Since its inception, the Private Attorneys General Act (PAGA) has been one of the more onerous laws governing California employers, presenting substantial risks for those accused of payroll and wage violations. Recent amendments to the PAGA statute allow employers to cure violations by showing they have taken “all reasonable steps” to maintain compliance. However, preventing and defending against PAGA claims requires employers to have a thorough understanding of their responsibilities under the updated standards.
The Ongoing Challenge of Defending PAGA Claims
The Private Attorneys General Act permits employees to file claims on behalf of themselves and others for alleged violations of California’s Labor Code, and claims for multiple workers can be brought without the class certification required in class action cases. Penalties for PAGA violations can escalate quickly, as the fines are levied for each affected employee, violation and pay period.
As a result of PAGA reforms, California employers have opportunities to better defend against claims and reduce fines. However, they must be proactive and vigilant to ensure they are eligible for relief.
How PAGA Penalties Can Be Reduced
Employers that can demonstrate they took all reasonable steps to prevent violations before receiving notice of a claim can reduce PAGA penalties by 85 percent. If a claim is filed and the employer cannot show steps were taken in advance, the law now allows them to take corrective action within 60 days of receiving notice. When the actions taken bring the employer into compliance under the law, the penalties for a claim are reduced by 70 percent.
All Reasonable Steps to Prevent & Remedy PAGA Violations
California’s PAGA statute states that taking “all reasonable steps” to comply may include, but is not limited to, performing audits of payroll records and taking corrective action as needed, disseminating compliance policies, training supervisors and managers regarding compliance with the provisions of the Labor Code and disciplining supervisors or managers for violations.
Employers can also take steps like these to maintain compliance and protect against PAGA claims:
- Ensure written policies and procedures are in place regarding meal and rest breaks, timekeeping, off-the-clock time, overtime, expense reimbursements and revision of time entries;
- Disseminate policies and procedures to employees and record acknowledgements of receipt;
- Ensure policies are integrated in business practices;
- Review and revise policies regularly and document any changes, the dates changes were made and the reasons for updating;
- Implement systems to identify errors and develop and document a process for correcting; and
- Document any errors or issues identified, as well as steps taken to correct and prevent reoccurrence.
When an employer has not taken all reasonable steps to maintain compliance before receiving notice of a PAGA claim, it can still substantially reduce potential penalties by taking action within 60 days of the notice. Steps to take at this stage may include the following:
- Review and preserve all records related to the alleged violation;
- Perform audits of payroll and wage systems, policies, procedures and actual practices;
- Revise policies as necessary and provide employee training to address issues specific to the claim;
- Take any appropriate disciplinary actions; and
- Document all of the above, as well as when and why actions were taken.
Under the amended law, alleged or actual violations alone are not evidence of a failure to have taken all reasonable steps. Rather, the evaluation of whether an employer took all reasonable steps is based on the “totality of circumstances.” The statute states that this includes consideration of the size and resources available to the employer, the specifics of the alleged violations and evidence of good-faith compliance.
Your Attorney’s Role in Defending a PAGA Claim
Susan A. Rodriguez is an experienced PAGA defense attorney who helps employers proactively identify risks, develop policies and review and audit policies and procedures. When a PAGA claim has been filed, she provides counsel regarding appropriate corrective actions and represents the employer in settlement negotiations and litigation when needed.
Contact Susan at the Law Offices of Susan A. Rodriguez, APC, to proactively address your PAGA risks and defend against claims by calling (323) 272-3954 or completing this online contact form.
Posted by Susan A. Rodriguez, Esq.
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For legal advice, contact an attorney at Law Offices of Susan A. Rodriguez, APC or an attorney actively practicing in your jurisdiction.
