5 Misconceptions Employers Have About PAGA Lawsuits

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The Private Attorneys General Act (PAGA) has become one of the biggest legal risks for employers in California. This law allows employees to sue on behalf of themselves, their coworkers, and the state for labor code violations, leading to costly penalties and complex litigation. Unfortunately, many employers misunderstand how PAGA works, which can leave them vulnerable to lawsuits. Below, we’ll clear up 5 misconceptions employers have about PAGA lawsuits and what you can do to protect your business.

Misconception #1: PAGA Claims Are the Same as Class Action Lawsuits

Many employers believe that PAGA lawsuits function just like class action lawsuits, but they are actually quite different.

Key Differences:

In a class action, employees must “opt-in” to be part of the lawsuit, and the employer has the right to defend against individual claims.
In a PAGA lawsuit, there is no opt-in requirement—one employee can file a claim on behalf of many, regardless of whether others agree.
PAGA penalties are paid mostly to the state, not individual employees (75% goes to California, and 25% is distributed among affected workers).

Why It Matters:

Unlike class actions, employers have fewer options to fight PAGA lawsuits, making proactive compliance the best defense.

Misconception #2: PAGA Only Applies to Large Companies

Some small and mid-sized business owners believe that PAGA claims only target big corporations. However, any California employer—regardless of size—can face a PAGA lawsuit.

Why Small Businesses Are at Risk:

Even minor labor code violations can trigger PAGA claims.
PAGA penalties add up quickly, especially if multiple employees are affected.
Small businesses often lack compliance teams, making them more vulnerable to unintentional violations.

Why It Matters:

No business is too small to be sued under PAGA. Employers should audit their labor law compliance regularly to reduce their risk.

Misconception #3: A Single Employee Complaint Can’t Lead to a Major Lawsuit

One of the biggest misunderstandings about PAGA is that it only applies to major, widespread violations. The reality is that a single employee complaint can open the door to a large-scale lawsuit.

How PAGA Claims Expand:

Once an employee files a PAGA claim, the lawsuit can represent all employees affected by the same violation.
Even if the original complaint is about one small issue (like an incomplete wage statement), the lawsuit can expand to include other violations, leading to significant financial penalties.

Why It Matters:

A small issue can quickly turn into a huge legal battle. Employers should take every employee complaint seriously and address labor law violations immediately.

Misconception #4: PAGA Lawsuits Only Happen for Serious Violations

Many employers assume that PAGA lawsuits are only filed for major labor law violations like wage theft or unsafe working conditions. In reality, even minor, technical violations can lead to a PAGA claim.

Common “Small” Violations That Lead to PAGA Lawsuits:

A missing employer address on a wage statement.
A rest break that started five minutes late.
A meal break that was slightly shorter than required.
A payroll system that incorrectly rounds employee work hours.

These issues may seem minor, but PAGA allows employees to sue over even the smallest violations—and those penalties add up fast if multiple employees are affected.

Why It Matters:

Employers must be meticulous about compliance, even with seemingly insignificant details. Regular payroll audits and legal reviews can help catch and fix small mistakes before they turn into costly lawsuits.

Misconception #5: PAGA Settlements Are Private and Confidential

Many employers assume that if they settle a PAGA claim, the terms of the settlement will remain confidential. This is not always the case.

What Happens in PAGA Settlements:

Court Approval Required: All PAGA settlements must be reviewed and approved by a judge to ensure they serve the state’s interests.
Public Records: Unlike private settlements, PAGA settlements are usually public, meaning other employees (and attorneys) can see what was paid.

Why It Matters:

Employers can’t count on confidentiality in a PAGA settlement. The best way to protect your business is to implement strong labor law compliance measures to prevent claims from happening in the first place.

How Employers Can Reduce Their PAGA Risk

Since PAGA claims can be difficult to fight, the best strategy is to prevent them. Here’s what employers can do:

✔ Conduct regular workplace audits to identify and fix compliance issues.
✔ Ensure wage statements are accurate and meet all legal requirements.
✔ Train managers and supervisors on meal and rest break policies.
✔ Keep detailed records of employee hours, wages, and breaks.
✔ Work with an employment law attorney to review policies and minimize legal exposure.

Call Rupal Law for PAGA Defense Assistance

If you’re facing a PAGA claim or want to protect your business from future lawsuits, Rupal Law is here to help. We specialize in defending California employers and providing expert guidance on labor law compliance.

Call (951) 460-0830 today to schedule a consultation and safeguard your business from PAGA claims.