Key takeaways
- Plaintiffs must now personally experience each alleged Labor Code violation to maintain standing.
- The aggrieved employees' share of recovered penalties increases from 25% to 35%.
- Employers who take all reasonable steps to comply can cap penalties at 15% or 30%, depending on timing.
- New cure procedures differentiate between employers with fewer than 100 employees and those with 100 or more.
The Legislation
Governor Gavin Newsom signed AB 2288 and SB 92 into law on July 1, 2024, enacting the most significant changes to the state's primary representative labor litigation mechanism since its inception. Chaptered as Chapter 44 and Chapter 45, Statutes of 2024, respectively, the dual bills fundamentally restructure how representative wage and hour claims proceed in California.
The reforms apply exclusively to notices and civil actions filed on or after June 19, 2024. They are not retroactive, meaning earlier-filed claims will proceed under the prior statutory framework. The legislation alters the foundational mechanics of Labor Code section 2698 et seq., modifying everything from who may file a lawsuit to how recovered funds are distributed between the state and the workforce.
Why It Matters
The 2024 reform shifts the statutory design from a primarily punitive model to one that incentivizes rapid employer compliance. By offering steep penalty reductions for employers who proactively correct wage and hour violations, the legislature created a tangible financial off-ramp for businesses willing to audit and correct their practices.
Simultaneously, the legislation narrows the gateway to the courthouse. By requiring plaintiffs to have personally suffered each specific violation they allege on behalf of a group, the law ends the practice of using a single, isolated technical violation as an anchor to litigate a wide array of unrelated company-wide practices. This targeted approach aims to reduce the volume of sweeping, multi-claim representative actions while increasing the direct financial payout to the workers who actually experienced the targeted violations.
Who Should Care
For lawyers
Defense counsel and plaintiffs' attorneys must immediately adjust their intake and litigation strategies. AB 2288 tightened standing by requiring a plaintiff to have personally experienced each Labor Code violation alleged on a representative basis. This departs from the broader standing recognized in Kim v. Reins International California, Inc. (2020) 9 Cal.5th 73, where the California Supreme Court held that an employee retained standing as an "aggrieved employee" even after settling and dismissing their individual claims.
Litigators must also master the new procedural off-ramps. SB 92 established an early evaluation conference procedure and a court-ordered stay of proceedings for employers with 100 or more employees once served with a summons and complaint. For smaller employers, administrative procedures before the Labor and Workforce Development Agency (LWDA) now dictate the early stages of a dispute.
For consumers/parties
Aggrieved employees will see a larger direct share of any successful recovery. The legislation increased the employees' share of recovered penalties from 25% to 35%, with the remaining 65% directed to the LWDA. However, individual workers can no longer act as a representative for colleagues regarding violations they never experienced themselves. For business owners, the reform provides specific mechanisms to fix errors—like incorrect wage statements—before facing maximum financial liability, provided they act quickly upon receiving notice of a problem.
Legal Background
The legislature originally enacted the Private Attorneys General Act in 2003 via SB 796, effective January 1, 2004. Codified at Labor Code section 2698 et seq., the statute deputized aggrieved employees to file lawsuits to recover civil penalties on the state's behalf. Historically, these penalties were distributed 75% to the LWDA and 25% to the aggrieved employees.
Over the past two decades, judicial interpretations generally expanded the scope of who could bring these claims. In Kim v. Reins, the court determined that standing was tied to the employer's violation rather than the employee maintaining an unredressed individual injury. More recently, in Adolph v. Uber Technologies, Inc. (2023) 14 Cal.5th 1104, the California Supreme Court held that an order compelling arbitration of a plaintiff's individual claims does not strip that plaintiff of standing to litigate non-individual representative claims in court. Under that pre-reform framework, a plaintiff only needed to be employed by the alleged violator and suffer at least one alleged violation to pursue a broad array of claims on behalf of others.
What the Legislature Did
The 2024 amendments dismantled the broad standing framework. Under AB 2288, a plaintiff must have personally experienced each specific Labor Code violation they seek to litigate on a representative basis.
The legislature also restructured the penalty framework to reward compliance. AB 2288 caps penalties at 15% of the amount otherwise recoverable if the employer demonstrates it took all reasonable steps to comply before receiving a statutory notice. If the employer takes all reasonable steps to comply within 60 days after receiving the notice, the penalty is capped at 30%. Furthermore, AB 2288 expanded the categories of Labor Code violations that can be cured to reduce litigation and capped wage-statement penalties under Labor Code section 226 at lower amounts where no injury results.
SB 92 introduced distinct cure procedures based on employer size. For employers with fewer than 100 employees, the law created a confidential cure-proposal process before the LWDA. These employers may submit a proposal to cure within 33 calendar days of the postmark date of the notice. For employers with 100 or more employees, SB 92 established an early evaluation conference procedure and a court-ordered stay of proceedings upon service of the summons and complaint.
Finally, the legislature adjusted the financial incentives, reallocating the distribution of recovered penalties to 35% for aggrieved employees and 65% for the LWDA.
How It May Be Applied
Courts will soon face the task of defining "all reasonable steps" to comply. Because the statute caps penalties at 15% or 30% based on this standard, early litigation will likely focus on what constitutes a reasonable compliance audit or policy revision.
The new standing requirement also raises questions about the future application of Adolph v. Uber. While Adolph preserved representative standing when individual claims head to arbitration, the new requirement that a plaintiff personally suffer each alleged violation means that an arbitrator's factual findings regarding an individual's specific experiences could severely limit the scope of the representative claims remaining in state court.
Before and After: The 2024 Amendments
| Feature | Prior Law (Pre-June 19, 2024) | New Law (Post-June 19, 2024) |
|---|---|---|
| Standing | One violation allows claims for any other violation. | Plaintiff must personally experience each alleged violation. |
| Penalty Distribution | 75% LWDA / 25% Employees | 65% LWDA / 35% Employees |
| Pre-Notice Compliance | No specific statutory penalty cap. | Penalties capped at 15%. |
| Post-Notice Compliance | Limited cure provisions. | Penalties capped at 30% (if steps taken within 60 days). |
| Small Employer Cure | Standard procedures applied to all. | LWDA confidential cure-proposal process (within 33 days). |
| Large Employer Cure | Standard procedures applied to all. | Early evaluation conference and court-ordered stay. |
Plain-English Callout
When the law talks about an employer "curing" a violation, it means the company is given a specific window of time to fix an illegal practice and make the affected workers whole. For example, if a company failed to include certain required information on pay stubs, "curing" the issue means issuing corrected pay stubs and paying any owed compensation. By creating these new cure processes, the state is encouraging businesses to correct their mistakes quickly and directly, rather than spending years fighting over maximum financial penalties in court.
This article is general legal information and commentary about developments in California law. It is not legal advice, does not address your specific situation, and is not a substitute for advice from a licensed attorney. Reading this article and contacting us through this website do not create an attorney-client relationship.
Sources & authorities
- Cal. Lab. Code § 2699 — PAGA penalties and standing (2024 reform, AB 2288 / SB 92) — source
Further reading
Additional perspectives (a link is not an endorsement):