Many California retailers have large hourly nonexempt workforces, and that has made retailers a popular target of lawsuits seeking penalties pursuant to California’s Private Attorneys General Act of 2004 (PAGA). PAGA allows individual aggrieved employees to sue their employers on behalf of themselves and all other aggrieved employees for alleged Labor Code violations. The original PAGA statute—and cases interpreting that statute over the last 20 years—made PAGA lawsuits both difficult and expensive to defend against. But recent amendments to PAGA, which were signed into law on July 1, 2024, will benefit employers in the Golden State. These are the five most pro-employer changes to the statute.

1. Employees Cannot Pursue Violations They Did Not Personally Experience Within 1 Year of Commencing the PAGA Action

Before the recent amendment, a PAGA plaintiff who allegedly experienced one kind of Labor Code violation could pursue penalties for all Labor Code violations experienced by other employees, even if the plaintiff did not experience those violations. The employee also had standing to represent other employees even if the employee did not personally experience a Labor Code violation within the applicable limitations period. This led to boilerplate lawsuits containing the same general allegations of wage and hour noncompliance without any details specific to the plaintiff. As long as the plaintiff could show during discovery that they arguably experienced at least one Labor Code violation (for example, a single missed meal break at some point during their employment), their attorneys could essentially audit the company’s wage and hour practices through broad-based discovery to find other violations affecting more employees.

The PAGA amendments address this by allowing an employee to pursue penalties only for those Labor Code violations the employee personally experienced within one year of commencing the PAGA action. So, for example, the employee who experienced only a missed meal period can only pursue penalties related to meal periods. Plaintiffs’ attorneys will likely continue to file boilerplate complaints that lack facts related to the plaintiff, but once the plaintiff has identified in discovery the violations they allegedly experienced, employers will be able to limit discovery—and the scope of the case moving forward—to only those violations.

2. Proactive Employers Can Reduce Available Penalties

PAGA penalties typically range from $100 to $200 per employee per pay period. But amendments to PAGA allow employers to reduce the penalties available in a PAGA lawsuit by 70%-85% by implementing compliant wage and hour policies and practices or to completely eliminate penalties by “curing” the alleged violations. The diagram below shows how an employer’s actions impact the penalties that can be recovered:

The phrase “all reasonable steps” is defined in the statute by a non-exhaustive list. With regard to an employer who has taken “all reasonable steps” before receiving a PAGA notice letter, the employer may have “conducted periodic payroll audits and took action in response to the results of the audit, disseminated lawful written policies, trained supervisors on applicable Labor Code and wage order compliance, or [taken] appropriate corrective action with regard to supervisors.” Whether the employer has taken all reasonable steps is determined based on the totality of the circumstances after considering the size and resources of the employer, and the nature, severity, and duration of the alleged violations. Importantly, the existence of a violation is insufficient to show that the employer failed to take all reasonable steps.

An employer “cures” violations through two separate steps. First, the employer must correct the violation alleged by the aggrieved employee and comply with the statutes identified in the employee’s PAGA notice letter. Second, the employer must make each aggrieved employee “whole,” which means paying each employee “an amount sufficient to cover any owed unpaid wages due under the underlying statutes specified in the notice dating back three years from the date of the notice, plus seven percent interest, any liquidated damages as required by statutes, and reasonable attorney’s fees and costs.”

3. Courts Can Ensure PAGA Lawsuits Are Manageable

PAGA lawsuits are often framed broadly. For instance, while the named plaintiff may have worked in only one location of a particular retailer, that plaintiff may file a PAGA lawsuit in which they seek to represent all nonexempt employees in California. Given this framing, before the recent amendments, parties to PAGA lawsuits frequently argued over whether a court had inherent authority to strike or otherwise narrow the scope of unmanageable PAGA lawsuits. Courts of appeal that considered the issue reached opposite conclusions, and the California Supreme Court later held that courts lack inherent authority to strike a PAGA claim on manageability grounds but allowed that courts could limit evidence or use “other tools to assure that a PAGA claim can be effectively tried.”

Fortunately, the PAGA amendments confirm that courts can “limit the evidence to be presented at trial or otherwise limit the scope of any claim ... to ensure that the claim can be effectively tried.”

4. Employers Have Avenues to Resolve Cases Quickly

Cure Process With the LWDA: Within 33 days of receiving a PAGA notice, employers with fewer than 100 employees can send the Labor and Workforce Development Agency (LWDA) a confidential proposal to cure one or more alleged violations. The LWDA will then determine whether the proposal is facially sufficient and may conduct a conference with the parties or request additional information. If the LWDA determines the cure is not sufficient, the employee may proceed with litigation and the employer can request a stay and early evaluation, as described below. If the LWDA determines the cure is sufficient, the employer has a limited period of time to complete the cure and provide required confirmatory documentation.

Stay and Early Evaluation: Upon being served with a summons and complaint, an employer with 100 or more employees (or a smaller employer whose cure proposal was rejected by the LWDA) may file a request to stay court proceedings and seek an early evaluation. The early evaluation process allows the parties to exchange the facts supporting their positions on the alleged violations and gives the employer an opportunity to propose a plan to “cure” alleged violations. If the neutral evaluator or plaintiff reject the proposed cure plan, the employer can file an evidentiary motion with the court to approve the cure.

5. Employers Are No Longer Punished for Weekly Pay Periods

PAGA penalties are assessed per pay period, and plaintiffs generally cannot obtain multiple penalties for multiple occurrences of the same violation within a single pay period — i.e., the PAGA penalty is the same whether there was one meal period violation or two meal period violations within the pay period. In the original PAGA statute, this had the effect (likely unintended) of penalizing employers that paid their employees on a weekly basis, because their employees had around twice as many pay periods per year as employees paid biweekly or twice monthly. The amended statute corrects this by stating that any penalties recovered “shall be reduced by one-half if the employees’ regular pay period is weekly rather than biweekly or semimonthly.”

Reprinted with permission from the April 9, 2025 issue of New York Law Journal. © 2025 ALM Media Properties, LLC. Further duplication without permission is prohibited. All rights reserved.