A PAGA notice initiates a formal process under California law in which an employer is alleged to have committed one or more Labor Code violations. Historically, such notices have often preceded significant litigation exposure.
Recent legislative changes between 2024 and 2026 have modified certain aspects of this process, including providing employers with opportunities to address alleged violations and potentially reduce associated penalties. This article provides an overview of PAGA notices and summarizes key changes in the law.
What is a PAGA letter?
A PAGA letter is a formal notice alleging that an employer violated one or more California Labor Code. The name stands for the Private Attorneys General Act.
A business might get this letter from an employee’s lawyer or the state. Once it arrives, the business usually has 33 days to respond or fix the issues.[1]
The “Private Attorney General” Concept
It is helpful to consider the concept of a “private attorney general.” PAGA establishes a framework in which employees may bring representative actions to recover civil penalties on behalf of the State of California for alleged Labor Code violations. In doing so, it creates mechanisms through which such claims may be pursued, including allowing an individual employee to seek penalties on a representative basis for a broader group of employees.
Damages vs. PAGA Penalties
There are distinctions between damages and PAGA penalties:
- Damages: This is the money a business owes the employee for the actual violation. For example, if someone misses a meal break, they may owe them one hour of pay plus interest.
- PAGA Penalties: These are extra fines paid on top of damages. They generally can be pursued for each violative employee pay period.
A Brief History of PAGA
California created PAGA in 2004. Since then, the process has followed a standard path:[2]
- Notice: The employee must tell both the employer and the California Labor and Workforce Development Agency (LWDA) they plan to sue.
- State Review: The state has 60 days to investigate.
- Green Light: If the state does not investigate or respond, the employee’s lawyer can move forward with the lawsuit themselves.
Over the years, filings have trended upward. Since July 2016, these notices are filed online, making them much easier for the state to track. Counts of filings for full years in 2015 and 2016 were not located, so these appear missing.
Key Updates Prior to 2024
Below is my understanding of important case decisions and passing of laws, both in California and on a federal level:
- 2011 – AT&T Mobility LLC v. Concepcion, 563 U.S. 333: clarified that arbitration is binding, which made PAGA an alternative to class actions in California.
- 2014 – Iskanian v. CLS Transportation Los Angeles, LLC: clarified that arbitration agreements do not apply to PAGA lawsuits.
- 2015 – AB 1506: Introduced cure provisions & 33-day window to fix certain wage statement violations
- 2016 – SB 836: Increased LWDA oversight. Specifically, notice review period extended from 30 to 60 days, requirement to file PAGA notices online, and required LWDA be able to review proposed settlements at same time as the judge.
- 2018 – Huff v. Securitas: Allowed employee to sue for all violations at a company. This included those they didn’t experience, if they were impacted by at least one.
- 2022 – Viking River Cruises, Inc. v. Moriana: The U.S. Supreme Court ruled that if an employee signs an arbitration agreement, the employer can force the primary employee’s lawsuit into arbitration.
- 2023 – Adolph v. Uber – California Supreme Court ruled that even if an individual’s claim is in arbitration, they still have standing. While the primary plaintiff’s lawsuit was in arbitration the group lawsuit stayed on hold.
The Big Changes: 2024 to 2026
In 2024, the state reformed the law to reward businesses that are proactive in addressing wage and hour issues.[3]
Reasonable Steps Clarified (2026)
While the 2024 reform limited PAGA penalties for employers that took “reasonable steps,” it was not initially clear what this entailed. The 2026 reform clarified this.[4] Employers are expected to be able to document that they:
- Conduct periodic wage and hour audits (at least annually)
- Have proof that policies reflect current law and were received by employees
- Documented training for frontline managers
- Plan to make “employees whole” for violations. This includes correcting underpayments with interest and taking steps to ensure it doesn’t happen again
Understanding the “33-Day Clock” (2024)
The 2024 reform rewards speed. How an employer handles the first month may have a significant impact on PAGA penalties owed.
- Small Employers (Under 100 staff): The employer has 33 days to send a “cure proposal” to the state. If the state accepts the plan to fix all issues, the entire lawsuit may be limited or blocked.[5]
- Large Employers (100+ staff): The employer can fix pay stub errors within 33 days to stop those specific claims. For larger issues, they can request an Early Evaluation Conference (EEC). This pauses the case for 70 days. During this time, a neutral party reviews the adequacy of the proposed “cure” and helps both sides reach a settlement that reflects the new statutory limits.[6]
The 60-Day “Reasonable Steps” Window (2024)[7]
Penalties are capped at 30% if an employer shows that it took “all reasonable steps” to follow the law within 60 days of the PAGA notice.
If the employer was already doing regular audits before the letter arrived, that cap drops to 15%. For example, if the employer finds a payroll error during a routine audit and pay the employees back before a lawyer gets involved, their PAGA fine may be reduced by 85%.
New 2026 Regulations[8]
In February 2026, the LWDA proposed a set of rules to clarify the 2024 reform. These rules are expected to be finalized soon, as a public hearing was held April 9:[9]
- Details Meaning of “Reasonable Steps”: Defines documents and audits needed to prove reasonable steps were taken, which caps penalties under the 2024 PAGA reform. This is discussed above.
- Standard Forms: Plaintiffs must use a specific form with job and location details. No more vague “boilerplate” letters only listing the code sections.
- Vexatious Filers: The state now tracks high-frequency lawyers (those filing 200+ cases a year) and subjects them to stricter screening.
- Settlement Oversight: The LWDA now has 45 days to review any settlement to make sure it is fair. Previously, LWDA received the proposed settlement at the same time as the court.
- Overlapping PAGA Suits Notice: In situations with multiple overlapping PAGA lawsuits against an employer, requires a waiting period of 21 days where other plaintiffs can submit their objections to the LWDA.
- Prohibits Adding New Theories: Prohibits adding new theories as part of a proposed settlement agreement.
Practical Considerations
The 33-day response window is a key feature of the PAGA process and can require prompt attention. From a data and analytics perspective, the following considerations may be helpful:
- Proactive review: Periodic audits of time and pay practices can help identify and address potential issues in advance. In some cases, documenting these efforts may also be relevant in assessing potential penalties.
- Timely evaluation: Once a notice is received, early engagement with data and records can be important. Evaluating workforce-wide information within a limited timeframe can be complex and may benefit from a structured approach.
Developing a clear and well-supported estimate of any amounts owed can help inform next steps and support a more efficient resolution process.
