How California's reformed PAGA changes employers' lawsuit exposure
A 2024 overhaul added penalty caps and a right to cure, but 2026 data shows PAGA notices are still climbing toward a record year.
The Private Attorneys General Act lets a single employee sue an employer to recover civil penalties on behalf of the state and other workers. Since 2004 it has become one of the most consequential sources of legal exposure for California employers, because it lets plaintiffs' lawyers turn technical wage-statement errors and missed meal breaks into penalties covering an entire workforce.
In 2024, the Legislature rewrote large parts of PAGA through Assembly Bill 2288 and Senate Bill 92, both signed by Governor Gavin Newsom on July 1, 2024. The changes apply to PAGA notices filed on or after June 19, 2024, and to the civil actions that follow from them. Two years later, the reform has given employers new ways to limit penalties and fix problems before being sued, but it has not slowed the flow of new claims.
Who can still sue, and for what
To bring a PAGA claim, a worker must qualify as an "aggrieved employee," meaning someone who personally suffered each violation alleged. Before the reform, plaintiffs could sometimes pursue violations they never personally experienced, sweeping in a wider range of Labor Code claims. The 2024 changes narrowed that, and also codified a one-year lookback tied to the statute of limitations in the Code of Civil Procedure, limiting claims to violations that occurred within a year before the notice was filed.
One carve-out remains: a nonprofit legal aid organization with 501(c)(3) status can still serve as counsel of record for an employee who experienced at least one — though not necessarily each — of the alleged violations, if the organization has represented workers in these cases for at least five years before January 1, 2025.
The 'all reasonable steps' standard and new penalty caps
The reform's central trade-off for employers is a set of caps tied to compliance effort. If an employer was "already taking all reasonable steps to comply" before receiving a PAGA notice, but a violation still occurred, penalties are capped at 15% of what would otherwise be assessed. If the employer wasn't compliant but takes all reasonable steps to become compliant within 60 days of the notice, the cap rises to 30%.
The statute lists examples of what counts, evaluated under the totality of the circumstances: conducting periodic payroll audits and acting on the results, maintaining written policies, training supervisors on Labor Code compliance, and taking corrective action against supervisors who violate the rules.
Underlying penalty amounts also changed. The base penalty remains $100 per employee per pay period, or $500 for violations that don't involve an employer-employee relationship. Wage-statement violations under Labor Code Section 226 now carry reduced penalties of $25 per employee per pay period when the missing information is easily determinable. Isolated, nonrecurring violations lasting no more than 30 consecutive days or four pay periods are capped at $50 per employee per pay period, while violations following a prior agency or court finding that a policy or practice was unlawful, or involving malicious conduct, can draw an enhanced penalty of $200.
How small employers can cure violations before being sued
Employers that had fewer than 100 employees in the 12 months before a PAGA notice was filed can submit a confidential proposal to cure one or more of the alleged violations to the Labor and Workforce Development Agency within 33 days of receiving the notice. The agency reviews the proposal and can schedule a settlement-style conference, similar to those the Labor Commissioner holds for individual wage claims, if it isn't satisfied the cure is sufficient on its own.
If the agency determines the cure is adequate, the employer generally avoids a PAGA lawsuit over the cured violations. The financial outcome depends on compliance effort: if the employer had already taken all reasonable steps to comply, the penalty for the cured violation drops to zero. If it cures the violation without having taken those steps beforehand, the penalty is capped at $15 per employee per pay period.
A separate cure path covers wage statements at any size of employer. To cure a wage-statement violation, an employer must provide fully compliant statements to affected employees covering the relevant look-back period, or, if the only defect was incorrect employer information, provide written notice correcting it.
How larger employers cure violations after a suit is filed
Employers with 100 or more employees don't get the pre-suit LWDA process. Instead, once a PAGA complaint is filed, they can ask the court for a stay of the case and an early neutral evaluation. Discovery and responsive-pleading deadlines pause while a neutral evaluator reviews the employer's proposed cure plan, monitors whether the employer follows through, and weighs the employer's compliance efforts in assessing potential penalties.
The same penalty scale applies here as for smaller employers: zero penalties for cured violations where the employer had already taken all reasonable steps, and a $15-per-employee-per-pay-period cap otherwise, with the $50 isolated-violation cap available regardless of company size.
“Two years after the reform took effect, PAGA activity hasn't slowed.”
What changed beyond the penalty math
The reform also responded directly to a California Supreme Court ruling. In Estrada v. Royalty Carpet Mills, decided January 18, 2024, the court held that trial courts lack inherent authority to strike or dismiss PAGA claims simply because they would be unmanageable at trial. AB 2288 responded by giving courts explicit statutory authority to limit the evidence presented or otherwise limit the scope of a claim to keep a trial manageable, without dismissing the claim outright.
The law also authorizes injunctive relief as a PAGA remedy for the first time, letting a court order an employer to change a practice going forward rather than only awarding penalties for past violations.
Money that flows from a PAGA settlement or judgment is now split differently. For PAGA notices filed on or after June 19, 2024, penalties are divided 65% to the Labor and Workforce Development Agency and 35% to the aggrieved employees, up from the previous 75/25 split that still applies to notices filed before that date.
What the 2026 numbers show
Two years after the reform took effect, PAGA activity hasn't slowed. PAGA notices filed with the Labor and Workforce Development Agency were averaging about 849 a month through the first half of 2026, putting the year on pace to exceed 10,000 notices, which could make it the largest year yet for filings.
Settlement dollars have followed. Roughly 1,400 to 1,500 tracked PAGA and wage-and-hour class action settlements in the first six months of 2026 totaled about $1.3 billion, averaging roughly $219 million a month. About half of those settlements came in under $500,000, with the most common range between $100,000 and $500,000, though the average settlement of about $900,000 was pulled upward by a smaller number of much larger cases.
Smaller companies remain heavily exposed: 44% of 2026 settlements involved employers with fewer than 200 employees, with the largest single concentration among employers with 50 to 200 workers. Five plaintiffs' firms accounted for roughly 40% of both the number of settlements and the settlement dollars tracked so far in 2026, and cases are taking about two years on average to move from an initial notice to a settlement.
Related coverage: What California's pay transparency law requires of employers; How California's minimum wage rules actually work; What AB 5 means for classifying workers in California.
