Updated · California Employment Law Report · Aug 22
California Employers Urged to Audit 5 Wage Practices to Cap PAGA Penalties at 15%
Updated
Updated · California Employment Law Report · Aug 22
California Employers Urged to Audit 5 Wage Practices to Cap PAGA Penalties at 15%
3 articles · Updated · California Employment Law Report · Aug 22
Summary
California employers are being told to run routine wage-and-hour audits in 2026, with payroll, deductions, classification, timekeeping, and meal-and-rest breaks flagged as the five highest-risk areas.
The push centers on 2024 PAGA reforms: employers that document “reasonable steps” before or soon after a notice can sharply reduce penalty exposure, in some cases to 15% of the usual level.
Key compliance pressure points include California’s $70,304 exempt-salary threshold for 2026, strict final-pay and reimbursement rules, and continued scrutiny of independent-contractor status under the ABC test.
Timekeeping and break practices remain especially exposed because off-the-clock work, rounding, and noncompliant meal periods frequently drive class actions and PAGA claims; documented manager training and corrective action help build a defense.
The guidance urges at least semiannual audits as California enforcement and local wage rules keep shifting, with the statewide minimum wage set to rise from $16.90 to $17.40 in 2027.