PAGA Reform: 2024 Changes in 2026 Courts

When California enacted the 2024 Private Attorneys General Act reforms, employers were told the litigation landscape would change. In 2026, that prediction is being tested in real notices, real cure windows, and real court filings. The question is no longer what AB 2288 and SB 92 promised on paper — it is which reforms courts and the Labor and Workforce Development Agency (LWDA) are actually enforcing, and what California employers must do differently as a result.

What the 2024 PAGA reform actually changed

On July 1, 2024, Governor Newsom signed Assembly Bill 2288 and Senate Bill 92 — the most significant rewrite of PAGA since 2004. With limited exceptions, the reforms apply to PAGA notices submitted to the LWDA, and civil actions filed, on or after June 19, 2024.

The old narrative that “one employee can sue for every Labor Code violation in the company” is no longer the full story. The 2024 package did four things that matter most to employers:

• Raised the standing bar so the named plaintiff generally must have personally experienced each alleged violation within the statutory period.
• Created statutory penalty caps for employers who can show they took “all reasonable steps” to comply.
• Expanded cure pathways, including early evaluation and a small-employer LWDA cure track.
• Rebalanced penalty sharing so aggrieved employees receive 35% of recovered penalties (up from 25%), with 65% going to the state.

What the reform did not do is eliminate PAGA. Demand letters still arrive, one-year lookbacks still matter, and wage-and-hour gaps still compound across pay periods. The reform changed leverage — not the need for compliance.

Standing: the plaintiff must have lived the violation

Before the reform, plaintiffs often asserted “kitchen-sink” PAGA claims covering violations they never personally suffered. AB 2288 largely ends that practice. For notices and actions covered by the new law, the named plaintiff generally must have experienced each Labor Code violation alleged in the claim within the applicable limitations period.

That change is already reshaping pleadings in 2026. Broader representative theories are harder to sustain, and employers have a clearer early-case challenge when the complaint alleges categories of violations outside the plaintiff’s own experience. The practical takeaway: when a notice lands, map every alleged code section to the named employee’s actual pay periods, job duties, and records before negotiating scope.

Penalty caps for “all reasonable steps”

The most employer-friendly piece of the reform is the statutory ceiling tied to compliance effort. If an employer took all reasonable steps to comply with the provisions identified in the notice:

• Before receiving the PAGA notice (or certain records requests), recoverable civil penalties are capped at 15% of the amount otherwise sought.
• Within 60 days after receiving the notice, recoverable civil penalties are capped at 30%.

The statute defines “all reasonable steps” by the totality of the circumstances and expressly recognizes actions such as:

• Periodic payroll audits, with follow-through on the findings.
• Dissemination and enforcement of lawful written policies.
• Supervisor training on Labor Code and wage-order requirements.
• Corrective action when supervisors violate those rules.

In 2026 practice, this is where cases are won or lost before they ever reach a jury. Employers who can produce audit trails, signed policy acknowledgments, training logs, and remediation tickets have a defined statutory path to reduced exposure. Employers who only “meant to get compliant” do not.

Cure rights, early evaluation, and the small-employer track

SB 92 also changed procedure. Larger employers can use an early evaluation conference process designed to surface cure opportunities and settlement pressure earlier in the dispute. Employers with fewer than 100 employees gained a streamlined LWDA cure pathway that began October 1, 2024.

Where a violation can be fully cured — including making aggrieved employees whole with back wages, interest, and any required statutory amounts — civil-penalty exposure can be eliminated or sharply reduced, depending on timing and whether the employer also took all reasonable steps. That is a meaningful shift from the pre-2024 era, when cure options were narrower and often too late to change the economics of the case.

None of this replaces the need to respond to a notice quickly. The 60-day window for post-notice reasonable steps is short. Waiting for “the next board meeting” is how companies forfeit the 15%/30% caps.

How default penalties changed

AB 2288 also recalibrated the default penalty structure. In broad terms:

• The ordinary default civil penalty is $100 per aggrieved employee per pay period for many Labor Code violations that do not already carry their own penalty.
• The higher $200 subsequent-violation penalty now applies only where a court or agency previously found the employer’s conduct unlawful within the relevant lookback, or where the conduct involved malice, fraud, or oppression.
• Isolated, nonrecurring events that do not extend beyond the lesser of 30 consecutive days or four consecutive pay periods can be capped at lower amounts (commonly discussed as $25 or $50 depending on the violation type).
• Certain wage-statement violations and weekly-pay-period calculations now carry reduced penalty exposure under the amended statute.

Courts in 2026 are applying these ceilings as written defenses, not as soft equities. That makes clean payroll classification, accurate wage statements under Labor Code §226, and consistent timekeeping more valuable than ever — not just as operational hygiene, but as quantified liability control.

What 2026 courts are actually doing with the reform

Two years into the new regime, several patterns are clear even without inventing case names:

• Standing challenges are raised earlier and more often.
• Employers who preserved contemporaneous audit and training evidence are invoking the 15%/30% caps as a core defense theory.
• Cure and early-evaluation procedures are being used to narrow claims before discovery expands.
• Plaintiffs still file — especially where meal/rest, overtime, off-the-clock, and wage-statement issues remain systemic.

In other words, PAGA did not disappear. It became more technical. The employers still getting hurt in 2026 are usually the ones with the same old gaps: missing meal-break documentation, inaccurate itemized wage statements, unmanaged off-the-clock work, and no proof of “reasonable steps” taken before the notice arrived.

What California employers should do now

If your company has not rebuilt its PAGA posture around the 2024 statute, 2026 is late — but still better than waiting for the next demand letter.

1. Run a forensic payroll and timekeeping audit. Focus on meal/rest premiums, overtime, regular-rate calculations, and wage-statement accuracy.
2. Document “reasonable steps.” Keep dated audit findings, corrective actions, policy rollouts, and supervisor training records.
3. Fix wage statements and handbooks. Labor Code §226 defects remain a common PAGA gateway claim.
4. Create a 60-day response playbook. When a notice arrives, you need counsel, data pulls, and cure analysis ready immediately.
5. Quantify exposure before you negotiate. Use a structured exposure calculator and, where needed, a deeper PAGA audit so settlement decisions are based on numbers, not fear.

Bottom line

The 2024 PAGA reforms gave California employers real tools: tighter standing rules, defined penalty caps for demonstrated compliance effort, and broader cure options. In 2026, courts and the LWDA are applying those tools — but only for companies that can prove the work. If your records, policies, and audits cannot show “all reasonable steps,” the reform’s protections remain theoretical.

If you need help turning the statute into an operating system — audits, documentation, cure strategy, and ongoing monitoring — contact Easeworks. The goal is not to win the next PAGA letter. It is to make the next letter harder to write.