In July 2024, California Governor Gavin Newsom signed significant reforms to the Private Attorneys General Act (PAGA) through Assembly Bill 2288 (AB 2288) and Senate Bill 92 (SB 92) (Labor Code § 2699 et seq.), which took effect immediately upon signing on July 1, 2024, as urgency statutes.

The reforms, however, generally apply to civil actions brought on or after June 19, 2024, except where the required PAGA notice was filed before that date. Note that certain cure provisions for small employers (fewer than 100 employees) under SB 92 became operative on October 1, 2024. These are the most substantial changes to PAGA since its inception in 2004, balancing employer concerns about sprawling litigation with employees’ need to enforce employment laws. Employers who prioritize compliance gain significant protections, while those ignoring obligations face steeper penalties.

For employers, the message is clear: Those who adopt proactive compliance practices will have more protection, while those who ignore employment law obligations will face harsher penalties.

Key Changes to PAGA

The reforms enacted multiple changes to PAGA, including:

1. Narrowing Who Can File: New Standing Requirements.
2. Clarifying the Statute of Limitations.
3. Adjustments to Penalties
4. Incentives for Employer Compliance.
5. Shifting the Allocation of Penalties.
6. Giving Courts More Control.

Let’s walk through them one by one.

Narrowing Who Can File: New Standing Requirements

Before the reforms, an employee could file a PAGA lawsuit not only for violations they personally experienced, but also for violations affecting coworkers—even if they had never suffered those same violations themselves. This broad standing requirement often led to sprawling lawsuits involving dozens of claims.

Under the new rules, employees can only bring claims for violations they personally experienced. For example, if an employee alleges missed meal breaks, they cannot tack on unrelated claims about pay stub errors unless they also suffered from those errors. This shift brings PAGA closer to the structure of class actions, ensuring that lawsuits are tied more directly to the plaintiff’s real-world experience.

Clarifying the Statute of Limitations

The reforms also resolve confusion around timeframes. PAGA claims must now be based only on violations that the plaintiff personally experienced within the one-year statute of limitations. This clarification prevents plaintiffs from reaching back further than a year or attempting to pursue claims based on others’ experiences outside of their own timeframe. For employers, it creates more predictability when assessing exposure and risk.

Adjusting Penalties: Striking a Balance

One of the most employer-friendly changes involves penalty adjustments. Lawmakers recognized that not all violations are equal, and the penalty system needed more nuance.

For minor, isolated violations—those lasting no more than 30 days or four consecutive pay periods—penalties are reduced to $50 per employee per pay period. This change acknowledges that technical or one-off mistakes should not trigger devastating financial consequences.

Similarly, penalties for wage statement violations have been lowered to $25 per employee per pay period if employees can easily determine the missing information from other records. This provision aims to reduce exposure for “gotcha” claims where employees weren’t actually harmed by the error.

At the same time, penalties have been increased for the most serious cases. Employers who act with malice, fraud, or oppression—or who have been found guilty of unlawful practices in the last five years—can face penalties of $200 per employee per pay period. By differentiating between harmless errors and bad-faith conduct, the law pushes employers to take compliance seriously without punishing honest mistakes as harshly as intentional violations.

Incentives for Employer Compliance

Perhaps the most important reforms are those that reward proactive employers. If a company can show that it took “all reasonable steps” to comply with labor laws before receiving a PAGA notice, penalties may be capped at 15% of the maximum. The law defines "reasonable steps" to include actions such as conducting periodic payroll audits, implementing and disseminating compliant written policies, providing training to supervisors and payroll personnel on applicable labor laws, and taking corrective action in response to any identified violations of the Labor Code.

In addition, the reforms expand the ability of employers to “cure” violations, with distinctions based on employer size:

• Small Employers (Fewer than 100 Employees): Starting October 1, 2024, small employers can submit a confidential proposal to the Labor and Workforce Development Agency (LWDA) to correct the violations within 33 days of receiving a PAGA notice. If the LWDA approves and the employer remedies the issues (including verifying the cure within specified timelines), the employee cannot proceed with a PAGA action for those violations. The LWDA may hold a hearing if requested by the aggrieved employee to assess the cure's adequacy.
• Large Employers (100 or More Employees): Large employers can request a court stay and an Early Neutral Evaluation (ENE) process after a PAGA action is filed. This stays discovery and pleadings while a neutral evaluator reviews the cure plan, monitors compliance, and provides input on penalty reductions. Employers may also seek court approval of a cure even if opposed by the plaintiff or neutral.

This provides a valuable opportunity for employers to correct errors before litigation escalates, but the process involves LWDA or court discretion, so detailed evidence of corrections is essential.

Shifting the Allocation of Penalties

Another notable reform involves how recovered penalties are distributed. Previously, only 25% of penalties were paid to employees, with the LWDA receiving 75%. Now, employees receive 35%, and the LWDA’s share has been reduced to 65%. This adjustment increases the incentive for employees to pursue legitimate claims while still preserving funds for state enforcement. The new allocation applies to penalties recovered in civil actions brought on or after June 19, 2024 (or where the PAGA notice was filed on or after that date), meaning pending cases from before June 19 may still follow the old 25%/75% split.

Giving Courts More Control

PAGA cases have often been criticized as unwieldy and difficult to manage, sometimes involving dozens of overlapping claims. The reforms give courts explicit authority to limit evidence, narrow claims, or otherwise shape how cases proceed to ensure they can be fairly tried. This added flexibility is intended to reduce drawn-out litigation and promote more efficient case management.

Remediation Measures and Compliance Strategies

The reforms strongly encourage proactive compliance and provide significant penalty reductions for employers who can demonstrate good-faith efforts.

Penalty Reductions Based on Timing

• Before Receiving Notice: If all reasonable steps were taken proactively (e.g., annual payroll audits, compliant written policies, supervisor training, and documented corrective actions), penalties may be capped at 15%.
• Within 60 Days After Notice: If compliance measures are implemented promptly after a PAGA notice, penalties may be capped at 30%.

Practical Steps Employers Should Take

The new PAGA landscape rewards employers who build compliance into their everyday operations. Regular compliance audits of payroll practices, employee classifications, and wage statements are now more valuable than ever. Employers should ensure handbooks and written policies reflect California’s strict requirements for meal and rest breaks, overtime, expense reimbursement, and complaint procedures.

Training is also critical. Supervisors and HR teams need to understand not only the letter of the law but also how to apply it in real-world situations. Equally important is maintaining accurate documentation—payroll records, timecards, meal and rest break logs, and records of corrective actions all serve as evidence that an employer took compliance seriously.

When a PAGA notice is received, employers should respond quickly. Investigating the claims, determining whether they represent broader issues, and deciding whether to pursue cure, settlement, or litigation should all happen without delay. Because penalties can now be dramatically reduced if an employer demonstrates proactive or timely compliance, quick action is essential.

To summarize, employers should:

1. Conduct Regular Audits
   • Audit payroll, timekeeping, employee classifications, and wage statements for compliance with Labor Code § 226.
   • Focus on industry-specific risks (e.g., meal/rest break scheduling in hospitality/retail or on-call pay in gig economy roles).
2. Implement a Cure Process (Size-Specific)
   • For small employers (<100 employees): Submit a confidential cure proposal to the LWDA within 33 days (available since October 1, 2024).
   • For large employers (≥100 employees): Request a court stay and Early Neutral Evaluation post-filing.
   • Notify employees and the LWDA of corrections, providing evidence to support the cure.
3. Strengthen Written Policies
   • Update handbooks with compliant policies on meal/rest breaks, overtime, reimbursements, and complaint reporting.
   • Roll out updated policies company-wide and document dissemination.
4. Train Supervisors and HR Teams
   • Provide regular training on wage-and-hour rules, compliance risks, and responding to employee concerns.
   • Use resources like Cal Comply to create records of good-faith efforts.
5. Maintain Documentation
   • Keep thorough payroll, time, and corrective action records.
   • Document investigations into any violations.
6. Respond Effectively to PAGA Notices
   • Evaluate claim validity and whether issues are isolated or systemic.
   • Consider mediation, early settlement, or cure when cost-effective.
7. Monitor Legal Developments
   • Stay updated on case law (such as Adolph v. Uber, which allows non-individual PAGA claims in court despite arbitration agreements) and new LWDA guidance.
   • Work with an employment attorney specializing in wage-and-hour class and PAGA actions.
   • Note that PAGA remains dynamic, with potential for further legislative changes or ballot initiatives.

Example: Applying the Cure Process

Imagine a small restaurant (with fewer than 100 employees) receives a PAGA notice alleging wage statement errors (e.g., missing total hours worked). Starting October 1, 2024, the owner can conduct an audit, correct the statements, and submit a confidential proposal to the LWDA within 33 days. The LWDA will verify the cure (potentially with a hearing if requested by the employee) and, if approved, the restaurant avoids litigation and penalties, saving thousands in legal costs. However, the LWDA has discretion to reject inadequate proposals, so employers should include detailed evidence and consult legal counsel to strengthen their case.

Tips for Small Businesses

Small employers (fewer than 100 employees) with limited resources can leverage free LWDA resources (e.g., compliance guides at dir.ca.gov) or affordable tools like payroll software with built-in compliance checks. They also benefit from expanded cure provisions starting October 1, 2024, allowing direct proposals to the LWDA to resolve issues pre-litigation. Partnering with cost-effective training providers, such as Cal Comply, can help meet the “reasonable steps” standard without breaking the bank.

Why These Reforms Matter

The 2024 reforms represent a turning point for California employment law. Employers who once felt helpless in the face of sprawling PAGA lawsuits now have tools to protect themselves—if they take compliance seriously. At the same time, employees still can enforce their rights, and penalties for truly bad actors remain severe.

In short, the reforms create both opportunities and responsibilities. Employers who prepare now will not only reduce litigation risk but also foster workplaces that comply with California’s complex rules.

Protect Your Business with Wage & Hour Training

At Cal Comply, we partner with California employers to help them take the “reasonable step” of training, testing, and certifying their employees and managers and supervisors on wage and hour policies, best practices, and California rules. Our online wage and hour training, designed by experienced employment litigators, equip managers and employees with the knowledge they need to:

• Follow California’s wage and hour rules on overtime, meal periods, rest breaks, and more
• Recognize compliance risks before they become costly lawsuits
• Create a record of good-faith efforts that can reduce PAGA penalties if claims arise

The 2024 PAGA reforms reward employers who invest in compliance. Let us help you protect your business, reduce your risk, and give your team the confidence to navigate California’s complex wage and hour rules.

Learn more about our wage and hour training →

Please note, this post is for informational purposes only and does not constitute legal advice. The 2024 PAGA reforms are complex and may evolve with new case law or guidance. Consult an experienced employment attorney for advice tailored to your business. Cal Comply is a training provider mentioned here for illustrative purposes; other resources are available.

Please note, this post is for informational purposes only and does not constitute legal advice. The 2024 PAGA reforms are complex and may evolve with new case law or guidance. Consult an experienced employment attorney for advice tailored to your business. Cal Comply is a training provider mentioned here for illustrative purposes; other resources are available.