California’s Labor Code Private Attorneys General Act (PAGA)

If you do business in California, cross your t's and dot your lowercase i's (and j's) when handling employees.  California’s Labor Code Private Attorneys General Act (PAGA) allows employees to file lawsuits to recover civil penalties on behalf of themselves, other employees, and the State of California for labor code violations. In a recent PAGA case, an employee brought a suit seeking civil penalties for a California employer’s failure to include the last four digits of its employees’ Social Security numbers on an itemized wage statement, which violates California Labor Code 226(a)(7).

The First District Court of Appeals in California reversed a summary judgment in favor of the employer, which argued that there is a knowing and intentional requirement for a violation of the labor code in question. In reversing the summary judgment, the court noted that there is a distinction between recovering statutory and civil penalties, and when an employee attempts to recover a civil penalty under the authority of PAGA, it is not necessary that an employer acts knowingly or intentionally.

Take note – In California, it is imperative to have a compliance system in place to check for labor code violations- even unintentional violations of the California Labor Code can result in significant civil penalties.

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