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PAGA FAQs
General PAGA Basics
The Private Attorneys General Act (PAGA) is a California law that allows employees to act as “private attorneys general” by filing lawsuits for alleged Labor Code violations. Employees who bring a claim can seek civil penalties on behalf of themselves, other employees, and the state.
PAGA was enacted in 2004 to expand enforcement of California’s labor laws. The Legislature intended to give employees a way to address violations when the state lacked resources to do so directly. While the law gave employees more leverage, it also opened the door to widespread litigation—much of it costly for employers, even over technical issues.
Unlike a class action, a PAGA claim does not require class certification, which is a very formal process that requires court approval. This makes PAGA actions easier to bring and harder to dismiss. In addition, while class actions generally compensate employees for damages, PAGA claims focus on civil penalties, which can multiply quickly and create significant financial exposure for employers.
Any “aggrieved employee” who alleges a violation of the Labor Code may file a PAGA claim. This means a single employee can seek penalties on behalf of an entire workforce.
Once a PAGA Notice is filed with the Labor and Workforce Development Agency, a lawsuit is very likely to follow in a little over two months. During that two month period there are opportunities to fix the problems alleged in the complaint and take other steps to resolve the claim or reduce exposure. It is very important for employers to act quickly in dealing with a PAGA Notice and the first step is often engaging experienced defense counsel.
PAGA Risks for Employers
PAGA claims have become one of the most expensive and disruptive risks facing employers in California. Penalties add up quickly, and claims are often pursued even where violations are minor or unintentional. Defending against a PAGA lawsuit can drain resources, distract management, and expose a business to reputational harm.
Common targets include missed meal and rest breaks, improper wage statements, unpaid overtime, late final paychecks, and recordkeeping errors. In many cases, the claims arise from administrative or technical issues rather than intentional wrongdoing.
Depending on the size of the workforce and the length of time involved, penalties can reach hundreds of thousands—or even millions—of dollars. Because penalties are calculated per employee, per violation, per pay period, exposure escalates rapidly.
Penalties are typically assessed for each violation affecting each employee, for every pay period the violation occurred. For example, if a payroll error affects 50 employees over 10 pay periods, that single mistake can trigger 500 separate penalty counts.
PAGA Reform (2025 Changes)
In July 2025, Governor Newsom signed legislation reforming PAGA. The law preserves employee rights but creates new tools for employers, including the ability to limit penalties if they take proactive steps to address violations and demonstrate compliance.
The reform law recognizes the challenges employers face and incentivizes good-faith compliance. By promptly correcting violations and reviewing practices, employers may significantly reduce potential penalties.
Yes. Employers who take reasonable steps to address alleged violations can see penalties reduced by 70–85%. This creates a meaningful opportunity to limit exposure.
Employers should regularly audit their wage and hour practices, correct errors quickly, and maintain documentation of compliance efforts. Taking corrective action before or during a PAGA claim can qualify a business for reduced penalties under the new law.
The reforms apply to all California employers. However, businesses with larger workforces or more complex operations may see the greatest benefit, since penalty reductions have a larger impact when exposure is high.
Employer Compliance and Prevention
Prevention is the best defense. Employers should:
- Conduct regular HR Compliance and wage and hour audits.
- Ensure payroll systems are accurate.
- Provide legally compliant meal and rest breaks.
- Train managers on California’s labor requirements.
Working with experienced counsel can help identify and address risks before they become claims.
The most frequent issues include:
- Missed or late meal and rest breaks.
- Overtime miscalculations.
- Inaccurate wage statements.
- Delayed final paychecks.
- Recordkeeping deficiencies.
Because PAGA penalties are ongoing, every pay period that passes with a violation increases potential exposure. Addressing compliance immediately reduces risk and ensures employers can take advantage of the reforms that allow penalty reductions.
Accurate, consistent documentation—such as time records, wage statements, and written policies—can demonstrate compliance or good-faith corrective efforts. Strong records are often the difference between high penalties and a reduced outcome.
At Larson & Gaston, we partner with employers to audit practices, identify risks, and implement compliance strategies. Our attorneys also defend businesses against PAGA claims, leveraging the new reform tools to reduce or eliminate penalties where possible.
Litigation and Defense Strategy
Yes. While defending a PAGA claim can be challenging, employers may contest allegations, show that violations were corrected, or demonstrate good-faith compliance to reduce penalties.
Yes, in certain circumstances, arbitration agreements provide protection against PAGA claims. Unfortunately, the law in this area changes constantly and arbitration agreements must be reviewed regularly to ensure that they comply with current law and can be used to deal with PAGA claims.
Options may include litigation, settlement negotiations, or corrective action to limit penalties under the new reform law. The best strategy depends on the nature of the alleged violations and the size of the exposure.
Settlements usually involve a negotiated penalty payment, part of which goes to the state and part to employees. Employers can often reduce settlement amounts by showing they have addressed the underlying issues.
Yes. Early compliance reviews, audits, and corrective action can prevent claims from being filed and can also qualify a business for penalty reductions if a claim does arise. Early discussion with the attorneys filing the PAGA Notice may lead to prompt and affordable resolutions to the case. Taking proactive steps immediately is the most effective strategy available.