626-795-6001
California Class Action FAQ for Employers
General Class Action Basics
An employment law class action is a lawsuit where one or more employees sue on behalf of a larger group of all or most employees (“the class”) who experienced the same alleged Labor Code or workplace violation. Class actions commonly involve wage and hour issues, worker misclassification, rest/meal break policies, or other uniform practices.
A class action requires class certification, meaning a court must determine that the group is large enough and experienced similar harm. This makes class actions more procedurally complex—but they also carry significant financial exposure because they seek damages, not just penalties.
PAGA claims, by contrast, do not require certification and focus on civil penalties.
Any employee who believes they suffered a workplace violation can bring a claim and ask the court to certify a class. If certification is granted, the lawsuit proceeds on behalf of all employees who fall within the defined group—sometimes hundreds or thousands of individuals.
Certification is a major threshold issue. To certify a class, the court must hold a hearing and find that each of the following are true:
- Numerous employees were affected, although courts sometimes certify classes with as few as two dozen members
- The claims share common legal and factual issues that can be resolved with the same evidence
- The representative plaintiff is adequate and their claims must be typical of the class members
- Class action treatment is the most efficient method to resolve the matter If a class is certified, the value and complexity of the case increase dramatically.
Risks for Employers
Because they combine individual damages across many employees, class actions can result in massive exposure—sometimes millions of dollars. Even when claims lack merit, defense costs, management disruption, and reputational harm can be significant.
Frequent targets include:
- Uniform, companywide policies that allegedly violate the Labor Code
- Misclassification of employees as exempt
- Misclassification of independent contractors
- Meal and rest break violations
- Off-the-clock work or unpaid hours
- Overtime miscalculations
- Inaccurate wage statements
- Unreimbursed business expenses
Yes. Even minor payroll or timekeeping issues, if applied consistently, can affect large numbers of employees and form the basis for class claims.
The timeline can vary between state and federal courts.
- California State Courts: Class actions in state court typically span 1–3 years. After the complaint is filed, the defendant responds within about 30 days, followed by an initial discovery phase. The motion for class certification usually occurs 6–12 months after filing, once enough evidence is gathered to address numerosity, commonality, typicality, adequacy, and whether class treatment is superior. Certification hearings often take place around 12–18 months in, and if granted, the case enters broader discovery and trial preparation. Settlements require court approval through preliminary and final hearings, adding several months. Complex wage-and-hour can push timelines beyond three years.
- California Federal Courts: Federal class actions under Rule 23 generally move faster due to stricter scheduling orders. Certification must be decided at an “early practicable time,” often within 6–12 months of filing. After certification, discovery and pretrial proceedings follow, with trial or settlement typically occurring within 18–36 months. Settlement approval involves notice and a fairness hearing under Rule 23(e), similar to state court but usually on tighter deadlines. Appeals of certification decisions are more common in federal court under Rule 23(f), which can extend the timeline. Multi-district or nationwide classes may take 3–5 years, but most federal cases resolve in about two years.
Exposure depends on factors like:
- Type of damages (unpaid wages, interest, attorneys’ fees, etc.)
Because damages are aggregated across a group, even small per-employee amounts add up quickly. - Number of employees
- Length of the alleged violation period (typically going back four years from the date of the complaint)
Employer Response & Defense Strategy
Act immediately. Early evaluation is critical. Employers should:
- Engage experienced employment defense counsel
Quick action can help shape the strategy and reduce exposure. - Preserve documents and time records
- Identify key personnel and systems involved
- Assess the scope of alleged violations
Yes. Challenging certification is one of the most effective defense strategies. Employers may argue that:
- A class action is not the superior method
Defeating certification can dramatically limit case value. - Employees’ experiences vary
- Claims are too individualized
- The representative plaintiff is inadequate or atypical
Often, yes. A properly drafted and updated arbitration agreement with a class action waiver can prevent employees from proceeding on a classwide basis.
However, the law in this area changes frequently, so agreements must be reviewed regularly to ensure enforceability.
Generally, no. Most Employment Practices Liability Insurance (EPLI) policies exclude coverage for wage and hour claims, which are the core of most class actions. While some policies offer a “defense cost sublimit”—a capped amount to help offset legal fees—these limits are often modest compared to the high cost of defending a class action, which can easily reach six or seven figures. Employers should review their policies carefully and consider whether additional endorsements or specialized coverage are available, but in most cases, EPLI will not cover damages or settlements for wage and hour violations.
Settlements often involve a lump-sum fund that is distributed among class members, with court approval. A portion typically goes to attorneys’ fees and administrative costs. Settlements may also require policy changes or compliance commitments.
Yes. Regular audits, prompt correction of issues, and updated policies significantly reduce class action risk. Addressing potential violations early can prevent lawsuits entirely or limit their scope.
Compliance & Prevention
Best practices include:
- Training supervisors on California’s labor requirements
- Conducting regular wage and hour audits
- Reviewing classification decisions with counsel or HR professionals (exempt vs. non-exempt, employee vs. contractor)
- Ensuring meal and rest break policies are compliant
- Maintaining accurate time, payroll, and expense records
- Updating handbooks and policies annually
Multiple employees raising similar complaints
- Companywide policies applied uniformly despite differences in how employees work.
- High turnover with wage or break concerns in exit interviews
- Payroll or timekeeping inconsistencies or rigid systems that do not accurately reflect employees actual hours worked.
- Large groups of workers classified as exempt or as independent contractors
- Receipt of a PAGA notice or attorney demand letter
Strong records—such as timecards, break logs, job descriptions, and written policies—help show compliance and undermine claims of uniform violations. Good documentation is often the strongest defense tool available.
Larson & Gaston partners with employers to:
- Negotiate favorable settlements where appropriate
Our attorneys have extensive experience navigating complex wage and hour matters and protecting employers across California. - Conduct proactive compliance audits
- Review policies and correct deficiencies
- Draft and update arbitration agreements
- Defend employers in class action litigation