In 2004, the Private Attorneys General Act (PAGA) was passed, which allows employees in California to sue on behalf of the state and win large fines for violations of their labor laws. Although PAGA was intended to prevent wage theft, the initial law did not have any checks on small inaccuracies and did not give employers any qualms.

This was replaced with the reforms included in AB 2288 and SB 92, the so-called PAGA 2.0, which went into effect on June 19, 2024, concerning notices and claims filed on or after that day. The purpose of these reforms is to simplify the rules, motivate compliance, and provide employers with a practical avenue to minimize liability by means of a timely audit and correction.

What Changed Under PAGA 2.0

• New Standing & Manageability

• The plaintiffs must now prove every alleged violation in their personal experience before pursuing claims in a representative manner, which makes PAGA more similar to the norms of class actions.

• Courts have become able to restrict evidence in scope to control litigation. 

The representative claims have a one-year statute of limitations, which is also confirmed by PAGA 2.0. This implies that employees must be the victims of the purported violations themselves in the 12 months immediately prior to the declaratory claim. This restricts older events and makes PAGA similar to normal class-action rules.

• Cure Process & Timeline

• After receiving a PAGA notification, small employers (those with fewer than 100 employees during the relevant period or years of 12 months) are encouraged to submit a confidential cure plan within 33 days. The employers have forty-five days to implement the remedy after it is taken.

• The employers who resolve the situation with the help of the cure process should send a written notice of their cure plan to the Labor & Workforce Development Agency (LWDA) and the concerned employees. This notification has to be submitted through certified mail and submitted online at the California Labor and Workforce Development Agency (LWDA). The LWDA is subsequently given 14-17 days to respond or to have a conference in 30 days. Employers can also only employ the cure process once annually as per a section of the Labor Code. As an illustration, there is no way of curing the same violation of the wage statement in section 226 twice in a year.

• After the termination of a large employer (those with 100 or more employees), an Early Evaluation Conference (EEC) may be sought, as well as a stay of tribunal and court proceedings.

• Caps on Penalties based on Employer conduct

It is now possible to significantly lessen penalties imposed by PAGA in case employers respond accordingly:

• In case the employers made all possible attempts to be compliant before being served with a PAGA notice, the penalties are limited to 15 percent of the upper amount.

• In case corrective measures are taken within 60 days of receiving notice, its penalties are limited to 30%.

According to other sources, employers may only pay 15% or 30%, respectively, after an 85% decrease. 

Besides these 15% and 30% limits, PAGA 2.0 includes less severe penalties in case of minor or first-time violations. In low‑impact wage statement/pay-period concerns:

• The penalty of $25 per employee per pay period is applied in the case when the violation did not harm anyone and did not interfere with the comprehension of employees regarding their pay.

• The per-employee rate of $50 per pay period is supposed to be imposed where the non-compliance has been isolated and has not taken over 30 days or four pay periods.

The penalty has also been capped at a maximum of $200 per employee (per pay period) except in cases where the employer was acting maliciously, fraudulently, or knowingly, or through the employer had a previous agency finding of the same violation within the last five years.

• Broader Cure Eligibility

The cure provisions now include:

• Wage-statement violations (Lab. Code Section 226),

• Meal/rest premium violations (Section 226.7),

• Overtime violations (Section 510), and

• Expense reimbursement (Section 2802). 

• Distribution of Penalties

PAGA has since increased the amounts shared between employees and state agencies with the Labor & Workforce Development Agency (LWDA), with 35% of recovered penalties going to employees and 65% to the state.

Common Payroll Issues That Trigger PAGA Claims

Common risk areas can be:

• Calculation errors in overtime will be a factor, mainly when the pay type is bonus, commission, or changing pay.

• Premiums for missed or late meals and rest periods are subject to fines imposed by the statutes.

• Erroneous (or inaccurate) and/or unbalanced wage statements, including failure to include hours, wage rates, or employer information as mandated by section 226.

• Failure to correctly classify employees as exempt or non-exempt, resulting in either unpaid overtime or misstatements.

How Payroll Audits Help Employers Stay Compliant

Conducting regular payroll audits is key to mitigating PAGA risk:

• Detect violations early, and an audit reveals errors before a legal notice.

• Document compliance efforts, showing you took “reasonable steps.”

• Track breaks and overtime in real time to prevent recurring issues.

• Build audit-ready reports that support cure proposals if a notice is received.

Actively audited employers have a greater chance of realizing the advantages of the 15% or 30% penalties that are liable. 

PayProNext PAGA 2.0 Compliance 

While PayProNext does not offer legal services, it can help employers maintain accurate payroll records and support compliance with PAGA 2.0. it can also help in: 

• Streamline payroll processing to minimize the chances of making errors that can result in PAGA claims.

• Produces clear and precise wage statements that assist in fulfilling the requirements of the CA Labor Code 226.

• Wages, hours, and overtime are calculated in a single system to avoid the preparation of an audit.

• Enables you to export your payroll information to legal or HR teams when needing to access the information with compliance requests.

Having timely and current payroll records reduces the time it takes the employer and advisor to react to possible wage‑and‑hour concerns, which is especially important in the environment of the short deadlines of PAGA 2.0.

Step-by-Step Employer Action Plan

Following this plan not only helps you stay compliant but also positions your business to maximize the 15% or 30% penalty caps available under PAGA 2.0.

Why Acting Now Matters

Although PAGA 2.0 offers new cures and reduced penalties, it also shortens timelines; waiting to address payroll issues until notice arrives is risky. The most compliant employers:

• Audit proactively, not reactively.

• Document everything from audits to training.

• Use technology to catch issues in real time.

Preparation isn’t just best practice, it’s essential for leveraging PAGA 2.0’s protections. Because cure opportunities are time-limited and restricted in frequency, waiting until a PAGA notice arrives can remove your ability to take advantage of the reduced penalties. Employers who audit proactively are the ones most likely to benefit from these reforms.

Conclusion & Call to Action

With the implementation of PAGA 2.0, California employers are not only allocated legal means of minimizing liability considerably but must act promptly and establish the compliance measures accordingly. The reforms are significant, as the auditing supports the refund expenses, the cure is possible for various kinds of violations, and the penalties are limited to 15 or 30 percent.

Wait for the PAGA notice to launch in action, programmatically audit, fix violations, and document compliance to contain risk and remain safe in California law.

Book a PayProNext demo today to see how regular payroll audits and instant compliance tools help you apply PAGA 2.0 reforms and safeguard your business in 2025.

Frequently Asked Questions (FAQs)

1. What is PAGA 2.0, and what sets it apart from the original PAGA?

PAGA 2.0 can mean the 2024 changes to the California Private Attorneys General Act with AB 2288 and SB 92. The initial 2004 law has enabled employees to sue employers on behalf of the state by means of violations of labor laws, which has frequently resulted in expensive lawsuits based on minor and technical violations. PAGA 2.0 would help render the law more reasonable and practicable to employers by imposing express rules on curing violations and capping the penalties against good-faith compliance and establishing more thorough supervision by the court system.

2. When was PAGA 2.0 enforced?

PAGA 2.0 covers any PAGA notice or claim filed after June 19, 2024. A claim filed before the date is governed by the ancient PAGA rules.

3. What is good about PAGA 2.0 to employers?

The reforms provide the employers with a simplified procedure for correcting some violations (“cure”)instead of being severely punished. They also limit penalties when good faith compliance is evidenced by the employers and offer courts additional instruments to control the cases that are too general. Nevertheless, the law sets very short time limits in responding, and a robust payroll compliance system is a must.