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Employers – How to Minimize PAGA Claim Risks

What is PAGA? The Private Attorneys General Act, or PAGA for short, enables “aggrieved” employees to act as private attorneys to sue employers for labor law violations. These employees can sue and act as state regulators on behalf of themselves and other employees to recover civil penalties.

These suits are typically in the form of a class action, and the penalties are commonly in the hundreds of thousands of dollars (keep in mind, the employee can either be current or former).  

75% of the penalties recovered go to the state and 25% goes to the employees.

PAGA Claims can be made against any companies that do not comply with Labor Code. These violations can include misclassifying workers as independent contractors, not having compliant meal and rest period policies, wage and hour violations, and reporting violations. The most frequent PAGA allegations are:

  • Failure to provide a required meal period or pay employees the appropriate premium for working during a break
  • Failure to pay minimum wages and overtime premiums for off-the clock work
  • Failure to pay all wages earned, on time
  • Failure to list all wages earned on pay stubs and failure to pay final wages on time

With a few other possible claims being:

  • Failure to accommodate lactation breaks
  • Failure to provide required time off
  • Failure to pay wages due on termination
  • Failure to reimburse employee expenses
  • Failure to pay employees for all hours worked
  • Failure to provide worker’s compensation

And the penalties associated?

First violation is $100 per employee per pay period, and every violation following is $200 per employee per pay period.

How to Minimize Risk

To minimize the risk of claims being filed against your business, it’s important to review company policies on a regular basis and identify areas of potential risk. We strongly advise:

  1. Having an Employee Handbook in place, reviewed by an attorney or an experienced HR Consultant on an annual basis
  2. If you are an out-of-state business with employees in California, make sure you are familiar with California labor laws
  3. Conduct regular audits to ensure your wage and hour policies and practices are compliant and in-line with the Labor Code
  4. Provide documented training to managers who are responsible for enforcing these policies

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This article provides general information and shouldn’t be construed as legal or HR advice. Since employment laws may change over time and can vary by location and industry, please consult a lawyer or HR expert for advice specific to your business. You can also contact Payroll Systems to inquire about our HR support services.