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California’s Labor and Workforce Development Agency has proposed sweeping new rules governing how PAGA claims are filed, cured, and settled. Nothing is final yet, but the proposed changes are good news for employers. Here’s what you need to know now.
Note: This area of law is actively developing. The regulations discussed below are proposed, not final, and may be modified before adoption. We will continue to update you as the LWDA moves toward a final rule. For background on the 2024 PAGA reforms that preceded these proposed regulations, see our earlier post.
What is PAGA? Why does it keep changing?
California’s Private Attorneys General Act, better known as PAGA, allows employees to sue their employers on behalf of the state for Labor Code violations, collecting civil penalties that are split between the employee and the state.
Since its enactment in 2004, PAGA has been one of the most significant sources of employment litigation exposure for California employers. In 2024, the legislature made landmark reforms aimed at reducing abuse and frivolous filings.
Now, the California Labor and Workforce Development Agency (LWDA) is taking the next step: proposing the first-ever formal regulations to govern how PAGA works in practice.
What the LWDA proposed and where things stand now
On February 6, 2026, the LWDA issued a Notice of Proposed Rulemaking that would add dozens of new sections to the California Code of Regulations governing PAGA procedures. The written comment period closed March 23, 2026, and a public hearing was held on April 9, 2026.
The LWDA is currently reviewing comments and hearing feedback before deciding whether to adopt the regulations as proposed or with additional modifications. Final rules are yet to come.
If adopted in their current form, the proposed rules would make consequential changes in three key areas:
- Stricter notice requirements
Under the proposed regulations, employees filing a PAGA claim would be required to use a standardized LWDA form and provide fact-specific allegations tied to their own employment experience, not the kind of vague, unsupported language that courts and the LWDA have long criticized.
The notice would need to be signed and certified, affirming that the claims are legally supported and not filed for an improper purpose.
LWDA’s planned regulations also take aim at high-frequency and vexatious filers. That is, attorneys who have used PAGA as a volume litigation tool. For example, during fiscal year 2024-2025, five law firms alone accounted for nearly a quarter of all PAGA filings statewide, with one attorney filing nearly 600 notices in a single year. A public list, maintained by the LWDA, would identify such filers through its online PAGA filing portal.
The good news for employers: This means that poorly supported or generic PAGA notices are easier to challenge from the start.
- Formalized cure procedures
The 2024 PAGA reforms gave smaller employers (those with fewer than 100 employees) an important off-ramp: the ability to propose corrective measures and fix the problem before a lawsuit can proceed.
In theory, this was a significant win for small businesses, but in practice, the rules for how to use that process were frustratingly vague. The proposed 2026 rules fill in those blanks and spell out specific steps, timelines, and procedures smaller employers need to follow to take advantage of it.
For eligible businesses, this clarification should let corrective measures finally become useful tools, but only if you know how to use them correctly and act quickly.
- Expanded settlement oversight
The proposed regulations would require a more robust settlement submission process, giving the LWDA at least 45 days to review proposed PAGA settlements before they are finalized. Additionally, any other employees with pending PAGA claims against the same employer must be notified of the proposed settlement and given the opportunity to weigh in before it is concluded.
This adds structure to a process that has historically lacked it, but it does mean longer resolution timelines and less flexibility in structuring settlements.
For employers with active or anticipated PAGA claims, longer settlement timelines make early legal involvement more important than ever.
What does this mean for California employers now?
These regulations are not yet final. The LWDA is still reviewing comments, and modifications are possible before any final rule is adopted. However, the direction of travel is clear: more structure, more scrutiny of filings, and more oversight of settlements. If you’re an employer, that’s mostly good news.
PAGA has been a source of costly, unpredictable litigation for California employers for over twenty years. These proposed regulations represent a real step toward a more structured and accountable process, but the landscape is still shifting.
What you should do now.
While you wait, there are some steps worth taking, regardless of how the final rules shake out. If your business receives a PAGA notice, keep in mind that you may have two immediate opportunities under the proposed rules: the ability to file a formal written response within 33 days identifying deficiencies in the notice, and – if you have fewer than 100 employees – the option to pursue the cure process before a lawsuit can proceed.
Both windows close quickly, which makes early legal involvement critical from the moment a notice arrives.
What’s next.
We’re monitoring these developments closely and will keep you updated once the final rules are issued.
Do you have questions or concerns about how the proposed regulations may affect your business? Contact us to review your specific situation.
FAQs
PAGA stands for the Private Attorneys General Act. It’s a California law that allows employees to sue their employers on behalf of the state for Labor Code violations, with any penalties split between the employee and the state. Since its enactment two decades ago, it has been a significant source of employment litigation exposure for the state’s businesses.
No. At time of publishing, the proposed regulations are still under review. The comment period closed on March 23, 2026, and a public hearing was held on April 9, 2026. The LWDA is currently reviewing feedback before deciding whether to adopt the regulations as written or with modifications.
The proposed regulations focus on three key areas:
- stricter requirements for how PAGA claims are filed
- a more clearly defined process for smaller employers to resolve claims before a lawsuit proceeds
and expanded LWDA oversight of PAGA settlements
Act quickly and contact employment counsel right away. A PAGA notice can trigger several important deadlines and opportunities to limit potential exposure.
Under current law:
- Evaluate whether a cure process is available. Employers with fewer than 100 employees may be able to submit a confidential proposal to cure certain alleged violations to the LWDA within 33 days after receiving the notice. Successfully completing the cure process may prevent a PAGA lawsuit based on the cured violations.
- Investigate the allegations immediately. Employers should review payroll practices, wage statements, timekeeping records, policies, and any other practices identified in the notice.
- Consider corrective action within 60 days. Employers that take “all reasonable steps” to comply with the Labor Code within 60 days after receiving a PAGA notice may qualify for a 70% reduction in PAGA penalties. Employers that can show they took reasonable compliance steps before receiving the notice may qualify for even greater reductions.
In addition, the LWDA’s proposed PAGA regulations would establish procedures allowing employers to submit a written response identifying alleged deficiencies in a PAGA notice. Because these regulations remain proposed and may change before adoption, employers should confirm the status of any applicable regulatory procedures at the time a notice is received
Under the proposed regulations, probably not in the way you may have done it before. The LWDA is moving to prohibit pre-litigation settlements from releasing PAGA claims, which would effectively end the common practice of resolving a PAGA notice with a private payment and release before a lawsuit is filed. Any resolution of PAGA claims would need to go through formal litigation and a court-supervised settlement process. This is one of the most significant practical changes in the proposed regulations for employers who have previously handled PAGA claims informally.
Even though the regulations aren’t final, early preparation matters. If your business has received or anticipates a PAGA notice, early legal involvement is important. If you have fewer than 100 employees, understanding the cure process could save you significant time and money. Contact us to discuss your specific situation.
About Larson & Gaston, LLP
Larson & Gaston, LLP is a Pasadena-based law firm that has been defending Southern California businesses for over 25 years. With deep experience in employment law, PAGA and class action defense, transportation, and business litigation, the firm counsels and represents employers across a wide range of industries—from carriers and logistics companies to contractors, retailers, and beyond.
When California’s legal landscape shifts, Larson & Gaston helps clients understand what it means for their business and what to do about it.