AB 1506 Enacted to Address PAGA Abuses

On October 2, 2015, Governor Brown signed urgency legislation (Assembly Bill [AB] 1506) that immediately amends California’s Labor Code Private Attorneys General Act of 2004 (PAGA) to address increasing civil litigation alleging technical violations of itemized wage statements (pay stubs) issued to employees.
Existing law required an employer to provide information to employees such as their wages, pay period, name, and address of the employer. If an employee filed complaint against an employer, prior to AB 1506, an employer would not be given the opportunity to rectify an error or violation before an employee could file suit. AB 1506 gives the employer the opportunity correct errors regarding the information necessary on an itemized wage statement.
AB 1506 allows an employer 33 days to cure violations of these requirements before an employee may bring an action for civil penalties under PAGA. However, these violations will not be considered “cured” until the employer can show it has provided fully-compliant wage statements to each aggrieved employee for each pay period for the three-year period prior to the date of the aggrieved employee’s letter to the Labor Workforce Development Agency (LWDA).
The amendments were enacted in response to concerns over the potential financial windfalls and corresponding burdens on employers from “frivolous litigation regarding technical violations that do not harm or injure the employee.” The outcome in Elliot v. Spherion Pacific Work, LLC is an example of what the amendment is intended to correct. In Spherion, the company’s itemized wages statements were challenged because the name was listed as “Spherion Pacific Work, LLC,” rather than “Spherion Pacific Workforce, LLC.” While the claim was ultimately dismissed, this case was an example of “unnecessary legal costs and attorney’s fees” that justified amending the statute.
The amended law now provides an employer with the right to cure an alleged violation of failing to provide on a pay stub the inclusive dates of the pay period (Labor Code section 226(a)(6)) and the name and address of the legal employer (Labor Code section 226(a)(8)) before an employee may bring a civil action seeking PAGA penalties. The amended statutes limit the employer’s right to cure these violations to once in a 12-month period.9 Employers should also keep in mind that AB 1506 pertains only to the cure provisions in PAGA; it does not address an employee’s ability to seek statutory penalties under Labor Code section 226(e) for violations of section 226(a)(6) and (8).
The LWDA has 17 days from the postmark date of the notice to review the dispute from the employee regarding the alleged violation. The LWDA will also review the actions taken by the employer to rectify the violation(s). The LWDA will then provide a written notice via certified mail to the employee and employer regarding the decision.
The agency may grant the employer an additional three days to fix the alleged violation(s). If the LWDA finds there is no violation, the employee may appeal that determination to the superior court. If the LWDA does not provide a timely response or fails to provide any notification, the employee may proceed with civil action pursuant to Section 2699.