“Knowledge is power” is cliché, but true.

California heads the nation in regulating employee relations. While workplace laws usually arise to police the few employers crossing the line into worker exploitation, they  subject the vast bulk of well-intentioned businesses to thousands of technical rules requiring close attention.

Enacted in 2004, the Private Attorneys General Act (PAGA) has become the epitome of our state’s intensive employment practices oversight. It is also the curse for a growing number of businesses that law has  driven to the point of bankruptcy or exodus to more employer-friendly lands.

PAGA was originally intended to deter widespread Labor Code violations by deputizing employees to act as private attorneys to sue employers in place of the state.  The suit need only name one aggrieved employee (former or current) to represent all others and collect penalties for each of the confirmed violations.  Money recovered goes to the state and the affected employees, with a losing employer  also paying successful opposing lawyers their fees and costs.

With penalties ranging from $10,000 [independent contractor misclassification] and $100/per violation, even minor non-compliance can be devastating.  For example, if an employer underpaid 20 aggrieved employees overtime every week over 18 months, this would equal 1,560 “workweek” violations. This single violation thus carries possible $150,600 minimum penalty (1,560 x $100 minimum).

This business-crushing potential lead the legislature in 2024 to provide some greater options for employers to examine, detect and cure violations before and after being hit with a PAGA suit. See, Workplace Roulette, Reducing the Odds of PAGA Purgatory (December 13, 2024).

While future articles will cover those “cure” alternatives in greater detail, the greatest protection is initiative to review, spot and fully remedy violations before a dissatisfied employee and his lawyer contemplate a PAGA challenge.

Take-Away:

Best practice demands periodic “friendly” internal audits to know whether workplace practices are in- or out-of-compliance in California’s highly regulated climate.  In many cases, the cost to fix any problems found before PAGA comes knocking is a business-saving investment.

For more information on our help with such audits, please contact Tim Bowles, Cindy Bamforth or Helena Kobrin.

See also:

●  Annual Virtual Seminar, Friday, February 28, 2025, Covering Employment Legal Essentials and New Workplace Laws
● PAGA Monster Declawed; Major Relief for Responsible Employers (June 28, 2024)
●  PAGA Monster Grows More Legs – Best Protection Against Potentially Devastating Group Labor Claims is … Prevention (February 2, 2024)
●  The PAGA Monster Is Hungry – Non-Compliant California Employers at High Risk under Special Law (May 14, 2021)

Tim Bowles
January 24, 2025