California's PAGA Reforms Introduce New Compliance Defense for Employers

California's employment enforcement landscape has undergone a fundamental transformation with the implementation of significant amendments to the Private Attorneys General Act that took effect on June 19, 2024. The legislative changes enacted through AB 2288 and SB 92 replace the previous litigation-focused framework with a new legal standard centered on documented employer diligence and compliance. This represents a paradigm shift in how businesses can manage their exposure to PAGA claims, which for two decades have served as a source of substantial financial liability where minor technical errors could accrue into massive civil penalties.

The core change concerns an employer's ability to assert a new affirmative defense that could dramatically alter the financial consequences of PAGA litigation. Under the revised framework, businesses that can successfully demonstrate they took all reasonable steps to comply with the Labor Code before receiving a PAGA notice may see their potential penalties drastically reduced. This marks the first time employers have been provided with a clear mechanism to proactively manage their PAGA exposure rather than simply reacting to claims after they are filed.

The specifics of defining and documenting these necessary compliance steps have become essential for liability mitigation. Companies must now focus on detailed auditing procedures, comprehensive record-keeping protocols, and thorough management training programs to build defensible compliance records. Human capital compliance professionals emphasize that immediate and proactive adoption of this new standard is critical for businesses operating in California. The complete analysis details the essential elements required to build a defensible Reasonable Steps file and secure the substantial penalty reductions available under the revised law. Access the Full Compliance Playbook Here to Understand the All Reasonable Steps Requirements at https://windes.com.

The implications of these reforms extend beyond individual businesses to the broader California economy. By creating incentives for proactive compliance rather than punitive measures for technical violations, the new framework could reduce litigation costs for businesses while maintaining worker protections. The shift toward documented diligence represents a more balanced approach to employment law enforcement that recognizes the practical challenges businesses face in maintaining perfect compliance with California's complex labor regulations. For employers, the reforms create both opportunity and obligation to develop robust compliance systems that can withstand legal scrutiny.