The California Legislature has passed reforms to a decades-old labor law with bipartisan support and a promise of immediate implementation upon Governor Gavin Newsom's signature. The reforms, approved on Thursday, aim to amend the Private Attorneys General Act (PAGA) of 2004, which allows workers to sue employers for labor violations and mandates that employers found liable must pay fines to the state.

Since its inception, PAGA has been a contentious piece of legislation. Business groups have criticized it as being misused, leading to time-consuming and expensive litigation. Critics have also raised concerns about the law's effectiveness and fairness, questioning how the state utilizes the fines collected from businesses. Recent reports indicate that $197 million of such funds were left unspent in the 2022-2023 fiscal year.

Key Reforms in the New Legislation

The newly approved bills introduce several key changes to PAGA, including:

Financial Penalty Adjustments: The reforms lower penalties for some employers while increasing them for more serious violations.

Violation Corrections: Small businesses with fewer than 100 employees are given the opportunity to correct violations. Larger businesses can request an early evaluation of alleged violations.

Allocation of Fines: Under the new legislation, 35% of collected fines will go to affected workers, up from 25%. The remaining 65% will continue to fund the Labor and Workforce Development Agency's enforcement and education efforts.

Governor Newsom, who played a crucial role in negotiating the reforms, indicated that he would sign the bills and highlighted the complexity of the issue in his State of the State address. He praised the bipartisan agreement, stating, “We accomplished something that was seemingly impossible. It’s easier to address simple problems, but that’s not the California way.”

The reforms received unanimous support in both the state Senate and Assembly, indicating broad legislative backing. Democratic Assemblymember Ash Kalra, one of the bill's authors, noted that the deal "demonstrates how things should be done when all sides come together to resolve a longstanding issue of division."

The California Chamber of Commerce, a vocal critic of the original PAGA law, expressed support for the reforms. Ashley Hoffman, a policy advocate with the Chamber, remarked at a hearing last week that the original law was "well-intentioned" but had become "manipulated at the expense of workers, businesses, and nonprofits." She praised the new legislation as "historic reform" that addresses these concerns.

From the labor side, Sara Flocks of the California Labor Federation emphasized the importance of PAGA in protecting vulnerable workers. At the same hearing, she noted that the reforms preserve PAGA as an enforcement tool while updating it to improve outcomes for workers and encourage employer compliance.