California’s Private Attorneys General Act (PAGA) has been reshaping the employer–employee landscape for over 20 years. For some, it has been a powerful tool for workers to enforce employee rights. For others, it has become a source of costly lawsuits over minor technical violations.

If you’re a California employer, understanding how PAGA started, how it has evolved, and how the 2024 reforms changed the game is essential to protecting your business.

The Origins of PAGA (2004)

PAGA was enacted in 2004 to fill an enforcement gap. At the time, California’s state agencies, including the Labor and Workforce Development Agency (LWDA), lacked the resources to pursue the growing number of wage-and-hour violations. Lawmakers created PAGA as a public–private partnership, deputizing employees to act as “private attorneys general.”

This meant that employees could bring lawsuits on behalf of the state for violations of the Labor Code. The law aimed to:

• Deter noncompliance by increasing employer risk.
• Recover compensation for workers.
• Supplement state enforcement efforts.

Supporters saw it as a creative solution. Critics, however, argued it became a vehicle for excessive litigation—often focused on technical wage statement issues—rather than genuine worker harm.

PAGA’s Impact and Growth

Over the next two decades, PAGA had a massive impact on California employers. By 2021, more than 6,000 PAGA notices were being filed each year. Settlements routinely reached millions of dollars, with 75% of penalties going to the state and 25% to employees.

The courts also shaped PAGA’s trajectory. For example:

• Viking River Cruises v. Moriana (2022, U.S. Supreme Court): Allowed some PAGA claims to be sent to arbitration, though California courts later limited the ruling’s impact.
• Estrada v. Royalty Carpet Mills (2024, California Supreme Court): Affirmed that courts can limit claims for manageability, giving employers a tool to challenge sprawling lawsuits.

Donohue v. AMN Services: Raising the Stakes

Another turning point was Donohue v. AMN Services (2021). This California Supreme Court case didn’t amend PAGA directly but dramatically increased its bite.

The court ruled that:

• Employers cannot round meal periods; records must be exact.
• Employers carry the burden of proof to show compliant meal periods were provided.
• Compliance with meal period rules should be treated as a health and safety issue.

The effect was profound: PAGA claims tied to meal period violations became much harder to defend, because any gap in timekeeping records could stack penalties against the employer.

New PAGA: The 2024 Reforms

In 2024, facing pressure from a proposed ballot initiative to repeal PAGA, California enacted reforms through AB 2288 and SB 92. Signed into law July 1, 2024, these changes apply to PAGA notices filed on or after June 19, 2024.

Key reforms include:

• Standing Requirement: Plaintiffs must have personally experienced each alleged violation (with limited nonprofit exceptions).
• Penalty Adjustments:
  • Technical wage statement errors may result in reduced penalties ($25 or zero if cured).
  • Penalties capped at 15% for employers who took proactive compliance steps before a PAGA notice, or 30% if corrected within 60 days.
• Cure Options: Expanded opportunities for employers, including special provisions for small businesses starting October 1, 2024.
• Employee Share of Penalties: Increased from 25% to 35%.
• Court Authority: Courts may now limit claims or evidence to improve manageability.
• Statute of Limitations: Clarified as one year from the date of violation.

The reforms were designed as a compromise: protect workers, reduce frivolous lawsuits, and encourage compliance rather than punishment.

“Reasonable Steps”: The Compliance Game-Changer

The most powerful tool for employers under New PAGA is the “Reasonable Steps” defense. This provision rewards employers who can show they took compliance seriously, reducing penalties by up to 85%.

What counts as reasonable steps?

• Conducting regular payroll and timekeeping audits.
• Disseminating lawful written policies.
• Training supervisors on wage and hour compliance.
• Taking corrective action when issues arise.

Timing matters too: take these steps before a PAGA notice, and penalties may be capped at 15% of the maximum. Act within 60 days after receiving notice, and penalties may be capped at 30%. For many businesses, that’s the difference between a six-figure payout and a manageable settlement.

Example: A mid-sized employer with 50 employees facing a $250,000 penalty could see that reduced to just $37,500 if it proves reasonable steps. But without documentation of compliance efforts, the full penalty may apply.

How Employers Should Respond

California employers cannot afford to treat compliance as an afterthought. PAGA claims are built on records, and courts expect evidence, not intentions. That means:

• Keep detailed payroll and time records (and make sure your timekeeping and payroll systems are set up correctly!)
• Train managers to enforce breaks and overtime rules
• Conduct periodic audits with legal or HR experts
• Document every compliance effort—because if it isn’t documented, it didn’t happen

Cal Comply: Compliance in Action

At Cal Comply, we take your compliance foundation further by training employees and managers with a health-and-safety inspired system of wage and hour training, testing, and certification designed specifically for California employers. This creates a culture of compliance and generates the documentation courts want to see when evaluating “reasonable steps.”

When combined with audits, policies, advice, and defense strategies from an expert employment litigators (like Medina McKelvey LLP), Cal Comply helps businesses not just survive PAGA but thrive under its new compliance-first framework.

Final Takeaway

PAGA isn’t going away. But the 2024 reforms give California employers a chance to control the risk. By investing in audits, policies, and training now, employers can take advantage of the “reasonable steps” defense, slash potential penalties, and build workplaces that are both compliant and resilient.

👉 Learn more about Cal Comply’s Wage & Hour Training

This post is for informational purposes only and does not constitute legal advice. California’s meal and rest break laws are complex and vary by industry and workforce. Consult an experienced employment attorney for guidance tailored to your business. Cal Comply is a paid training provider mentioned for illustrative purposes; other compliance resources are available.