Reforms to the California Private Attorneys General Act (PAGA) offer a lifeline to businesses that prioritize compliance now to reduce liability and penalties later. Conducting proactive audits and demonstrating efforts to follow the law can significantly limit exposure to costly litigation and position employers for protection under the new rules.
Enacted in 2004, PAGA empowers employees to act as “private attorneys general,” filing lawsuits on behalf of themselves and other workers to recover civil penalties for Labor Code violations. With the 2024 PAGA reforms (Assembly Bill 2288 and Senate Bill 92), employers face heightened scrutiny but also new opportunities to reduce penalties through proactive compliance.
Conducting regular audits is one of the most effective ways to mitigate the risk of costly PAGA claims, which can result in significant financial and reputational damage. By identifying and correcting violations before they escalate, employers can demonstrate “good faith” compliance, potentially capping penalties at 15% or 30% of the standard rates under the reformed law.
Proactive PAGA Compliance: Three Critical Audits
To take full advantage of the 2024 PAGA reforms, employers should focus on three core areas of compliance. Regular audits in these categories can uncover hidden risks, demonstrate good-faith efforts and significantly reduce potential penalties.
Payroll and Timekeeping Audits: Wage and hour violations, such as inaccurate wage calculations, missed meal or rest breaks, or improper overtime payments, are common PAGA claim triggers. Regular payroll audits should verify accurate wage statements, timely final paychecks and compliance with minimum wage and overtime laws. Reviewing timekeeping records ensures breaks are provided within legal windows and premium pay is issued for non-compliant breaks. These audits, ideally conducted with legal counsel, help identify technical issues that could lead to significant penalties when multiplied across a workforce. Documenting corrective actions strengthens your defense in case of a claim.
Policy and Handbook Audits: Outdated or unclear workplace policies can expose employers to PAGA liability. Regularly review and update employee handbooks to ensure compliance with California’s Labor Code, including wage and hour rules, anti-retaliation measures and safety standards. Ensure policies align with actual practices and that managers are trained to implement them consistently. For example, meal and rest break policies must match real-world operations, and final pay procedures should address timing and inclusion of unused vacation time or bonuses. A legal review of these policies can bolster defenses by demonstrating proactive compliance efforts.
Safety and Cal/OSHA Compliance Audits: PAGA claims increasingly target alleged violations of the California Occupational Safety and Health Act (Cal/OSHA), particularly in industries like manufacturing, hospitality and healthcare. Conduct periodic safety audits to identify and correct hazards, ensuring compliance with Cal/OSHA standards, such as the new indoor heat regulation. Disseminate clear, lawful safety policies, train employees and supervisors regularly and document corrective actions for any violations. These steps not only reduce PAGA exposure but also enhance workplace safety and employee trust.
Duckor Metzger & Wynne, APLC, guides California employers through these critical audits to minimize PAGA risks. By implementing a robust compliance program that is supported by payroll, policy and safety audits, employers can leverage the 2024 PAGA reforms to cap penalties and avoid litigation.
Contact us today to schedule a consultation and learn how our experienced Employment and Labor Law attorneys can help you build a culture of compliance, protect your business and ensure peace of mind in California’s complex labor law landscape.