PAGA: Early Evaluation Conference
This is the final of a three-part series addressing the changes to California’s Private Attorneys General Act. You can read more about the PAGA reform and recommended audit steps here, and pre-litigation conference here.
In this part we discuss the Early Evaluation Conference:
What is an Early Evaluation Conference?
When served with a PAGA lawsuit, larger employers (who employed at least 100 employees in total during the period covered by the PAGA notice), as well as smaller employers who did not use the pre-litigation process with the Labor and Workforce Development Agency – may request an Early Evaluation Conference and a stay of the proceedings (meaning the suit will be put on hold).
In essence, the EEC is similar to mediation and serves to evaluate:
- Whether or not violations were cured,
- The strengths and weaknesses of the parties’ claims and defenses,
- What information the parties can share to facilitate resolution, and
- Whether the plaintiff’s claims can be settled in whole or in part.
When requesting an EEC, the Defendant must include a statement regarding whether it intends to cure any violations and identify any allegations in disputes. If the Court issues an EEC order, the Defendant is required to disclose to the evaluator and Plaintiff its proposed plan to cure and/or the basis for disputing Plaintiff’s allegations, as applicable.
If Defendant submits a cure plan, the Plaintiff will be ordered to disclose the factual basis of their allegations, the amount and calculation of penalties claimed, attorney’s fees and costs incurred, a demand for settlement, and the basis for accepting/rejecting Defendant’s proposed cure plan.
Who Will Conduct the EEC?
The EEC will be conducted by “a judge or commissioner or such other person knowledgeable about and experienced with issues arising under the [Labor Code] whom the court shall designate.”
It remains to be seen if the judicial system will create a separate cost-free platform for EECs, similar to its Mandatory Settlement Conference program. It is also possible the Court will order the parties to attend private mediation with an experienced mediator as part of the EEC process (which will require the parties to incur costs).
EEC Process
For purposes of the EEC and the PAGA reform the term cure means that the employer “is in compliance with the underlying statutes identified [by plaintiff] … and each aggrieved employee is made whole.”
Curing alleged unpaid wages can be costly as the new PAGA statutes clarifies that to make an employee whole, an employer must pay:
- Any owed wages for the previous three years;
- Seven percent interest;
- Liquidated damages “as required by statute;” and
- Reasonable attorney’s fees and costs “as determined by the court.”
Notably, all evidence submitted during an EEC remains confidential. But underlying documents (e.g., internal Company correspondence regarding cure, internal calculations of cure, etc.) may be discoverable in subsequent or companion litigation (e.g., class action), unless a privilege applies.
Conclusion
Given the potential litigation costs of PAGA and other representative claims, parties often agree on mediation in an effort to reach an early resolution. Given the common practice of early mediation, and the cost of curing alleged wage claims, the EEC may not make much difference.
Best practice for employers continues to be to review and audit practices and make corrections as needed:
- Do your employees record all hours worked?
- Do employees properly record meal breaks?
- Do you pay premiums where applicable?
- Do you include incentives in overtime, paid sick leave, and premium pay?
- Are your paystubs in compliance with California law?
Employers should ask these questions and many others to confirm compliance. As we always say – being proactive now can go a long way in defending later claims and saving the company money.
Sue M. Bendavid and Tal Burnovski Yeyni defend employers in wage and hour, and other employee claims.