California PAGA and Wage and Hour Class Action Defense

We defend California employers against PAGA representative actions and wage and hour class actions — and we bring settlement data to every decision you have to make along the way.

PAGA is the single largest source of employment law exposure for California employers. In the first half of 2026 alone, we tracked roughly $1.3 billion in PAGA and wage and hour class action settlements, and notice filings with the LWDA are on pace for their biggest year on record.

No employer is too small or too remote to be a target. About 44% of recent settlements covered workforces of fewer than 200 employees, and filings have spread well beyond Los Angeles, San Francisco and San Diego into Ventura, the Inland Empire and the Central Valley. The plaintiffs' bar is not being selective.

Zaller Law Group defends California employers in these cases. We have done this work since the firm opened in 2017, and our attorneys have more than 70 years of combined experience defending California employers. We also build the compliance systems these lawsuits attack — which means we usually know where the evidence is before the other side does.

The 2024 reform gave you leverage. Most employers don't use it.

Under PAGA, civil penalties run $100 per employee, per pay period. Across a two-year reach-back and a workforce of any size, that arithmetic gets serious quickly. The 2024 reform changed the math in two ways that matter enormously to a defendant: it eliminated penalty stacking on derivative claims, and it created caps tied to what the employer actually did about compliance.

The difference is not marginal. In a 100-employee model, exposure that would have exceeded $2.3 million under the old PAGA becomes roughly $156,000 as a starting point for negotiation — and that is the soaking-wet number, before the plaintiff has proven a single violation.

The four pillars of "reasonable steps"

• Periodic payroll audits — time records, pay calculations, wage statements — with action taken on what they find
• Lawful written policies, kept current as the law moves
• Supervisor training, because supervisors make the meal period decisions in real time
• Corrective action when issues surface, including discipline of non-compliant supervisors

Compliance is a system, not an event. One webinar, one handbook revision, or one payroll audit across several years is unlikely to be enough — the employers in the strongest position show a recurring, documented pattern of compliance work over time. And finding a problem without fixing it is worse than not looking: if an audit turns something up, correct it, pay the premium if one is owed, train on it, and document all three. Our 2026 roadmap walks through what that looks like in practice.

The claims we defend

PAGA representative actions

• LWDA notice response, cure evaluation and early resolution strategy
• Reasonable steps positioning to secure the 15% or 30% cap
• Standing challenges under the post-reform requirement that the plaintiff personally suffered the violations alleged
• Scope and manageability — limiting what a representative action can put in front of a court
• "Headless" PAGA claims, where plaintiffs plead only the representative claim to avoid arbitration — an active split in the Courts of Appeal
• Arbitration strategy, including the sequencing questions that follow when individual claims are compelled

Wage and hour class actions

We bring data to the table.

Two questions decide most of these cases, and both are arithmetic before they are argument: what is our actual exposure? and is the number on the table a fair one? Employers are routinely quoted figures by both sides that have no relationship to what the data supports.

Our founding partner co-founded Scaled Comp, a compliance analytics company built for exactly this problem, and we use it on our own matters. It gives our defense two things most firms cannot bring:

This changes how mediation goes. You walk in with a modeled exposure figure and a benchmark range rather than a range of guesses, and the conversation moves to the merits instead of to who can outlast whom. More on how PAGA settlements are actually valued.

How we work these cases

1. Model the exposure before building the strategy. Arithmetic first. Everything downstream — whether to cure, whether to mediate early, what to reserve — depends on a number that reflects the actual data.
2. Move inside the reasonable steps window. If steps can still be taken, they need to be taken now and documented properly. This is the most time-sensitive part of the case and the one most employers miss.
3. Attack standing and scope. The narrowed standing requirement and the courts' ability to manage scope give the defense real levers that did not exist in this form before 2024.
4. Get the arbitration sequencing right. Where employees signed arbitration agreements, how the individual and representative claims are sequenced shapes the entire case.
5. Resolve on benchmarks, not on fear. PAGA's reach-back runs from filing, so pay periods accumulate while a case sits. Where resolution is the right answer, reaching mediation early with a defensible number is usually worth more than another year of discovery.

Who we represent

We defend California employers with concentrated hourly workforces, where wage and hour exposure multiplies fastest — restaurant and hospitality groups, multi-unit retail, manufacturing, transportation and trucking, aerospace and entertainment. Most of our clients operate between 50 and 3,000 employees in California: large enough that PAGA exposure is a real balance-sheet item, small enough to want the partner who answers the phone to be the one handling the case.

Watch — how the 2024 PAGA reforms changed the math

The 2024 reform did two things employers can actually use. It ended penalty stacking, so a single practice no longer generates layered derivative penalties on the same conduct. And it created the reasonable steps caps — 15% where the compliance work was done before a notice arrived, 30% where it happens within 60 days after. Neither cap applies automatically; the employer has to prove what it did, which is why dated audit reports, training logs and policy revision histories matter more than any argument made later. More employer videos on The Legal Lineup →

Frequently asked questions

What is a PAGA notice, and what happens after I receive one?

A PAGA claim begins with a written notice to the Labor and Workforce Development Agency and to the employer describing the alleged Labor Code violations. The agency has a window to decide whether to investigate. If it does not, the employee may file suit on behalf of themselves and other allegedly aggrieved employees. The period between the notice and the complaint is the most valuable time an employer has, and most of it gets spent waiting.

How quickly do I need to act after receiving a PAGA notice?

Immediately. Taking all reasonable steps within 60 days of the notice can cap penalties at 30% of the maximum. That window does not reopen. A Labor Code records request deserves the same response — it is frequently the first sign that a PAGA claim is coming.

What are "reasonable steps," and can they really reduce my penalties?

Yes, substantially. Reasonable steps are documented, good-faith compliance efforts: periodic payroll audits, lawful written policies, supervisor training, and corrective action when issues are found. Taken before a notice arrives, they can cap penalties at 15% of the maximum. The statute gives no bright-line test, and because the reform is still new there is little case law defining it — so what courts will weigh is the timing and frequency of your audits, whether identified issues were actually corrected, the training you ran, your size and resources, and whether the alleged violation was systemic or isolated.

Do the penalty caps apply automatically?

No. The employer carries the burden of proving it took all reasonable steps. Dated audit reports, training logs, policy revision histories and corrective-action records are the evidence. Without documentation there is no cap.

We have arbitration agreements. Are we still exposed?

Usually, at least in part. Arbitration agreements can move individual claims out of court, but an employee compelled to arbitration may retain standing to pursue representative claims. The agreements still matter a great deal — they change the shape of the case rather than ending it.

What does a PAGA case settle for in California?

There is no single figure, but the range is far more knowable than most employers are told. Settlement values turn on the claim types alleged, the number of employees and pay periods in scope, the industry, and whether the employer can demonstrate reasonable steps. We benchmark against a database of more than 7,700 California PAGA and class action settlements rather than relying on anecdote, which is how we tell you whether a demand is in line with the market or well outside it.

What is the difference between a PAGA claim and a wage and hour class action?

A class action seeks damages for a certified class of employees and must satisfy certification requirements. A PAGA claim is a representative action seeking civil penalties on behalf of the state, and it does not require class certification — which is precisely why plaintiffs bring it. In practice the two are usually filed together, and defending them well means treating them as one strategic problem.

Should we run a payroll audit after receiving a notice?

Almost always, and under privilege. You cannot make sound decisions about a case whose real exposure you have not measured, and the audit is frequently the foundation of the reasonable steps record. If you have not received a notice, the audit is worth more — that is the 15% cap rather than the 30% one.

Recent insights for California employers

More PAGA coverage on California Employment Law Report →

This page is general information for California employers and is not legal advice. Reading it or contacting us does not create an attorney-client relationship, and no outcome in any matter is guaranteed. Please do not send confidential information until an attorney-client relationship has been established in writing. Scaled Comp is a separate company; it is not a law firm and does not provide legal advice. Settlement figures reflect data tracked through mid-2026.