For nearly two decades, California’s Private Attorneys General Act (PAGA) has been one of the most feared laws among employers. Even minor technical violations — a missing date on a pay stub, a late meal break, an overtime miscalculation — could turn into six- or seven-figure lawsuits. Many employers settled simply to avoid the crushing costs of litigation.
That changed in June 2024, when Governor Gavin Newsom signed AB 2288 and SB 92, ushering in the most significant reforms to PAGA since its creation in 2004. One of the biggest changes? Employers now have a chance to slash penalties by up to 85% if they can show they took “reasonable steps” to comply with California’s labor laws.
For businesses operating in the state, this provision is not just a lifeline — it’s an incentive to build compliance into daily operations before problems arise.
Old PAGA vs. New PAGA: Penalty Exposure Comparison
| Scenario | Old PAGA (Before June 2024) | New PAGA (After June 2024) |
| Employer without compliance efforts | Full penalties apply (often 100% of the maximum) | Still up to 100% of penalties if no “reasonable steps” are shown |
| Employer with proactive compliance (“reasonable steps” before notice) | No penalty reduction — even minor violations could trigger maximum exposure | Penalties capped at 15% of the maximum |
| Employer who takes corrective action within 60 days after a notice | No penalty reduction — exposure often the same as if no action taken | Penalties capped at 30% of the maximum |
| Example: $500,000 in potential penalties | Employer may owe the full $500,000 | With proactive steps: as little as $75,000; with prompt action after notice: $150,000 |
What Does “Reasonable Steps” Mean?
The reforms, aka “New PAGA”, don’t give a one-size-fits-all definition, but they do provide clear guidance. Courts will look for proactive compliance measures that show employers weren’t ignoring the law. Examples include:
- Conducting regular payroll and timekeeping audits and acting on findings.
- Implementing written wage and hour policies aligned with California’s Labor Code and Wage Orders.
- Providing training to supervisors and managers on meal and rest break rules, overtime, and wage statements.
- Taking corrective action when issues are discovered.
For example, if a restaurant conducts quarterly payroll audits and quickly fixes wage statement errors, it could argue that it took reasonable steps — and cut a $200,000 penalty down to just $30,000.
Timing Matters: Before vs. After a PAGA Notice
The new law offers two key penalty reductions:
- Before a PAGA Notice: If you can show you had reasonable steps in place before an employee filed a PAGA notice, penalties may be capped at 15% of the maximum amount.
- After a PAGA Notice: If you move quickly to implement compliance measures within 60 days of receiving a notice, penalties may be capped at 30%.
That difference can be massive. A company facing $500,000 in potential penalties could reduce exposure to $75,000 if it had compliance practices in place before the notice — or $150,000 if it acted promptly after receiving one.
Real-World Impact
Take a mid-sized manufacturing company with 80 employees. An employee files a PAGA notice alleging missed meal breaks. Under the old rules, penalties could have easily reached six figures, regardless of intent. Under the new framework:
- Because the company already had written policies, trained supervisors, and quarterly audits in place, the court could reduce penalties to 15%.
- Instead of owing $400,000, the employer might only owe $60,000 — a manageable sum that reflects good faith efforts.
This change doesn’t erase liability, but it recognizes and rewards proactive compliance.
Evidence Is Everything
Intentions won’t cut it in court. Employers must prove their compliance efforts with documentation. That means keeping:
- Audit reports and corrective actions.
- Employee handbooks and signed acknowledgments.
- Training records and certificates.
- Written notices of policy updates.
If you can’t show your work, the court will assume you didn’t do it.
Best Practices to Build a “Reasonable Steps” Defense
To prepare for potential PAGA claims:
- Schedule compliance audits at least annually, with follow-up action plans.
- Train supervisors and HR staff regularly on wage and hour obligations.
- Document everything — policies, trainings, employee acknowledgments, corrections.
- Partner with experts like employment counsel or compliance trainers to ensure policies match current law.
Why Recordkeeping Matters in Entertainment
The new PAGA reforms don’t eliminate risk, but they change the game. Employers who take compliance seriously now have a chance to drastically reduce penalties and litigation exposure. The “reasonable steps” provision rewards businesses that invest in prevention, not just reaction.
In California’s high-risk employment law environment, that’s an opportunity no employer can afford to ignore.
Build Your Defense Before You Need It
At Cal Comply, our wage and hour training and compliance tools are designed to help employers meet California’s high standards. We teach employee, managers, and HR staff the policies, best practices, and rules everyone must follow—so when a claim comes, you’re already protected.
👉 Learn more about our Wage & Hour TrainingThis 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.
