For the third consecutive legislative session, Massachusetts state representative Tram T. Nguyen (D-Essex) has proposed a bill (H.1916) 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 (S.1300) with goals similar to those of her bill.
Rep. Nguyen’s proposed law, which is modeled on but would be even more punitive than California’s infamous Private Attorneys General Act, would have significant consequences for Massachusetts employers and the economy of the Commonwealth.
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 to assess and collect 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 acting as “private attorneys general,” ostensibly to allow individuals to vindicate their rights, given the state’s limited resources and capacity to address every alleged violation.
Employees pursue PAGA claims on behalf of themselves, other “aggrieved employees,” and the state, seeking to recover the civil penalties available under the Labor Code and PAGA. Penalties generally range between $50 to $200 per employee per pay period, depending on the type of violation. Not only can they add up quickly depending on the size of the class and the number of pay periods involved, but the penalties may also be “stacked.” In other words, multiple penalties are applied to the same underlying conduct when multiple provisions of the Labor Code have been violated with respect to the same employee.
The Labor and Workforce Development Agency receives the majority of these penalties -- originally 75 percent, reduced to 65 percent after a 2024 amendment to the statute. 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 Agency detailing the allegations. Theoretically, this gives the Agency time to investigate and take action. In practice, this rarely happens, and the employee is entitled to file suit 65 days later.
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 class-wide basis, seeking to recover unpaid wages, meal and rest period premiums, and other statutory penalties in addition to the PAGA claim seeking civil penalties. These class and PAGA claims are often filed as separate lawsuits, exposing employers not only to duplicative liability for the same claims, but also to increased defense costs.
Unfortunately, as drafted PAGA left a number of unanswered questions relating to the scope of potential liability, including whether individuals could bring claims for violations that they themselves did not experience, and when and to what extent penalties could be stacked. The absence of clarity on these and other issues left some employers vulnerable to outsized demands, and embroiled others in years of expensive litigation.
California’s PAGA was rarely used in its first decade, but the number of PAGA actions has since ballooned: from 2013 to 2014, PAGA notices jumped from 444 to 4,134; in 2023, almost 8,000 notices were filed.
Over the past 10 years, California’s PAGA has been nothing short of a nightmare for employers of all sizes. It is a rare employer that is 100 percent 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 with potential liability in the hundreds of thousands of dollars, 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 non-compliance 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.
The California legislature finally responded to the business community’s concerns about PAGA’s impacts by passing a handful of amendments in 2024. These provided some relief to employers -- for example, by limiting the ability of aggrieved employees to bring claims for violations that they did not personally suffer and providing employers with an opportunity to cure some violations – but they also arguably further encouraged PAGA claims by increasing the employees’ recovery from 25 percent to 35 percent.
Proposed Massachusetts PAGA
Rep. Nguyen’s bill seeks to bring the plaintiff-friendly features of California’s PAGA to the Commonwealth, including civil penalties paid to a “wage enforcement fund,” while omitting some of the few guardrails in the California statute. For example, Rep. Nguyen’s bill does not require notice to first be filed with any government agency, permits actions on behalf of the Commonwealth to proceed in court even if the individual’s claims are subject to arbitration, and does not prohibit the stacking of penalties, all while limiting the defenses available to employers and imposing treble damages as liquidated damages.
Moreover, although the recent PAGA amendment in California set limits on overbroad actions by requiring that the person bringing suit have “personally suffered each of the violations alleged,” the proposed Massachusetts law not only lacks this requirement but also expands standing beyond individuals, allowing non-profit employee rights advocates and labor unions to sue.
Rep. Nguyen introduced substantially the same bills as part of the 2023-24 and 2021-22 legislative sessions. Neither of those earlier bills advanced past the House committee to which they were assigned. Her bill may stand a better chance this time, given the potential for support from the Senate.
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 percent 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.
Given the various Massachusetts wage and hour statutory sections that include civil penalties, which are sometimes stated as broad ranges rather than specific amounts and can be as much as $10,000 and even $25,000 per violation, as well as those that currently do not provide for civil penalties at all, the Senate bill would also drastically change wage and hour enforcement in the Commonwealth.
Massachusetts beware
Several other left-leaning states have considered – but not passed – PAGA-like legislation, 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. Compliance with the California wage and hour law is already exceedingly difficult. The risk that small, inadvertent errors can lead to a demand for staggering penalties plus attorneys’ fees can be too much for some businesses to bear.
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 even fewer protections. Although the Massachusetts Wage Act differs in important ways from the California Labor Code, the Massachusetts statute already provides for treble damages and attorneys’ fees for wage payment violations, and it has significant civil penalty provisions that could greatly affect employers if made available as an enforcement tool by private litigants.
No responsible employer wants to shortchange its employees. And employees in Massachusetts can and do take advantage of the Wage Act and other laws to ensure they are properly compensated. Although the term “wage theft” has become widely used across the country, it is far from clear that the Commonwealth needs the threat of individual recovery of potentially massive civil penalties to bring “wage theft” under control, given that the Massachusetts economy does not depend as heavily as California on low-income, service-based jobs (such as in hospitality and tourism).
The lesson of California’s PAGA experiment suggests that bringing such a law to the Commonwealth 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.
Concerned Massachusetts employers are encouraged to contact their local legislator.
