Recent amendments to California’s Private Attorneys General Act (PAGA), enacted on June 27, 2024, and effective immediately for PAGA actions filed on or after June 19, 2024, introduce significant changes that impact both employers and employees. These reforms were designed to limit excessive penalties for employers while still upholding employee rights under California’s labor laws. Given the increasing complexity of PAGA litigation, businesses must proactively address compliance to mitigate potential liabilities.
Background on PAGA and Pushback Against High Penalties
The Private Attorneys General Act (PAGA), enacted in 2004, was intended to empower employees to act as private attorneys general and enforce labor code violations when the state failed to do so. While the law was initially designed to protect workers from employer misconduct, it quickly became a tool for mass litigation, often resulting in disproportionate penalties for minor infractions. Many small businesses struggled under the weight of excessive PAGA penalties, which frequently led to forced settlements and financial hardship rather than meaningful labor law improvements.
Employers, particularly small and medium-sized businesses, argued that PAGA lawsuits were often driven by attorneys seeking large settlements rather than genuine labor law enforcement. This concern was validated by cases where employers were penalized millions of dollars for technical violations, such as minor wage statement errors, without any actual harm to employees. The recent legislative amendments reflect a growing recognition that PAGA, while well-intentioned, had been weaponized in ways that often harmed businesses without significantly benefiting employees.
Key Changes to PAGA in 2025
1. Reduced Penalties for Certain Violations
Technical Violations: Employers face a reduced penalty of $25 per pay period for minor wage statement errors, provided the mistake does not cause confusion or mislead the employee.
Isolated Incidents: If a violation is nonrecurring and lasts no longer than 30 consecutive days or four pay periods, penalties are limited to $50 per pay period.
2. Penalty Caps for Employers Who Take Corrective Actions
Pre-Notice Compliance: If an employer demonstrates proactive compliance efforts before receiving a PAGA notice, penalties may be capped at 15% of the maximum amount.
Post-Notice Remediation: Employers who cure violations within 60 days of receiving a notice may see penalties capped at 30% of the maximum amount.
3. Expanded Cure Provisions
More violations are now eligible for "curing," including wage statement errors, meal and rest break violations, overtime miscalculations, and reimbursement claims.
Employers with fewer than 100 employees may submit a confidential remediation plan to the Labor and Workforce Development Agency (LWDA).
Larger employers (100+ employees) may request an early court evaluation to discuss settlement and compliance measures.
4. Adjusted Distribution of Penalties
The penalty distribution now allocates 65% to the State of California (previously 75%) and increases the employee share to 35% (previously 25%).
How West Themis Law, PC Can Help Your Business Stay Compliant
West Themis Law, PC, a firm with 15 years of experience in employment litigation on both the plaintiff and defense side, understands the nuances of California labor laws. With these new PAGA reforms, it is more critical than ever for businesses to implement comprehensive compliance strategies.
Our firm offers labor law compliance audits and training designed to help businesses navigate these legal changes and minimize risk. We provide:
Bi-annual or quarterly labor law audits to ensure full compliance with the latest regulations for a flat fee of $3,000. This flat fee includes a highly comprehensive audit, which features a 1-2 hour physical site visit of your business to assess workplace conditions, employee records storage, and overall compliance with labor regulations.
Employee-specific audits at a rate of $300 per full-time employee and $600 per full-time employee over the last four years. These audits are highly comprehensive, involving a meticulous review of each employee's entire personnel file. Additionally, the audit includes a 1-2 hour physical site visit of your business to assess workplace conditions, employee records storage, and overall compliance with labor regulations. We conduct a detailed examination of paystubs for inconsistencies, including rounding downs, unpaid overtime, double time, sick pay, and other wage-related issues to ensure complete compliance with California labor laws. These audits include a thorough review of each employee's entire personnel file, including a detailed examination of paystubs for inconsistencies such as rounding downs, unpaid overtime, double time, sick pay, and other wage-related issues.
Manager training programs that ensure supervisors are well-versed in labor law compliance and best practices, reducing the risk of costly violations.
Comprehensive review and revision services for employment applications, notices, and agreements to ensure compliance with the latest legal requirements.
Implementation of quizzes and training programs for supervisors, ensuring they understand labor law obligations and best practices.
Issuance of summary certificates certified by our firm and experienced employment attorneys, which businesses can use to demonstrate that they have taken "reasonable" and diligent steps to comply before facing any PAGA claims.
Key Legal References and Case Citations
California Labor Code §2698 et seq. governs PAGA, outlining employer obligations and penalties.
Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348 established that PAGA claims cannot be waived by arbitration agreements.
Adolph v. Uber Technologies, Inc. (2023) 14 Cal.5th 1104 reaffirmed employees' standing to bring PAGA claims even if subject to individual arbitration.
ZB, N.A. v. Superior Court (2019) 8 Cal.5th 175 limited PAGA claims to penalties rather than unpaid wages.
Why Proactive Compliance Matters
The new PAGA amendments reward proactive employers who take compliance seriously. By investing in regular audits and employee training, businesses can:
Avoid costly PAGA lawsuits and reduce penalties if a claim arises.
Demonstrate good faith compliance, which may cap penalties at significantly lower rates.
Protect their brand and reputation from legal disputes and labor violations.
Take Action Today
West Themis Law, PC offers both pre-notice and post-notice audits to help businesses proactively comply with labor laws and mitigate potential PAGA claims. We are excited to empower all employers to protect themselves from this financial tsunami of PAGA claims.
Take Action Today
With the legal landscape shifting in California labor law, businesses cannot afford to wait until a PAGA claim is filed. Contact West Themis Law, PC today to schedule a compliance audit or manager training session. Our team is dedicated to helping businesses stay ahead of the law while safeguarding their operations against unnecessary litigation.
For more information, visit West Themis Law, PC appointment bookings for Employment Law Audits or email us at info@wthemislaw.com to schedule a time to discuss your compliance needs today!
By experienced Trial attorney: Sally Chan, Esq, Managing Partner of West Themis Law, PC.
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