The Private Attorneys General Act (PAGA) was enacted in California in 2004, empowering employees to file lawsuits against their employers for California Labor Code violations. Unlike traditional class action lawsuits, where a large group of employees file a collective lawsuit, PAGA allows individual employees to act as “private attorneys general.” This means they can sue employers for state labor law violations and seek penalties on behalf of themselves and other employees.
In recent years, PAGA has become an increasingly important area of concern for businesses operating in California. As small-to-mid size companies grow and expand, understanding PAGA’s implications becomes crucial to maintaining compliance, minimizing legal risks, keeping a positive culture, protecting your bottom line, and maintaining a solid brand presence.
The law was originally designed to help enforce labor laws by filling the gap where the state labor department might not have the resources to address every workplace violation. While the intention was to create a more effective enforcement mechanism, it has had significant consequences for businesses, particularly those that may have inadvertently violated labor laws.
Why Should Employers Be Concerned About PAGA?
If you’re running a small or mid-sized company in California, especially with non-exempt employee classifications, PAGA is something you need to take seriously. Here’s why:
- Financial Penalties: PAGA allows employees to seek civil penalties of up to $100 per employee, per pay period, per violation for the first violation, and up to $200 per employee, per pay period, per violation for subsequent violations (which only occurs if an agency or court finds the employer’s conduct was malicious, fraudulent, or oppressive). These penalties can quickly add up and lead to significant financial burdens for businesses.
- Class Action-Like Lawsuits: PAGA cases often operate like class action lawsuits, meaning they can involve large numbers of employees and cover multiple violations. This can lead to high litigation costs, legal fees, and reputational damage.
- Employer Liability: Even if your business is not intentionally violating labor laws, PAGA holds employers accountable for failing to comply with even minor provisions of the California Labor Code. Small businesses can be disproportionately impacted by this, as compliance oversight can be more difficult with limited resources.
- Enforcement of Labor Laws: With PAGA, employees have the power to enforce not just their own rights, but those of others, including co-workers. This means that a single violation, no matter how small, can lead to larger legal consequences. For this reason, there are many attorneys that market filing these claims to employees who work at high-risk organizations.
- Examples of Areas Covered: PAGA claims cover a large arena of Labor Code violations, but here are a few examples of claims often filed:
- Overtime
- Meal breaks
- Rest periods
- Rounding time
- Inaccurate wage statements
- Expense reimbursements
How Companies Can Reduce PAGA Risk
While PAGA may seem like a California-specific issue, its consequences can ripple across the broader business community. Moreover, the law saw significant changes in 2025. It’s more important than ever for small- and-mid-size companies to take proactive steps to understand the law, mitigate potential risks, and ensure compliance. By doing so, you protect your company from costly legal battles and maintain the trust of both employees and customers.
PBO Advisory is collaborating with other PAGA experts to host a complimentary webinar to review the changes for 2025, educate employers on how they can take measurable steps to significantly reduce penalties, and advise on actions to take if they receive a PAGA (LDWA) letter. We invite anyone interested in learning more to watch our webinar on PAGA claims.
Nicole Devine
Consulting Chief People Officer
[email protected]
858-622-1681 Ext. 287
