PAGA (Private Attorneys General Act)

PAGA stands for the Private Attorneys General Act, a California law that lets an eligible employee seek civil penalties for certain Labor Code violations on behalf of the state and other affected employees. A PAGA case is a representative enforcement action, not a traditional class action seeking each worker’s unpaid wages or other personal damages.

The employee bringing the case acts as a proxy for California’s labor enforcement agencies. Under the current definition in California Labor Code Section 2699, an “aggrieved employee” generally must have personally experienced each Labor Code violation alleged in the PAGA action. A limited exception applies to certain employees represented by qualifying nonprofit legal-aid organizations. PAGA claims may appear alongside wage-and-hour class claims based on the same alleged conduct, but the remedies remain different: class claims may seek compensation such as unpaid wages, while PAGA seeks civil penalties for alleged Labor Code violations.

Workers generally cannot opt out of the PAGA portion of a court-approved settlement in the same way they may opt out of a class settlement. California courts have explained that a PAGA judgment can bind the state and other aggrieved employees as to the covered penalty claims. That does not mean every worker must submit a claim form or will automatically receive payment under identical rules. Distribution procedures, covered dates, and payment calculations depend on the approved settlement, so the notice should explain whether any action is required.

For PAGA matters governed by California’s 2024 reforms, 65 percent of recovered civil penalties generally goes to the Labor and Workforce Development Agency and 35 percent goes to aggrieved employees. Older matters may still use the previous 75/25 allocation, depending on when the required PAGA notice and action were filed. Courts must review PAGA settlements, and the proposed settlement must also be submitted to the agency.

Tax reporting can also vary. Wage portions of an employment settlement are generally treated as wages, while non-wage amounts may be reported differently. The IRS explains that the key question is what each payment was intended to replace. Workers should rely on the allocation and tax forms provided for their specific settlement rather than assume every PAGA payment will produce the same combination of forms.