FAQ: California's PAGA Reforms and the New 'All Reasonable Steps' Defense

The 2024 reforms fundamentally restructure PAGA by replacing the previous litigation-focused framework with a new legal standard centered on documented employer diligence and compliance. The core change introduces an affirmative defense where employers can demonstrate they took 'all reasonable steps' to comply with the Labor Code before receiving a PAGA notice.

The significant amendments to PAGA took effect on June 19, 2024, following the passage of new legislation.

The new affirmative defense allows employers to demonstrate they took all reasonable steps to comply with the Labor Code before receiving a PAGA notice. By successfully proving this, courts may drastically reduce potential penalties against the business.

For two decades, PAGA has been a source of substantial financial liability where minor technical errors could accrue into massive civil penalties. The 2024 reforms offer employers, for the first time, a mechanism to significantly reduce their exposure to these penalties.

Employers should focus on detailed auditing, record-keeping protocols, and management training to document their compliance efforts. Building a comprehensive 'Reasonable Steps' file is essential for liability mitigation under the revised law.

The previous framework was litigation-focused and could result in massive penalties for minor technical errors. The new framework shifts focus to employer compliance and provides a defense mechanism for businesses that can demonstrate proactive compliance efforts.

California businesses are the primary entities affected, as they now have new opportunities to reduce penalty exposure through documented compliance efforts. Human capital compliance professionals emphasize the importance of immediate adoption of these new standards.

The article references a Full Compliance Playbook that details the essential elements required to build a defensible 'Reasonable Steps' file and secure penalty reductions under the revised law.

Human capital compliance professionals note that immediate and proactive adoption of the new standard is critical. Employers should begin implementing detailed compliance protocols and documentation systems to take advantage of the new defense provisions.

Windes, an advisory, audit, and tax firm, provides the analysis and offers human capital compliance consulting to help businesses understand and implement the new PAGA requirements.