Why a PAGA settlement is different
California's Private Attorneys General Act lets an employee bring a claim for civil penalties for Labor Code violations on behalf of the state and other affected employees. Because the claim belongs in large part to the state, a settlement has to be submitted to the California Labor and Workforce Development Agency and approved by the court, which reviews whether the terms are fair and adequate in light of the law's purposes. The penalties recovered are divided between the state and the affected employees, with the state receiving the larger share. Employees cannot opt out of the PAGA portion of a settlement the way they can opt out of a class settlement, which affects how releases are drafted when both kinds of claims are resolved together.
How the reforms changed things
Amendments enacted in California in 2024 reshaped PAGA. A plaintiff now has to have personally experienced the violations alleged, rather than relying on violations suffered only by others. Penalty limits apply to employers that took reasonable steps to comply before receiving notice, and there are procedures for early evaluation and for curing certain violations. Cases whose required notice to the state was filed before the reforms took effect are generally governed by the earlier rules, so the filing date is one of the first things checked. California courts have also held that a plaintiff whose individual claim is sent to arbitration can keep pursuing the representative claim in court, which affects settlement strategy.
What gets reviewed before agreeing
Both sides look at the scope of the release, which time period and which employees it covers, and how the settlement amount is allocated between PAGA penalties, wages, and any class claims. Payroll and timekeeping data usually drive the valuation, so those records need to be complete. PAGA matters are litigated in California and require counsel admitted there; if your company is based in New York, part of the first conversation is how that representation is arranged and how we can help organize the records and the decision-making on your side.
