Background
The Private Attorneys General Act of 2004 generally enables California employees to sue their employers on behalf of themselves and other “aggrieved employees” to recover civil penalties for Labor Code violations. In 2018, legislation was passed which created a PAGA exemption for employees in the construction industry if they are covered by a collective bargaining agreement (CBA) which provides for:
- Wages, hours of work, and employee working conditions;
- Premium wages for all overtime hours worked; and
- Employees to receive a regular hourly pay rate of not less than 30% more than the state minimum wage rate.
In addition, the CBA must:
- Prohibit all of the Labor Code provisions otherwise covered by PAGA and provide for a grievance and binding arbitration procedure to redress such violations;
- Expressly waive PAGA’s requirements in clear and unambiguous terms; and
- Authorize the arbitrator to award any and all remedies available under the Labor Code.
The original bill had a sunset provision which stated that the exemption only applied to collective bargaining agreements in effect before January 1, 2025 and expired on the date the CBA expires or on January 1, 2028, whichever was earlier.
New Law
AB 1034 extends the exemption to January 1, 2038.
What to Do Next?
Unionized construction industry employers or employer associations whose CBAs do not already contain the PAGA exemption should certainly attempt to negotiate one. Employers and associations who already have the PAGA exemption in their CBAs should take this opportunity to confirm that all the above-referenced requirements are satisfied. In particular, the wage rates of employees covered by the CBA should be reviewed to ensure that all such employees are earning at least $20.80 per hour, which is 30% more than the current state minimum wage of $16 per hour. It’s also important to ensure that those CBA rates are increased if the state minimum wage rate increases. Of note, California’s minimum wage rate is slated to increase to $16.50 on January 1, 2025 based on increases in the consumer price index. In addition, if California voters approve Proposition 32 next month, the minimum wage will increase to $18 per hour for all employers by 2026.
