PAGA Reform Slashes Penalties - Employers Minimize Financial Exposure!

On July 1, 2024, Governor Gavin Newsom signed groundbreaking legislation to overhaul California’s Private Attorneys General Act (PAGA). This transformative reform aims to create a fairer balance between PAGA enforcement and employer interests, offering new pathways for addressing violations and slashing penalties. Employers can now save up to 85% on penalties by taking "reasonable steps" to comply with labor code requirements.

Key Dates for the Reformed PAGA Rules

The updated PAGA rules apply to actions filed after June 19, 2024, and to PAGA notices sent by the Labor & Workforce Development Agency (LWDA) on or after June 19. Existing actions or those based on notices sent before June 19 will still follow the old rules.

When to Start Taking “Reasonable Steps”

The time is now! Penalty caps under PAGA depend on when employers take proactive steps:

15% Cap: If employers take all reasonable steps to comply before receiving a PAGA notice or an employee’s request for records, penalties are capped at 15%.

30% Cap: If employers take all reasonable steps within 60 days of receiving a PAGA notice, penalties are capped at 30%.

What Are “Reasonable Steps” to Reduce PAGA Penalties?

"Reasonable steps" will be assessed based on the circumstances, including the employer's size, resources, and the nature of the alleged violations. Here’s how to stay ahead:

Regular Audits: Conduct periodic internal audits to identify and fix potential violations. Engaging legal counsel for an objective compliance assessment is often a best practice.        

Policy Updates: Regularly review, update, and disseminate workplace policies to align with PAGA provisions. Ensure employees are informed and trained on these policies.        

Training Programs: Train supervisors and employees on labor code compliance. Combining training with internal audits can help catch and correct issues early.        

Accurate Records: Maintain detailed records of work hours, breaks, wages, and other employment conditions. Ensure documentation is up-to-date and accessible.        

Compliance Plan: Develop a robust compliance plan that addresses all PAGA provisions and outlines corrective actions. Designate a person to oversee and enforce the plan.        

Be Proactive

These PAGA reforms present a golden opportunity for employers to significantly reduce penalties by taking proactive and reasonable steps. By following these guidelines and maintaining a diligent approach to compliance, employers can not only minimize penalties but also foster a more compliant and positive workplace environment.

For my clients with non-exempt employees, this reform allows us to demonstrate a significant ROI by being proactive in reducing penalties by up to 85%. By minimizing financial impact through strategic compliance in wage and hour regulations, sick leave, overtime, suitable seating, and detailed pay statements breakdowns, we can make a substantial impact. Through compliance audits, targeted training, and robust policy development, The HRRx can help mitigate risk and ensure compliance, leading the way in this new era of PAGA reform. Reach out today to minimize your financial exposure [email protected] hashtag#thehrrx hashtag#PAGA hashtag#compliance hashtag#audit

Please reach out to [email protected] if you have any ?need assistance with your businesses’ compliance with the ever-changing California employment laws.