The California Private Attorneys General Act (PAGA): What HR Professionals Need to Know

The California Private Attorneys General Act of 2004 (PAGA) is one of the most consequential enforcement laws affecting employers in California. Rather than creating new workplace requirements, PAGA is solely a penalty-and-enforcement mechanism.

California significantly amended PAGA in 2024 with AB 2288 and SB 92. The amendments generally apply to PAGA notices and lawsuits filed on or after June 19, 2024 (with some cure provisions effective October 1, 2024).

Because a majority of claims arise from wage and hour violations, HR and payroll staff play a critical role in mitigating PAGA risk through compliance, documentation, and timely corrective action.

Purpose and Structure of PAGA

PAGA was enacted to address chronic underenforcement of labor standards by the California Labor and Workforce Development Agency (LWDA).

It allows an “aggrieved employee” to bring a representative action on behalf of the State of California and other affected employees to recover civil penalties that otherwise could be sought only by state agencies.

Important facts for HR professionals

• PAGA claims primarily cover non-exempt employees.                                                                                 
• PAGA actions are not class actions, although they resemble them procedurally.
• PAGA plaintiffs do not need to meet certification standards that are required in class-action lawsuits.
• Most Labor Code violations — particularly wage and hour issues — are actionable.
• PAGA actions are not subject to agreements to arbitrate.
• Class action wage and hour lawsuits can also be brought under a different legal framework, but have 3- to 4-year statutes of limitation increasing potential penalties.
• Wage and hour penalties are NOT covered by insurance.

The statute’s enforcement-oriented nature makes even technical or low-dollar violations potentially expensive once penalties, attorneys’ fees, and costs are considered.

Common PAGA Claims: Wage and Hour Focus

While PAGA applies broadly to the Labor Code, claims most frequently involve wage and hour compliance, including violations of laws regarding minimum wage, overtime, employee misclassification, meal and rest periods, wage statements, expense reimbursement, final pay, off-the-clock work, and improper timekeeping or rounding practices.

PAGA Notice Requirements

Employees must provide written notice to the employer and LWDA identifying alleged violations before filing suit. HR departments should treat PAGA notices as high-priority risk events and promptly notify legal counsel.

PAGA Penalties

The 2024 PAGA amendments modified the penalty structure to relate it to the severity of employer conduct:

• $50 per employee, per pay period for isolated, non‑recurring violations lasting no more than 30 days, or four pay periods.
• $25 per employee, per pay period for certain wage statement errors if the information is otherwise easily determined.
• $200 per employee, per pay period only for repeat violations or conduct deemed malicious, fraudulent, or oppressive.

Seventy-five percent of penalties are paid to the LWDA and 25% to employees. Some Labor Code sections provide their own civil penalties, which may replace the default amounts.

Standing to Bring a PAGA Lawsuit

Under the 2024 amendments, a PAGA plaintiff must have personally suffered each Labor Code violation they seek to pursue on behalf of others.

This reverses prior case law that allowed an employee who experienced just one violation to pursue penalties for entirely different violations affecting other employees.

This standing restriction does not apply to certain nonprofit legal aid organizations.

Statute of Limitations

PAGA claims are subject to a one-year statute of limitations, measured from the filing of the PAGA notice by the employee/plaintiff with the LWDA.

The 2024 amendments clarify that a plaintiff must have personally suffered a violation within one year to have standing to bring a PAGA claim.

This rejects arguments that standing could be based on older or “continuing” violations.

Attorneys’ Fees and Costs

Prevailing employees are entitled to mandatory recovery of reasonable attorneys’ fees and costs. Employers may not recover fees if they prevail.

Employer Defenses and Preventative Actions

With the 2024 amendments, PAGA changed the penalty structure for employers who can show proactive compliance.

Employers that take “reasonable steps” to comply with the law before receiving a PAGA notice may significantly limit their exposure. In those circumstances, civil penalties may be reduced to 15% of the amount that would otherwise be assessed.

Even when compliance efforts begin after a PAGA notice is issued, an employer may still benefit from a reduced penalty cap of 30%, provided the employer undertakes meaningful corrective action within 60 days of receiving the notice.

To qualify for the 15% penalty cap, Labor Code section 2699v(g)(2) explains that taking “all reasonable steps” prior to receiving notice may include, among other actions:

• Performing regular payroll audits and correcting issues identified through those audits.
• Distributing written policies that comply with applicable labor laws.
• Providing training to supervisors on Labor Code and wage order requirements and addressing supervisory noncompliance through corrective measures.

Similarly, Labor Code section 2699(h)(2) identifies examples of “all reasonable steps” taken after receipt of a PAGA notice, which may include:

• Auditing the specific violations alleged in the notice and responding appropriately to the findings.
• Issuing compliant written policies addressing the alleged violations.
• Training supervisors on the relevant Labor Code and wage order obligations and implementing corrective action when necessary.

To be eligible for the post‑notice penalty cap, these steps must be completed within the 60‑day statutory window.

Conclusion

Unfortunately, there is no clear formula guaranteeing that a court will determine an employer has taken “all reasonable steps.”

The mere existence of a Labor Code violation does not, by itself, establish a failure to act reasonably, just as the presence of a compliant written policy does not automatically establish sufficient compliance efforts.

Courts are required to assess the issue based on a “totality of the circumstances” standard, including consideration of the employer’s size and available resources, as well as the nature, seriousness, and duration of the alleged violations.

Because it requires a trial on the facts to establish that “all reasonable steps” to comply were taken, defense attorneys report that there still are as many lawsuits being brought as prior to the 2024 PAGA amendments, because the settlement pressure from the costs of litigation and attorney’s fees is still present.

Therefore, HR efforts to ensure compliance is essential to avoiding the PAGA quagmire.

Members of Nonprofits Insurance Alliance have access to live webinars, in addition to short educational sessions on the member portal.

Resources are designed to support members in complying with employment risks, including wage and hour laws enforced by PAGA.

Members with an active Board & Executive policy that includes Directors & Officers (D&O) and Employment Practices Liability (EPLI) coverage also have access to additional resources, including employment risk consultations.