initiative from the November ballot.

On Tuesday, business and labor groups said they had an agreement after weeks of talks. On Wednesday, attorneys filed over 100 notices of new PAGA cases with the state Department of Industrial Relations. On Thursday, they filed over 220 more. During 2022 and 2023 -- years that saw a record number of PAGA filings to date -- the department saw just over 20 filings on an average day.

Of the approximately 330 notices, roughly 220 were filed by the Wilshire Law Firm. Several other firms filed well over a dozen apiece.

"It definitely is filed by a handful of firms, apparently to get under any deadline that might be included in the PAGA reform deal," Zaller said.

"I think it's reasonable to conclude that the plaintiff's bar is concerned, understandably, that something that has been a real cash cow for them for many years, the spigot is about to be shut off, or ratcheted down," said Daniel H.​​​​ Handman, who represents employers as a partner with Hirschfeld Kraemer LLP in Santa Monica. "It's not going to be completely cut off, but it's going to be curtailed. The amounts recoverable are going to be smaller."

Handman noted that filing a PAGA case is a multistage process. First plaintiffs must file a letter with the department to get permission to sue. There is then a delay before defense attorneys like him see the cases.

But some defense attorneys have been monitoring the department's website. Corey J. Cabral, a partner of chair of the PAGA Litigation Practice at CDF Labor Law LLP in Sacramento, said he has been keeping an eye on the numbers.

"Before the PAGA reform agreement was announced on June 18, the LWDA was receiving about 40 PAGA notices per business day in 2024," Cabral wrote in an email. "Since June 19, the LWDA has received 484 notices and counting; 150 notices have already been filed today."

He continued, "For added perspective, more than half of the 940 notices filed this month have been filed in the last 60 hours. However, it appears that over 310 of those recent filings have come from just one plaintiff's firm. Who knows what they hope to achieve with this tactic. But one might reasonably conclude that they are trying to get ahead of the proposed PAGA amendments which were negotiated, in large part, to limit frivolous litigation."

The deal came after weeks of negotiations between the California Labor Federation and the California Chamber of Commerce, brokered by Gov. Gavin Newsom's office. Labor groups agreed to new rules that will ensure more payments go to workers, limit the circumstances under which workers can sue, and give greater leeway for businesses -- especially small businesses -- that fix problems before they face severe consequences.

The Chamber and its allies agreed to remove an initiative from the fall ballot that would repeal PAGA, which went into effect in 2004. Labor groups wanted to preserve the law, even with changes, especially after a series of recent court cases confirmed it was one of the key means for employees to sue even if they signed arbitration agreements in their employment contracts.