Keeping Up with PAGA

California employers continue to navigate a new, costly and often unclear legal landscape when defending claims under the California Private Attorneys General Act (PAGA). Recent legislative reforms, enacted in 2024, significantly modified how PAGA penalties are calculated, expanded opportunities for employers to cure certain Labor Code violations and created new procedural requirements for litigating representative claims. Recent case law further addressed the ways in which employers may raise standing and pleading challenges against PAGA claims. And the California Labor and Workforce Development Agency (LWDA) recently issued proposed regulations that would impose new requirements on both claimants and employers. These proposals were subject to a 45-day comment period, which closed on March 23, 2026, and employers should prepare to adjust strategies if the regulations are ultimately adopted.  

In light of this ever-changing landscape, it is important for employers to monitor new PAGA developments while reviewing their compliance procedures and litigation strategies.

Key Recent Amendments

The 2024 legislative reforms included the following generally employer-friendly changes:

• Stricter Standing Requirements: To bring a PAGA claim, employees must now have personally experienced each alleged Labor Code violation.
• Revised Penalties: Penalties may be capped at 15% if the employer takes all reasonable steps to comply with the law before receiving a PAGA notice, or at 30% if corrective actions are taken within 60 days of receiving the notice.
• Employee Share of Penalties: Aggrieved employees are now allocated 35% of penalties, an increase from the previous 25%.
• Enhanced Employer Cure Opportunities: The amendments expand the range of Labor Code violations that employers may cure before a PAGA claim proceeds, including wage statement errors and some wage and hour infractions.

Thus far, California courts have not issued a significant number of published decisions interpreting the new PAGA amendments—such as what “reasonable steps” to comply with law will allow employers to take advantage of the penalty caps noted above. Accordingly, employers should continue taking proactive measures to ensure compliance with Labor Code requirements and other pertinent laws and avoid PAGA actions in the first instance.

The Rise of “Headless” PAGA Actions

In recent years, we have also seen a rise in what some have dubbed “headless” PAGA actions, in which plaintiffs bring only representative PAGA claims (with no individual component). This strategy attempts to avoid arbitration of individual claims, as individual PAGA claims can be compelled to arbitration under a mandatory arbitration agreement, but representative claims cannot (and are thus typically stayed pending resolution of the individual arbitration). In Balderas v. Fresh Start Harvesting, Inc., 101 Cal. App. 5th 533 (2024), a California appellate court gave credence to this approach and held that an employee who has personally suffered at least one Labor Code violation may bring a representative PAGA action against their employer, even without asserting an individual claim. Balderas therefore led to an increase in headless PAGA actions.

Reversing this trend, the appellate court in Leeper v. Shipt Inc., 107 Cal. App. 5th 1001 (2024) held that every PAGA action inherently includes an individual component that cannot be excised from the representative action. In a win for employers, Leeper established that a plaintiff cannot disclaim the individual component of a PAGA claim to avoid arbitration. Then, in Rodriguez v. Packers Sanitation Servs. LTD., LLC, 109 Cal. App. 5th 69 (2025), another appellate court reasoned that individual claims should not automatically be inserted into a matter (as the court in Leeper had done), but instead the lack of an individual PAGA claim should be treated as a pleading deficiency that the employer may raise in an appropriate pleading challenge. The California Supreme Court has granted review of Leeper, with a decision expected later in 2026.

Therefore, the legal landscape remains unclear as to whether a plaintiff must bring both individual and representative PAGA claims, which may cause interim uncertainty in the enforceability of arbitration agreements.

Proposed Regulations

The California Labor and Workforce Development Agency (LWDA) recently issued proposed regulations intended to implement the 2024 PAGA amendments. The proposed regulations would require employees to provide more detailed factual allegations and legal theories in their pre-litigation PAGA notices, establish procedures for employers to submit responses through the LWDA portal, introduce oversight mechanisms for “high-frequency” filers who submit large volumes of PAGA notices, and expand reporting requirements for PAGA settlements, among other proposals. These proposals were subject to a 45-day comment period, which closed on March 23, 2026, and employers should prepare to adjust strategies in ongoing or future PAGA matters if the regulations are ultimately adopted in some capacity.

Next Steps for Employers

Given the uncertain landscape surrounding the 2024 PAGA amendments, employers should be diligent in ensuring compliance to prevent PAGA actions from arising in the first place, and adjusting their litigation strategies where appropriate in light of recent law and ongoing developments. Advisable preparatory measures include:

• Conducting periodic audits of payroll systems, wage statements and time-keeping records, as well as of related policies and procedures.
• Providing training on wage and hour compliance, recordkeeping practices and employee classification practices.
• Documenting corrective actions by keeping records of actions taken in response to potential PAGA violations.
• Determining the employer’s approach to arbitration agreements and implementing these agreements, as well as class action/representative action waivers where appropriate.
• Keeping litigation strategies up to date by raising appropriate challenges to PAGA standing requirements.
• Monitor legal changes by regularly verifying any further developments or court guidance and adapting practices and policies accordingly.