Cynthia Sandoval

Sandoval Mediation

23 Corporate Plaza Dr, Ste 150
Newport Beach , CA 92660

Email: cynthia@sandovalmediation.com

Golden Gate Univ SOL; San Francisco CA

Cynthia Sandoval is a mediator who specializes in all types of employment disputes, including PAGA and class action matters. With nearly 30 years of employment litigation experience representing plaintiffs, defendants and serving as in-house counsel, Sandoval brings a truly unique approach to mediation.

Matthew D'Abusco

Mediator D'Abusco Mediation

23 Corporate Plaza Dr Ste 150
Newport Beach , CA 92660

Email: matt@dabuscomediation.com

Chapman Univ SOL; Orange CA

Matt D'Abusco is a mediator who specializes in employment law, including both PAGA and class action matters. With his diverse background and experience (both on the defense and plaintiff bar), D'Abusco brings a unique approach to mediation, utilizing his ability to understand the positions of all parties to break impasses and find creative and practical solutions to settle disputes.

The long controversial California Private Attorneys' General Act (PAGA) underwent significant changes this year with the enactment of Assembly Bill 2288 and Senate Bill 92. Many of the statutory modifications, such as the more limited standing requirement, opportunities for reduced penalty assessments, and clarification on the ability to "stack" penalties, can be easily understood and applied to newly filed PAGA cases. Another new provision which may have perhaps the most substantial long-term impact - the Early Evaluation Conference (EEC) - remains highly uncertain and the Department of Industrial Relations recently issued Frequently Asked Questions that do not provide much further guidance.

An opportunity for early, efficient resolution

For cases filed after Oct. 1, 2024, employers served with a PAGA Summons and Complaint (arising from a PAGA Notice submitted to the California Labor and Workforce Development Agency (LWDA)) who have at least 100 total employees during the period covered by the PAGA Notice now have an opportunity to stay proceedings to conduct an EEC. See California Labor Code §2699.3(f). The procedural timeline to decide whether to request an EEC and stay is short. The request must be made at the same time the employer files their responsive pleading or other initial appearance and must also set forth other specific information including whether the employer intends to cure alleged violations. See California Labor Code §2699.3(f)(2).

When an employer files a request for an EEC and stay - it appears unlikely an employer would not move for both - the Court shall issue a stay of the proceedings and, absent good cause, schedule an EEC. See California Labor Code §2699.3(f)(3). Once that occurs, the EEC must take place on "a date as soon as possible from the date of the order but in no event later than 70 days after issuance of the order." See California Labor Code §2699.3(f)(3)(A).

Who conducts the newly minted EEC?

Considering the highly expedited and condensed timeframe, it begs the question - who will be both available and responsible for conducting these EECs in compliance with the statute? According to Section 2699.3, an EEC is to be conduct by a judge, commissioner, or "such other person who is knowledgeable about and experienced with issues arising under the code who the court shall designate." See California Labor Code §2699.3(f)(12).

While they will certainly make every effort to do so, given the vast docket of cases most judges and commissioners currently preside over, it seems impractical to assume they alone will have the capacity to shoulder the responsibility of conducting these new EECs within the 70-day compliance period. Yet it remains uncertain who this additional category of persons "knowledgeable about and experienced with issues arising under the code who the court shall designate," may consist of and how they might be vetted and appointed.

That said, since the objective is early resolution before the expenditure of substantial time and monetary resources, one very good option to preside over an EEC may be an experienced employment mediator. Mediators, who are already neutrals, are already trained to seamlessly transition between evaluation and the facilitation of settlement discussions. In theory, the experienced employment mediator may be an ideal option to both satisfy the statutory requirements and provide the most benefit to the parties.

Clarity on EEC process and guidelines

Even though there are questions regarding who will conduct future EECs, there is clarity regarding the guidelines which must be followed during the process. For example, the statute provides that both parties must submit sequential confidential statements, beginning with the defendant, and followed by the plaintiff, which outline their positions including the claims defendant seeks to dispute and, again, whether there is an intention to cure. The plaintiff's statement must then respond with, among other things, the amount of penalties plaintiff claims for each violation (including a description of how those amounts were calculated), the amount of attorneys' fees and costs to date, a settlement demand, and a basis for accepting or rejecting an employer's plan to cure. See California Labor Code §2699.3(f)(3). The statute does not expressly provide discovery mechanisms during this phase, but it seems doubtful a plaintiff would be in a position to prepare this type of informed statement without, at a minimum, an informal exchange of information.

After statements are submitted, the neutral evaluator will then decide whether to accept or reject the defendant's proposed plan to cure. See California Labor Code §2699.3(f)(4). In doing so, the neutral evaluator must consider, where applicable:

(i) Whether any of the alleged violations occurred and if so, whether the defendant has cured the alleged violations.

(ii)  The strengths and weaknesses of the plaintiff's claims and the defendant's defenses.

(iii)  Whether plaintiff's claims, including any claim for penalties or injunctive relief, can be settled in whole or in part.

(iv)  Whether the parties should share other information that may facilitate early evaluation and resolution of the dispute.

See California Labor Code §2699.3(f)(1)(B).

If the neutral evaluator decides to accept the defendant's proposed plan to cure, if the plaintiff agrees to the plan, and the violations are cured, the matter will be closed. See California Labor Code §2699.3(f)(6). There are several other more likely possibilities. First, if a partial agreement is reached, the remaining issues will proceed to litigation. Second, if the defendant's proposals are rejected outright, the case will go forward in litigation. Third, if the neutral evaluator or the plaintiff do not believe the defendant properly cured the alleged violations pursuant to their plan, the employer can return to the court to seek a determination on the sufficiency of the steps they have taken to cure. See California Labor Code §2699.3(f)(7)-(9). Regardless of the outcome, the entirety of the EEC process must take place within 30 days unless the parties mutually agree to extend the time. See California Labor Code §2699.3(f)(11). Importantly, all statements or evidence submitted for purposes of the EEC and "all discussions" at the EEC "shall be subject to Section 1152 of the Evidence Code. See California Labor Code §2699.3(f)(10).

The EEC process has the ability to make a substantial impact on PAGA cases going forward, but the framework required to administer it in accordance with the statutory requirements is considerable. Courts will need time to implement an internal EEC process and construct a panel of knowledgeable and experienced professionals. The guidelines will likely vary by Court. While this takes place, the modified PAGA statute points out that the new EEC process does not prohibit the parties from agreeing to their own mediation process. See California Labor Code §2699.3(f)(14). To that effect, parties may choose both--availing themselves of the EEC process while also working to simultaneously schedule a private mediation in the same timeframe to attempt to resolve the matter beforehand.

The EEC process presents a potential opportunity for PAGA litigants to go forward but, until the administrative process is clarified by courts, it is unclear exactly how valuable it may be. In the interim, parties looking to take advantage of the EEC process should consider the benefits of utilizing an experienced employment mediator or other neutral.