The Private Attorneys General Act, in force since 2004, allows a single employee to sue an employer for Labor Code violations on behalf of the state and all other affected employees, with civil penalties calculated per employee, per pay period. For twenty years it was one of the most consequential and most litigated employment statutes in California.

In summer 2024, the Legislature passed and the Governor signed a reform package, AB 2288 and SB 92, as part of an agreement that removed a repeal initiative from the November 2024 ballot. The reforms apply to civil actions based on PAGA notices filed with the Labor and Workforce Development Agency on or after June 19, 2024. Cases built on earlier notices continue under the old rules, which is why both regimes are still working through the courts.

The headline change: penalty caps tied to conduct

The reform created a sliding scale based on what the employer did and when:

  • 15 percent cap. An employer that took "all reasonable steps" to comply with the Labor Code before receiving a PAGA notice or a records request pays at most 15 percent of the applicable penalties.
  • 30 percent cap. An employer that takes all reasonable steps within 60 days after receiving a PAGA notice pays at most 30 percent. This cap is not available to an employer that acted maliciously, fraudulently, or oppressively, or whose policy or practice was already found unlawful within the previous five years.

"All reasonable steps" can include conducting payroll audits and acting on the results, maintaining lawful written policies, training supervisors, and correcting problems as they surface. Whether the steps were reasonable is evaluated against the size and resources of the employer.

Other structural changes

  • Standing. The employee bringing the claim must have personally experienced each violation alleged, within the one-year limitations period.
  • Cure process. Small employers can present a cure proposal through the state agency; larger employers can request an early evaluation conference in court.
  • Wage statement penalties. Penalties for paystub errors that caused no actual harm were reduced.
  • Employee share. The employees' share of any recovery rose from 25 percent to 35 percent, with the remainder going to the state.

The practical takeaway

The reform did not shrink the list of things an employer can be sued over. It changed what preparation is worth. Before 2024, a compliance audit did not reduce penalty exposure. Now, documented proactive compliance is the difference between full penalties and the 15 percent tier, which makes the audit itself the highest-leverage step most employers can take.