settlement of paga claims california

Filing an employment claim can result in lengthy legal battle.

But, for employees bringing claims under the California Private Attorneys General Act (PAGA), their legal resolution may come faster and more efficiently. 

The Mechanics of a PAGA Settlement 

A court must approve any settlement of a claim or claims brought under California’s Labor Code Private Attorneys General Act (PAGA). 

While PAGA claims are similar to class-action suits in many respects, the requirements for court approval of a settlement are less stringent. For this reason, PAGA claims may settle more quickly and in a more effective way than typical class-action lawsuits.

However, a PAGA lawsuit may include a variety of claims that aren’t typical of a class-action lawsuit.

One PAGA suit may include both individual claims (on behalf of one person) and representative claims (on behalf of many people). Even after parties reach a settlement on representative claims, there may be individual claims that need to be sorted out through arbitration. In that case, any settlement of the PAGA case would be delayed until those claims are resolved.

A Closer Look at PAGA Settlement Payouts

There are plenty of recent settlements illustrating how expensive PAGA claims can be for an employer.

For example, in 2019, janitorial service provider ABM Industries settled for $5.4 million after it allegedly failed to reimburse employees for using their personal cell phones to communicate with managers and clock in and out.

But the road to settlement approval may not be easy. For example, in 2019, a judge refused to approve an $11.5 million settlement in a case alleging that Postmates Inc. had misclassified delivery couriers as independent contractors, citing “significant concerns” and asking the parties to provide more information concerning the settlement proposal.

There are several open-ended issues that the legal community is contending with concerning PAGA settlements, such as:

  • What is required to give proper notice of a PAGA settlement?
  • Are employees who were not party to the lawsuit entitled to receive notice of the PAGA settlement? 
  • Should employees not directly involved in the lawsuit be heard at the settlement hearing to approve the order?

Fortunately, in March 2020, the California Supreme Court answered one of the biggest questions in Kim v. Reins International California, Inc. The court decided that an employee who settles individual claims can still file a PAGA lawsuit.

But there are other legislative developments that could impact PAGA settlements. Right now, the California Legislature is considering SB 1129, which would expand the amount of time employers have to cure itemized wage statement violations from 33 to 65 calendar days.

Suffice to say, the issues surrounding PAGA settlements are not cut and dry. Each proposed settlement must be considered on a case-by-case basis. Therefore, it’s best to have competent legal counsel sort through the issues to achieve the best resolution.

What is the First Step Toward Obtaining a PAGA Settlement?

Filing a PAGA claim is the first step. And to do so, employees should have competent legal counsel by their side.

At Workplace Rights Law Group, our attorneys have nearly 100 years of combined employment law experience. Clients in Southern California and across the state turn to our team to apply unique strategies that are customized to their particular circumstances.

If you have questions about the road to a PAGA settlement, contact us online or call (818) 844-5200 today.


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