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PAGA Defense: Protecting California Employers from Representative Actions

February 18, 2025 by Lerner & Weiss

For California employers, few legal threats carry the same financial risk as Private Attorneys General Act (PAGA) claims. Since its enactment in 2004, PAGA has become a preferred vehicle for plaintiffs’ attorneys to pursue workplace violations, with potential penalties that can easily reach six or seven figures. At Lerner & Weiss, our employer defense attorneys have successfully defended numerous businesses against these potentially devastating claims.

Understanding PAGA: Why It Creates Unique Liability Risks

PAGA authorizes “aggrieved employees” to act as private attorneys general, essentially stepping into the shoes of the state to enforce California’s labor laws. This unique statutory mechanism creates several critical risk factors for employers:

Expansive Scope

PAGA allows employees to pursue penalties for virtually any Labor Code violation, not just those they personally experienced. A single employee who experienced one type of violation can bring claims for:

  • Wage and hour violations
  • Meal and rest break violations
  • Wage statement violations
  • Recordkeeping violations
  • Health and safety violations
  • And numerous other Labor Code provisions

Representative Nature

Unlike class actions, PAGA claims don’t require certification or proof of commonality. One employee can represent all “aggrieved employees” without meeting the rigorous requirements of class certification.

Significant Penalties

PAGA provides for civil penalties of:

  • $100 per employee per pay period for an initial violation
  • $200 per employee per pay period for subsequent violations
  • Plus additional penalties specific to certain Labor Code sections

These penalties can multiply rapidly across even modest-sized workforces.

Extended Statute of Limitations

PAGA claims can reach back one year from filing, which is shorter than some wage claims but still creates substantial exposure when penalties are multiplied across a workforce.

Limited Arbitration Protection

Until recently, PAGA claims couldn’t be compelled to arbitration regardless of an employee’s arbitration agreement, though the legal landscape is evolving following the U.S. Supreme Court’s decision in Viking River Cruises v. Moriana.

Our Proven Track Record: PAGA Defense Success Stories

Our firm has achieved remarkable results defending employers against PAGA claims. The following case studies demonstrate our effective approach:

Case Study: Reducing a $400,000 PAGA Claim to $10,000 (October/November 2023)

Situation: Former employee filed a Private Attorney General Action (PAGA) complaint for meal and rest period violations, minimum wage violations, overtime violations, wage statement violations, failure to reimburse business expenses, failure to pay wages upon separation, and failure to produce personnel records. Former employee brought case on behalf of himself and “other members of the general public similarly situated.” Former employee made demands exceeding $400,000.00.

Our Approach: After evaluation of client documents and documents produced by plaintiff’s counsel, Lerner & Weiss filed a Motion for Summary Judgment based upon legal deficiencies in demands and claims made by former employee.

Result: With Motion for Summary Judgment pending, matter settled for $10,000.00, and settlement received required court approval.

Case Study: $18,000 Settlement of PAGA Claims (March 2023)

Situation: Former employee filed a PAGA action alleging failure to accurately and fully pay all wages including minimum wage and overtime; failure to authorize and permit legally compliant rest breaks; failure to provide lawful meal breaks; failure to timely pay wages due and payable during employment; failure to reimburse expenses; failure to provide accurate itemized wage statements; failure to pay sick leave properly and failure to comply with sick leave notice requirements; failure to keep accurate payroll and timekeeping records; and failure to timely pay wages at termination.

Our Approach: Former employee sought damages of $75,000.00.

Result: Matter was resolved for $18,000.00 with payment terms.

Effective PAGA Defense Strategies

Based on our extensive experience defending California employers against PAGA claims, we’ve developed several highly effective defense strategies:

1. Challenging the Plaintiff’s Standing as an “Aggrieved Employee”

PAGA defines an “aggrieved employee” as one who suffered at least one Labor Code violation. We frequently challenge this fundamental requirement by:

  • Demonstrating the plaintiff was not personally subject to any violations
  • Establishing the plaintiff’s claims are factually or legally unfounded
  • Leveraging evidence that the plaintiff consented to or caused the alleged violations

Our employment law attorneys carefully examine each plaintiff’s employment history to identify standing deficiencies that can substantially limit or entirely defeat PAGA claims.

2. Attacking the Manageability of Representative Actions

Courts increasingly recognize that some PAGA actions are simply unmanageable as representative proceedings. We leverage this evolving legal principle by demonstrating:

  • The alleged violations require individualized inquiries that cannot be efficiently adjudicated collectively
  • The plaintiff’s experiences are not representative of other employees
  • Determining violations would require examining different facts for each employee
  • Calculating penalties would be arbitrary without individualized assessment

3. Leveraging Recent Legal Developments

The legal landscape for PAGA continues to evolve, creating new defense opportunities. We capitalize on recent developments including:

Viking River Cruises v. Moriana: This 2022 U.S. Supreme Court decision held that employers can compel arbitration of individual PAGA claims while dismissing the representative portions. We help clients leverage arbitration agreements to significantly reduce PAGA exposure.

Adolph v. Uber Technologies: This 2023 California Supreme Court case clarified that after an individual PAGA claim is compelled to arbitration, the plaintiff may still maintain standing to pursue representative PAGA claims in court. We help clients navigate this complex interaction between federal and state law.

Estrada v. Royalty Carpet Mills: This case addressed whether courts have inherent authority to strike PAGA claims as unmanageable. While California appellate districts are split on this issue, we leverage favorable precedent where applicable.

4. Statutory Defenses and Penalty Reduction Arguments

Several statutory defenses can significantly reduce PAGA liability:

“Good Faith” Defense: Labor Code section 2699(e)(1) provides that no penalties apply if the employer had a good faith belief that its actions were not violations.

Cure Provisions: For certain violations, employers have the right to “cure” within 33 days of notice, potentially eliminating penalties entirely.

“Unjust, Arbitrary and Oppressive” Reduction: Courts have discretion to reduce penalties they consider unjust, arbitrary, or oppressive, or if the award would be disproportionate given the circumstances.

Our business litigation team has successfully employed these statutory defenses to dramatically reduce our clients’ PAGA exposure.

5. Strategic Settlement Approaches

When appropriate, we employ strategic settlement approaches that may include:

  • Early settlement before extensive discovery increases costs
  • Bifurcating individual and representative claims to create settlement leverage
  • Using mediation effectively to highlight case weaknesses
  • Structuring settlements to minimize financial impact while ensuring court approval

Preventive Measures: Reducing PAGA Risk Before Claims Arise

While effective defense strategies are essential, the best protection against PAGA claims is preventing violations before they occur. We recommend these preventive measures:

Comprehensive Compliance Audits

Regular compliance audits can identify and correct potential violations before they become the basis for PAGA claims. These audits should examine:

  • Wage and hour practices, including overtime calculations and minimum wage compliance
  • Meal and rest break policies and implementation
  • Wage statement compliance with all Labor Code requirements
  • Timekeeping and payroll procedures
  • Final pay practices
  • Expense reimbursement policies

Our business law attorneys can guide you through these audits while maintaining attorney-client privilege to protect sensitive findings.

Strategic Use of Arbitration Agreements

In light of Viking River Cruises, properly drafted arbitration agreements can significantly limit PAGA exposure. Effective agreements should:

  • Clearly cover all employment-related claims
  • Specifically address representative actions
  • Include class action waivers
  • Comply with California requirements for enforceability
  • Be regularly updated to reflect evolving case law

Robust Documentation Systems

Documentation often determines the outcome of PAGA litigation. Implement systems that document:

  • Employee acknowledgment of policies
  • Meal and rest break compliance
  • Wage payment practices
  • Training on compliance policies
  • Response to employee complaints
  • Efforts to correct identified issues

Regular Policy and Practice Reviews

Labor Code requirements constantly evolve through legislation and case law. Regular reviews ensure your policies remain compliant with:

  • Current wage and hour requirements
  • Meal and rest break standards
  • Paid sick leave obligations
  • COVID-related leave requirements
  • Industry-specific regulations

Response Protocols for Agency Complaints

Develop protocols for responding to Labor Commissioner complaints, which often precede PAGA actions. These protocols should include:

  • Investigation procedures
  • Documentation gathering
  • Communication strategies
  • Consideration of early resolution opportunities

When Facing a PAGA Notice: Critical First Steps

If your business receives a PAGA notice (the required precursor to a PAGA lawsuit), taking prompt, strategic action is essential:

Immediate Response Priorities

  1. Preserve all relevant documents including time records, pay records, policy documents, and communications related to the alleged violations.
  2. Evaluate cure opportunities for those violations that permit curing. The cure period is only 33 days, so prompt assessment is critical.
  3. Consult with experienced PAGA defense counsel like our employer defense attorneys immediately to develop a strategic response.
  4. Assess potential exposure by analyzing the scope of alleged violations, number of potentially aggrieved employees, and applicable penalty provisions.
  5. Consider early resolution options if the potential exposure and defense costs warrant settlement discussions.

Evaluating Whether to Cure

For violations that permit curing, consider:

  • Whether a legally sufficient cure is possible within the 33-day window
  • The cost of implementing the cure versus potential litigation
  • The likelihood the plaintiff will contest the adequacy of the cure
  • The strategic advantages of demonstrating good faith compliance efforts

Responding to the LWDA

The Labor and Workforce Development Agency (LWDA) receives copies of all PAGA notices, but rarely intervenes. Nevertheless, your response to the LWDA should:

  • Address all alleged violations comprehensively
  • Highlight compliance efforts and good faith dispute areas
  • Include supporting documentation where helpful
  • Preserve all potential defenses

Industry-Specific PAGA Considerations

Different industries face distinct PAGA risks based on their operations:

Retail and Service Industries

Retail and service businesses commonly face PAGA claims related to:

  • Scheduling practices affecting meal and rest breaks
  • Off-the-clock work before opening or after closing
  • Reporting time pay violations
  • Regular rate calculations for commissioned employees

Our firm helps these employers implement compliant scheduling and timekeeping practices that address these industry-specific risks.

Manufacturing and Production

Manufacturing operations often encounter PAGA claims involving:

  • Rounding practices at shift changes
  • Safety equipment and gear-up/gear-down time
  • Meal break timing in continuous operations
  • Alternative workweek schedules

We help manufacturing clients develop compliant shift structures and timekeeping protocols.

Healthcare

Healthcare providers face unique challenges with:

  • 24/7 operations affecting meal and rest breaks
  • On-duty meal period arrangements
  • Overtime for multiple consecutive shifts
  • Wage statement compliance for varying pay rates

Our experience defending healthcare employers informs our compliance guidance for this specialized industry.

Transportation and Delivery

Transportation companies must navigate:

  • Rest and meal break compliance for drivers
  • Piece-rate and mileage pay compliance
  • Independent contractor classification issues
  • Expense reimbursement requirements

We help transportation employers develop policies that maintain operational efficiency while minimizing PAGA risk.

Recent Trends in PAGA Litigation

Understanding current trends is essential for effective PAGA defense:

Increasing Scope of Claims

Rather than focusing on a single violation, PAGA plaintiffs increasingly allege numerous Labor Code violations to maximize penalty exposure. This “kitchen sink” approach requires employers to mount broader defenses addressing multiple compliance areas.

Focus on Technical Violations

Many recent PAGA claims target technical violations that may have minimal actual impact on employees but can generate substantial penalties, such as:

  • Wage statement formatting requirements
  • Specific language in policies
  • Technical meal and rest break timing issues
  • Recordkeeping requirements

Interaction with Arbitration Agreements

Following Viking River Cruises, the interplay between individual arbitration and representative PAGA claims continues to evolve. Employers must stay abreast of these developments to effectively leverage arbitration agreements.

Settlement Scrutiny

Courts are increasingly scrutinizing PAGA settlements to ensure they’re not being used to resolve individual claims while providing minimal benefit to the state and other aggrieved employees. This scrutiny affects settlement strategies and approval processes.

The Future of PAGA: Legislative and Judicial Developments to Watch

Several developments may affect PAGA defense in the coming years:

Potential Legislative Reform

Various stakeholders continue to advocate for PAGA reform to address perceived abuses while preserving the law’s enforcement goals. Proposals range from moderate reforms, like expanded cure provisions, to more substantial restructuring of the entire PAGA framework.

Evolving Supreme Court Jurisprudence

Both the California and U.S. Supreme Courts continue to address PAGA issues, with several cases in the pipeline that could significantly affect:

  • Arbitration agreements and PAGA claims
  • Standards for manageability
  • Penalty calculation methodologies
  • Standing requirements

Agency Enforcement Priorities

The LWDA and Labor Commissioner’s enforcement priorities influence PAGA litigation. Changes in agency focus often predict shifts in private enforcement emphasis.

Beyond Defense: The Business Case for PAGA Compliance

While defending against PAGA claims is essential when they arise, the most cost-effective approach is building robust compliance systems. Beyond avoiding penalties, comprehensive PAGA compliance offers business advantages:

Competitive Recruiting and Retention

Employers with strong compliance cultures typically experience:

  • Lower turnover rates
  • Stronger candidate pools
  • Greater employee loyalty
  • Reduced recruiting costs

Operational Efficiency

Well-designed compliance systems often enhance operational efficiency by:

  • Streamlining processes
  • Reducing errors and exceptions
  • Creating consistent expectations
  • Improving documentation

Reduced Insurance Costs

Employers with strong compliance records may benefit from:

  • Lower employment practices liability insurance premiums
  • Reduced workers’ compensation costs
  • Better terms for directors and officers coverage
  • More favorable risk profiles

Transforming Your PAGA Defense Position

PAGA claims present significant risks, but they also create opportunities for employers to strengthen their overall employment practices. At Lerner & Weiss, we help clients transform PAGA vulnerability into competitive advantage.

Our case results demonstrate the effectiveness of our approach. By combining thorough documentation review, strategic legal arguments, and decisive action, we’ve repeatedly turned potentially devastating claims into manageable resolutions. Our October/November 2023 case, which settled for just $10,000 instead of the demanded $400,000, exemplifies this approach.

For California employers seeking to minimize PAGA exposure while maximizing operational effectiveness, the path forward involves both rigorous compliance systems and partnership with experienced legal counsel. Our California employer defense lawyers provide both preventive guidance and strategic defense to help employers confidently navigate the challenges of PAGA compliance.

Contact our Los Angeles employment law attorneys today to discuss how we can help your business develop PAGA defense strategies that protect against liability while enhancing your workplace practices.

This article is for informational purposes only and does not constitute legal advice. For specific guidance regarding your company’s situation, please consult with a qualified attorney.