In this episode of California Employment News, Meagan Bainbridge and Ryan Abernethy break down the latest PAGA reforms and what employers need to know to reduce penalties and stay compliant. From new cure opportunities to proactive audits, they cover actionable steps to protect your business.

Watch this episode on the Weintraub YouTube channel.



Show Notes:

Meagan:
Hello, everyone. Thank you for joining us for this installment of California Employment News, an informative video and podcast resource offered by the Labor & Employment Group at Weintraub Tobin. My name is Meagan Bainbridge, and I'm a shareholder in the firm's Labor & Employment Group. And today, I'm joined by my partner, Ryan Abernethy. As we recap for you, a recent seminar we presented on discussing how employers should respond to that dreaded PAGA letter.

Ryan, can you remind us what the current state of PAGA is?

Ryan:
Sure thing, Megan. Yeah. So as many of you probably already know, there were some massive PAGA reforms back in July of 2024 that were actually mostly employer-friendly, provided the employers actively took advantage of the new opportunities. Later in the year, in October of 2024, the LWDA gave us some more information about these new options that we'll discuss here. Some of these beneficial changes for employers include things like, for instance, there's no more stacking for certain derivative penalties for certain violations. This way, employers are less likely to get buried in snowballing penalties for relatively minor violations. In addition, penalties are determined by pay period. Employers who paid weekly could be subject to double liability simply because they generously paid their employees every week. Under the reform, penalties are now reduced by 50% by employers who pay weekly. Perhaps most significant were the enhanced cure opportunities that the new Paga reforms present for employers. To cure just means to rectify the violation by, for example, paying for an unpaid wage or fixing an incorrect wage statement. So under the old PAGA, employers had the opportunity to cure only a limited number of violations within a very narrow 33-day window after they received the Paga notice.

Now, employers can reduce their penalties by up to 85% if they can show that they took all reasonable steps to maintain compliance with the labor code before they received the PAGA notice. So this change is really exponential essentially increased the value of taking proactive measures to become labor code compliant right away. Such steps could include manager trainings and payroll audits, which Megan will discuss in greater detail later on this episode. In addition, employers can now see a reduction in PAGA Penalties by 70% by taking all reasonable steps to remedy a violation within 60 days after they were served with a PAGA notice. Now, even if the LWDA decides to investigate the PAGA allegations, the employer can still cure the violations during the 120-day notice period and avoid penalties that way as well. Small employers, which is defined as those with fewer than 100 employees, can also now submit a cure plan within 33 days after receiving the Paga notice. This is different than actually effectuating the cure. All they have to do is propose a plan during that time. Then a conference will then be set to evaluate the sufficiency of the proposed cure, and the employer has 45 days after that plan is approved to complete the cure.

So, Meagan, with that, can you tell us more about steps employers can take right now to limit their pocket liability in the future?

Meagan:
Yeah. Well, the receipt of a pocket letter is a great opportunity for employers to audit their employment policies to ensure compliance with California's wage and hour laws. The purpose of the self-audit is to identify and correct issues to redu...