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Why Small Businesses Should Care About PAGA Reform

California’s Private Attorneys General Act (PAGA) has long been a challenge for employers, and the 2024 PAGA reforms bring changes every small business should understand. Historically, PAGA allowed employees to sue their employers for labor code violations on behalf of themselves, coworkers, and the state. While it aimed to enforce labor laws, PAGA often led to costly litigation, even for minor or unintentional violations, disproportionately impacting small businesses with limited resources.

What PAGA Reform Brings to the Table

The 2024 reforms aim to curb frivolous lawsuits and offer a more balanced framework for employers. Key changes include:

  • Certified Compliance Programs: Businesses with these programs may gain protection from PAGA lawsuits by demonstrating proactive compliance with labor laws.
  • Enhanced Role of the Labor and Workforce Development Agency (LWDA): The LWDA now plays a larger role in reviewing and mediating claims, reducing unnecessary lawsuits.
  • Streamlined Claims Process: Clearer guidelines make it easier for employers to understand and address allegations.
  • Capped Penalties: Limits on penalties for minor, unintentional violations reduce the financial burden on small businesses.

Why Small Businesses Should Act Now

PAGA reform offers an opportunity for small businesses to mitigate risks, but action is needed to fully benefit. Implementing a certified compliance program can shield businesses from claims and demonstrate a commitment to fair labor practices. Staying updated on wage and hour laws, maintaining accurate records, and fostering open employee communication are essential to minimizing potential liabilities.

Actionable Steps for Small Businesses

  1. Conduct a Compliance Audit: Review payroll, timekeeping, and HR policies to ensure alignment with labor laws.
  2. Implement a Certified Compliance Program: Adopt policies and training that address common violations and gain certification.
  3. Train Managers and Supervisors: Educate leadership on the reforms and their role in maintaining compliance.
  4. Utilize Mediation Opportunities: Leverage the LWDA’s enhanced involvement to resolve claims early and avoid costly litigation.

Conclusion

The 2024 PAGA reform offers a chance for small businesses to protect themselves from litigation and foster better compliance. By acting now, businesses can create a workplace that supports growth and success in 2025 and beyond. For expert guidance, reach out to Infinium HR today!

Written by Mike Hayden

Mike Hayden is with Infinium HR Group located at 29970 Technology Drive, Suite 220B in Murrieta. (951) 473-7272 – www.infiniumhr.com.

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