In November 2024, California voters will have the opportunity to pass a ballot initiative to repeal the California Labor Code’s (Labor Code) Private Attorneys General Act of 2004, Cal. Lab. Code § 2698, et seq. (PAGA). PAGA allows an “aggrieved employee” to sue their employer on behalf of themself and other current and former employees to recover civil penalties for Labor Code violations (assuming the aggrieved employee follows the preliminary perquisites to filing the lawsuit). Prior to PAGA, only the California government could recover such civil penalties through enforcement actions brought by the California Labor and Workforce Development Agency (LWDA). Accordingly, in PAGA actions, a plaintiff who initiates an action serves as an “agent” or “proxy” of the California government. If an aggrieved employee recovers civil penalties, the aggrieved employees receive 25% of the recovery, with 75% of the penalties going to the state. 

The ballot initiative, termed the California Fair Pay and Employer Accountability Act (FPEAA), seeks to eliminate an individual employee’s ability to initiate private actions to obtain civil penalties for purported violations of the Labor Code. Instead, the FPEAA requires employees to report purported Labor Code violations to the Division of Labor Standards Enforcement (DLSE) to obtain the civil penalties they currently seek under PAGA.

The FPEAA aims to impose various other changes, such as allowing employees to recover 100% of the penalties and eliminating the recovery of attorneys’ fees.

Given the potential changes, California employers should monitor the results of the 2024 ballot initiative.

The California Supreme Court denied review of an appellate court judgment in favor of Simplot in a case called Coronel v. Pinnacle Agriculture Distribution, Inc. (“Coronel”). The California Fourth District Court of Appeal held, in an unpublished opinion, that a judgment in a prior class action alleging unpaid wages and inaccurate pay records barred a subsequent putative class action for unpaid wages and inaccurate pay records as a result of a release in the prior class action, even though plaintiff argued the subsequent class action encompassed claims broader than the settlement agreement and judgment in the prior class action. 

The U.S. Supreme Court recently ruled in Helix Energy Solutions Group v. Hewitt that a daily-rate worker who earned over $200,000 annually was not exempt from the Fair Labor Standards Act’s overtime requirements. In an opinion authored by Justice Elena Kagan, the Court held that compensation based on a daily rate did not satisfy the “salary basis test,” which is required for an employee to be exempt from overtime compensation. The decision, while specific to day-rate compensation, also applies to exempt employees paid an hourly or shift rate.

Further discussion of the Court’s decision and its implications for employers and employees is found here.

Effective February 19, 2023, San Francisco employers with 100 or more employees worldwide will be required to pay employees who are military reservists and who are called for military duty the difference between their military salary and their civil salary as employees.

Multiple new laws took effect in Washington at the beginning of the year, including several that increased the minimum wage in various locations across the state. Further details can be found here. With the start of the new year, employers should check to ensure that all nonexempt employees earn at least the minimum wage. This is particularly true for Washington employers with employees in multiple cities, given that the minimum wage in any given location may vary. This is also a good time to review overtime policies to ensure that employees are accurately characterized as exempt or nonexempt and are paid accordingly. Finally, Washington employers should review workers’ noncompete agreements to ensure that workers who are subject to such agreements meet the relevant salary thresholds.

California’s Senate Bill 1162, a pay transparency law aimed at identifying pay disparities based on gender, ethnicity, and race, went into effect on January 1, 2023. Last week, the California Civil Rights Department (CRD), the state agency tasked with enforcing California’s civil rights laws, updated their Frequently Asked Questions (FAQ) to reflect the resulting changes to the state’s pay data reporting requirements.

The Illinois legislature, on January 10, 2023, passed the Paid Leave for All Workers Act (PLFAW), which Governor Pritzker announced he will sign into law. Should the bill be enacted, Illinois would become the third state (after Maine and Nevada) to require private employers to provide employees with earned paid leave to use for any reason. A further description of the PLFAW can be found here. Perkins Coie will continue to monitor these legislative developments and provide additional guidance if/when the law is enacted. In the meantime, employers should begin to prepare for this likely change to the Illinois employment landscape.