A Smoother Ride Ahead: PAGA Reform Brings Balance Back to California Workplaces

California’s franchised new car dealers are seeing tangible benefits from the 2024 PAGA reforms. Once burdened by broad, costly lawsuits, dealerships are now experiencing faster claim resolutions and fairer outcomes.

According to a new report by California’s leading employment attorneys, the new rules limit claims to actual violations, reduce inflated penalties and reward employers who take reasonable steps to comply with labor laws.

Key early benefits of the reforms include:
• Narrower Standing Reduces Frivolous Lawsuits. Employers and defense lawyers report they are now routinely knocking out claims early by proving the plaintiff didn’t experience certain violations, dramatically shrinking exposure. Claims are resolved faster and for less money because legal disputes are narrower and more manageable.
• More Money & Faster Resolution for Employees. PAGA reforms increased the employee share of penalties from 25% to 35%, with the state receiving 65%. The early resolution process through the state’s Labor and Workforce Development Agency (LWDA) also limits the need for extended and costly litigation.
• Reduced Penalties for Employers. Reduced penalties now balance fairness and enforcement. Defense firms report significantly reduced penalties on employers because of the PAGA reforms.
• One-Year Limitations Period. PAGA reforms clarified standing law that a plaintiff must have experienced a violation within the past year to bring a claim.
• Ability to Limit the Scope of Claims and Evidence to Ensure Manageability. Courts now have explicit authority to limit the evidence to be presented at trial or otherwise limit the scope of a PAGA claim to ensure cases remain manageable for trial.
• Employers Doubling Down on Compliance Efforts. Employers are doubling down on their compliance efforts, conducting audits more frequently, training managers and updating policies proactively.

These early successes show that California’s PAGA reforms are working as intended, helping employees, employers and our economy move forward together.