Understanding PAGA: A Guide for Small and Medium-Sized Businesses in California and Beyond
Understanding PAGA: A Guide for Small and Medium-Sized Businesses in California and Beyond
For small and medium-sized businesses, navigating employment laws can be a daunting task, especially in California where regulations like the Private Attorneys General Act (PAGA) add layers of complexity. At Employer Guidance Group PC, we specialize in advising and counseling businesses on employment matters, with a deep focus on California laws such as wage and hour compliance, health and safety regulations, and PAGA-related risks. While we’re experts in California’s unique legal landscape, we also provide nationwide support to ensure your business stays compliant across all states. Let’s dive into what PAGA means for your business in 2025 and how you can mitigate its risks.
What is PAGA and Why Should You Care?
Enacted in 2004, the Private Attorneys General Act (PAGA) allows employees in California to act as “private attorneys general,” filing lawsuits against employers to recover civil penalties for Labor Code violations on behalf of themselves, other employees, and the state. Unlike a traditional class action, PAGA claims are representative actions that don’t require certification, making them easier for plaintiffs to pursue. This means a single employee can sue for violations affecting all “aggrieved employees,” potentially exposing your business to significant penalties.
PAGA covers a wide range of California Labor Code violations, including wage and hour issues (e.g., unpaid overtime, missed meal breaks), health and safety violations, and inaccurate wage statements. For small and medium-sized businesses, a PAGA lawsuit can be financially devastating, with penalties calculated per employee, per pay period—potentially reaching millions of dollars. For example, a default penalty for an initial violation is $100 per employee per pay period, doubling to $200 for subsequent violations.
How PAGA Works: The Claims Process
The PAGA process begins when an employee submits a notice to the California Labor and Workforce Development Agency (LWDA) and the employer, detailing alleged Labor Code violations. The notice is filed online with the LWDA and sent to the employer via certified mail. Employers often miss these notices because they’re formatted as letters to the LWDA, not the employer directly. If the LWDA doesn’t respond within 65 days, the employee can file a lawsuit in court.
Recent amendments to PAGA, effective for notices filed on or after June 19, 2024, introduced stricter requirements for curing violations. Employers must pay unpaid wages, liquidated damages, and interest, often requiring a detailed analysis of time and payroll records. However, these amendments also expanded options for smaller employers (under 100 employees) to cure violations early, potentially reducing penalties.
Key Risks for Small and Medium-Sized Businesses
PAGA lawsuits have surged in recent years, with nearly 2,600 notices filed in 2025 alone. The lack of a certification requirement, unlike class actions, means plaintiffs face fewer hurdles, increasing the likelihood of litigation. Additionally, PAGA penalties can “stack” across multiple violations, amplifying financial exposure. For instance, a business with 50 employees facing a year-long violation across 26 pay periods could owe $130,000 for just one type of violation—and that’s before attorney’s fees, which plaintiffs can recover if they prevail.
Beyond California, businesses operating in multiple states must also ensure compliance with federal and state-specific laws, such as the Fair Labor Standards Act (FLSA) for wage and hour issues. While PAGA is California-specific, similar representative action risks exist elsewhere, and our team at Employer Guidance Group PC can help you navigate these challenges nationwide.
Proactive Steps to Mitigate PAGA Risks
The good news? You can take steps to protect your business from PAGA claims, and Employer Guidance Group PC is here to help. Here’s how:
Conduct Regular Audits: Routinely review timekeeping, payroll, and break policies to ensure compliance with California Labor Code requirements. This includes verifying that employees are properly compensated for overtime and receive mandated meal and rest breaks.
Train Supervisors: Educate managers on company policies and California labor laws, including wage and hour rules and health and safety standards. Regular training can prevent unintentional violations that lead to PAGA claims.
Act Quickly on Notices: Train staff to identify PAGA notices in the mail. With strict deadlines under the 2024 amendments, promptly assess whether you can cure the alleged violations or utilize early evaluation options to reduce penalties.
Update Policies: Ensure your employee handbook and workplace policies align with the latest California laws, such as the 2025 minimum wage increase to $16.50 per hour and expanded health and safety requirements.
Seek Expert Guidance: Partner with Employer Guidance Group PC to conduct compliance audits, draft policies, and navigate PAGA notices or lawsuits. Our expertise in California employment law, combined with our ability to support businesses nationwide, ensures you’re covered no matter where you operate.
Why Choose Employer Guidance Group PC?
At Employer Guidance Group PC, we understand the challenges small and medium-sized businesses face in staying compliant with California’s complex employment laws, including PAGA, wage and hour regulations, and workplace safety standards. Our team provides practical, cost-effective solutions tailored to your business, whether you’re in California or any other state. We offer:
Compliance Audits: Thorough reviews of your payroll, timekeeping, and policies to identify and address potential PAGA risks.
Policy Development: Customized employee handbooks and procedures that meet California and federal requirements.
Training Programs: Supervisor training on labor law compliance to prevent violations.
Litigation Support: Defense against PAGA lawsuits, including single-plaintiff and representative actions.
Stay Ahead of PAGA in 2025
PAGA remains a significant risk for California businesses, but with proactive measures and the right legal partner, you can minimize your exposure. Don’t let a PAGA lawsuit catch you off guard—contact Employer Guidance Group PC today to schedule a consultation or join our webinar on December 15, 2025, where we’ll discuss PAGA compliance strategies and other 2025 employment law updates.
Keywords: PAGA compliance, California employment law, wage and hour violations, workplace safety, small business employment law, medium-sized business compliance, Employer Guidance Group PC, California Labor Code, nationwide employment law support, health and safety regulations.
Disclaimer: This blog post provides general information and is not a substitute for legal advice. Contact Employer Guidance Group PC for personalized guidance tailored to your business needs.