If your employer settles a PAGA lawsuit, covered workers get an automatic penalty payment and lose the covered penalty claims. PAGA, California's Private Attorneys General Act, lets one employee pursue civil penalties for Labor Code violations on behalf of the state and other affected workers. You do not join the case to benefit. The court decides whether the deal is fair, the state gets its share first, and an administrator sends your share by mail.
Official resources:
- http://www.dir.ca.gov/Private-Attorneys-General-Act/Document_Submission-Instructions.html — Use this primary source to verify the official announcement.
- https://www.mcguirewoods.com/client-resources/alerts/2020/3/california-supreme-court-reins-in-argument-that-individual-releases-bar-paga-claims/ — Use this page to read the original argument in context.
Table of Contents
- How does a PAGA settlement become final?
- Where does the penalty money go?
- Do you need to file a claim or opt out?
- What claims end and what claims survive?
How does a PAGA settlement become final?
A PAGA settlement takes effect only after superior-court review and approval. The California State Legislature requires the proposed settlement to be submitted to the state labor agency at the same time it is submitted to the court, according to the current text of Labor Code section 2699.
That agency review gives the Labor and Workforce Development Agency, known as the LWDA, a chance to evaluate or object before the judge approves the deal. The California Department of Industrial Relations directs parties to upload the settlement text, supporting points and authorities, and hearing notice through the PAGA portal, as described in its PAGA document-submission instructions.
Where does the penalty money go?
Most of every PAGA penalty goes to the state. The rest goes to the aggrieved employees covered by the settlement period and violations. For LWDA notices sent on or after June 19, 2024, reforms AB 2288 and SB 92 allocate 65% of penalties to the state and 35% to employees, according to the 2024 PAGA Reform article from Sweeney Mason LLP.
Cases based on earlier notices use the prior 75%-to-LWDA and 25%-to-employees split. The employer also pays court-approved attorney fees and administration costs on top of the penalty fund. Fees in these cases are often one-third to more than one-third of the total, which reduces the amount left for penalties.
Do you need to file a claim or opt out?
You usually do not need to file a claim form. A neutral settlement administrator calculates each worker's Individual PAGA Payment pro rata from workweeks or pay periods worked, then mails checks to the last known address. Someone who worked twice as many covered weeks as another worker generally receives about twice as much.
Someone employed for only part of the covered period receives a smaller share tied to that shorter time. You also cannot opt out of the PAGA penalty portion. Once the court approves the settlement, the judgment binds the covered employees and the state and releases the specified civil-penalty claims.
- Watch for mail from the administrator, not only from your employer.
- Update your mailing address if you moved during or after the covered period.
- Cash or deposit the check before it expires.
What claims end and what claims survive?
An approved settlement ends the representative PAGA penalty claims listed in the release for the covered period. The PAGA case is then dismissed, and a later PAGA case based on the same violations can be barred. Your separate individual claims do not automatically disappear.
Unpaid wages, overtime, missed meal-period pay, expense reimbursement, and other personal damages survive unless you expressly settle them in another agreement. Keep the settlement notice with your pay records. It shows the covered dates, the released penalties, and whether any individual claims were included, which matters if you later pursue back pay.