PAGA’s Exhaustion Requirements: Guidance from the 9th Circuit

The Private Attorneys General Act of 2004 (Labor Code[1] §§ 2698-2699.5) (“PAGA”) was enacted in 2004 in order to allow employees to bring representative actions to recover civil penalties for violations of the Labor Code.  Once an afterthought, in recent years PAGA claims have become increasingly popular.[2]  As the number of PAGA claims has grown, the PAGA landscape has become ever more hotly contested.

This post is part of a series of posts exploring recent development in PAGA jurisprudence.  It focuses on  PAGA’s exhaustion requirements.

PAGA’s Exhaustion Requirements

Before bringing an action against an employer to recover civil penalties for violations of the Labor Code, an employee must give “written notice by certified mail to the Labor and Workforce Development Agency and the employer of the specific provisions of [the Labor Code] alleged to have been violated, including the facts and theories to support the alleged violation.”  Cal. Lab. Code § 2699.3(a)(1).  This provision begs the question of how much detail an employee must include in her letter to avoid having her PAGA claims dismissed for failure to properly exhaust.

Two Ninth Circuit decisions in 2015 help to answer this question.  First, Alcantar v. Hobart Serv. (9th Cir. 2015) 800 F.3d 1047, 1057 provides an example for employees of what not to do.  In Alcantar, the court held that the exhaustion requirements were not satisfied where a plaintiff’s allegations were so vague they did not allow the state agency to “intelligently assess the seriousness of the alleged violations” or the employer to “determine what policies or practices are being complained of.”  Id.  Indeed, Mr. Alcantar’s letter was rather skimpy with regard to the underlying facts:

Plaintiff contends that Defendant (1) failed to pay wages for all time worked; (2) failed to pay overtime wages for overtime worked; (3) failed to include the extra compensation required by California Labor Code section 1194 in the regular rate of pay when computing overtime compensation, thereby failing to pay Plaintiff and those who earned additional compensation for all overtime wages due; (4) failed to provide accurate wage statements to employees as required by California Labor Code section 226….

Id.

On the other end of spectrum is Green v. Bank of America (9th Cir. Oct. 13, 2015) No. 13-56023.  In Green, a failure to provide seating case, the Ninth Circuit found that the plaintiffs’ exhaustion letter was adequate.  The court noted that, “a written notice is sufficient so long as it contains some basic facts about the violations, such as which provision was allegedly violated and who was allegedly harmed.”  The court also cited with approval the case of Cardenas v. McLane Foodservices, Inc., (C.D. Cal. 2011) 796 F. Supp. 2d 1246, 1259-61, in which the court had explained that plaintiffs need not include “every potential fact or every future theory,” and found a PAGA notice sufficient where it identified the specific plaintiffs aggrieved by the alleged violations.

The Green court based its conclusion on the fact that the written notice contained the following information: (1) the specific statute that the defendant had allegedly violated, (2) facts about what position the plaintiffs held, (3) a statement that the plaintiffs could use a seat in their position, and (4) a specific identification of who was allegedly harmed.  Alcantar and Green therefore provide useful guideposts, both to employees for determining how much information to include in a PAGA exhaustion letter, and to employers for determining whether such letters are adequate.

[1] All references to the Labor Code refer to the California Labor Code.

[2] For example, the Department of Industrial Relations reports that there were 4,430 PAGA exhaustion letters filed in 2010, 5,064 in 2011, 6,047 in 2012, 7,626 in 2013, and 6,307 in 2014.