For the third consecutive legislative session, Massachusetts state representative Tram T. Nguyen has proposed a bill to establish a private right of action by employees on behalf of themselves, their fellow employees and the Commonwealth for employers’ alleged wage and hour violations.
For the first time, however, Rep. Nguyen has some support from the other chamber: Several state senators have introduced a bill with similar goals.
Rep. Nguyen’s proposed law – which is modeled on California’s infamous Private Attorneys General Act (PAGA) but would be even more punitive – would have significant consequences for Massachusetts employers.
California PAGA
To understand the potential impact of a Massachusetts PAGA, it is helpful to review the California version.
Enacted in 2004, California’s PAGA empowered the state’s Labor and Workforce Development Agency (LWDA) to assess civil penalties for violations of the state’s Labor Code, which governs employee wages and hours of work. PAGA also empowered “aggrieved employees” to file civil actions on behalf of the state, i.e., to act as “private attorneys general,” ostensibly to allow individuals to vindicate their rights, given the state’s limited enforcement resources.
Employees pursue PAGA claims on behalf of themselves, other “aggrieved employees,” and the state, seeking to recover the civil penalties, which generally range between $50 to $200 per employee per pay period, depending on the type of violation. Not only can penalties add up quickly based on the size of the class and the number of pay periods involved, but they may also be “stacked,” with multiple penalties applied to the same underlying conduct when multiple provisions of the Labor Code have been violated with respect to the same employee. The LWDA receives the majority (65%) of these penalties; the plaintiff and the other employees get the rest, along with reasonable attorneys’ fees and reimbursement of costs.
Before commencing a PAGA action, the aggrieved employee must file a notice with the LWDA detailing the allegations, theoretically providing an employer with some opportunity to reduce its liability by paying amounts owed. Notably, PAGA imposes liability in addition to that of traditional class action lawsuits. So, in practice, employees in California typically also assert Labor Code violations on a classwide basis, seeking to recover unpaid wages and statutory penalties in addition to the PAGA claim seeking civil penalties. These class and PAGA claims are often filed as separate lawsuits, exposing employers to both duplicative liability for the same claims and increased defense costs.
Over the past 10 years, California’s PAGA has ensnared employers of all sizes in costly litigation. It is a rare employer that is 100% compliant in every pay period with the multitude of exacting requirements of the Labor Code. The result in many cases is that what might appear to be a small number of technical or de minimis violations can entice plaintiffs (and their lawyers) to instigate sprawling class litigation in hopes of extracting sizable settlements. Many large employers have settled PAGA actions for multiple millions of dollars.
In addition, the potentially significant consequences of even minor noncompliance have led many companies with California employees to disproportionately pour resources into state-specific time and pay systems, processes, policies, compliance personnel, training and related legal supports, raising the cost of doing business in the state.
Proposed Massachusetts PAGA
Rep. Nguyen’s bill seeks to bring the plaintiff-friendly features of California’s PAGA to Massachusetts while omitting some of the few guardrails in the California statute. For example, Rep. Nguyen’s bill calls for a 20% “surcharge” on top of treble damages and attorneys’ fees, plus certain other “civil penalties,” to be paid to a “wage enforcement fund,” but it does not require notice to first be filed with any government agency or provide for cure. It also permits actions on behalf of the Commonwealth to proceed in court even if the individual’s own claims are subject to arbitration, and it does not prohibit the stacking of penalties. At the same time, it limits the defenses available to employers and imposes treble damages as liquidated damages.
Moreover, although a 2024 amendment to California’s PAGA set limits on overbroad actions by requiring that the plaintiff have “personally suffered each of the violations alleged,” the proposed Massachusetts law lacks this requirement while also expanding standing to bring cases beyond individuals – allowing nonprofit employee rights advocates and labor unions to sue.
The Senate bill tracks the federal False Claims Act by permitting “aggrieved persons” to initiate actions on behalf of the Commonwealth for wage and hour violations. Prevailing individuals could collect 20-30% of any winnings plus recovery of any existing civil penalties. If the relevant law has no civil penalty, the recovery would include a $500 penalty per employee per two-week period in which the violation occurred.
Massachusetts Beware
Several other left-leaning states have considered PAGA-like legislation but have not passed it – and for good reason. The law has been near the top of a list of concerns the California business community has expressed about operating in the state as it can create staggering exposure for even small, inadvertent errors. If any of the PAGA-like legislation that has been introduced in Massachusetts passes, the Commonwealth’s employers will soon face the same hazards but with even greater potential liability and fewer protections. While no responsible employer wants to shortchange its employees, when errors occur, Massachusetts employees can and do take advantage of the Wage Act and other laws to ensure they are properly compensated. Indeed, the Massachusetts Wage Act already allows employees to recover treble damages and attorneys’ fees for wage payment violations. Existing and new civil penalty provisions could greatly affect employers if made available as an enforcement tool to private litigants.
The lesson of California’s PAGA experiment suggests that bringing such a law to Massachusetts is unlikely to meaningfully increase compliance or improve employees’ collection of amounts owed. However, it is likely to introduce a cottage industry of private employment litigation motivated by the potential of extracting outsized penalties or settlements from those creating jobs in the Commonwealth.
Christopher R. Deubert is a senior counsel at law firm Constangy, Brooks, Smith & Prophete who represents and advises businesses on a broad range of labor and employment matters. He can be reached at cdeubert@constangy.com.
Sasha Thaler, a partner at Constangy, Brooks, Smith & Prophete and co-chair of the firm’s Investigations practice group, advises and defends employers across a wide range of industries in matters affecting today’s workplace, from regulatory compliance to litigation and dispute resolution. She can be reached at adthaler@constangy.com.