California employers face unique challenges under the Private Attorneys General Act (PAGA), which allows employees to file lawsuits for labor law violations on behalf of themselves, their coworkers, and the state. These claims can result in significant penalties and damage your business’s reputation. To minimize the risk of facing a PAGA lawsuit, it’s crucial to know how to conduct an effective workplace audit to prevent PAGA claims.

 

By identifying and addressing compliance issues before they escalate, you can protect your business and ensure a fair and compliant work environment for your employees.

 

Below, we will outline the key steps for conducting a workplace audit, highlight common areas where employers often fall short, and share actionable tips to safeguard your business.

 

1. Review Wage and Hour Practices

PAGA claims frequently arise from wage and hour violations, such as:

• Incorrect overtime calculations.
• Inaccurate or incomplete wage statements.
• Failure to pay employees for all hours worked, including off-the-clock work.

What to Check:

• Are employees being paid at least the minimum wage?
• Is overtime calculated correctly based on California’s specific rules?
• Are wage statements compliant with state requirements (e.g., including total hours worked, pay period dates, and employer information)?

Action Tip:
Use a payroll compliance checklist to ensure accuracy and address discrepancies immediately.

 

2. Evaluate Employee Classifications

Misclassifying employees as exempt or independent contractors is a common trigger for PAGA claims.

What to Check:

• Do exempt employees meet California’s strict requirements for their classification (e.g., salary basis and job duties)?
• Are independent contractors properly classified under California’s ABC Test?

Action Tip:
Consult with a legal expert to ensure employee classifications align with California labor laws. Correct any misclassifications promptly to avoid penalties.

 

3. Assess Meal and Rest Break Policies

California employers must provide:

• A 30-minute unpaid meal break for every five hours worked.
• A 10-minute paid rest break for every four hours worked.

Failing to provide breaks or mismanaging break schedules can lead to significant penalties under PAGA.

What to Check:

• Are employees able to take their required breaks without interruption?
• Are breaks properly documented?
• Are missed breaks compensated correctly (e.g., paying a meal or rest period premium)?

Action Tip:
Implement time-tracking tools to document breaks and ensure employees receive their entitled rest periods.

 

4. Audit Workplace Safety Compliance

Unsafe working conditions are another area where PAGA claims may arise, particularly under Cal/OSHA regulations.

What to Check:

• Are safety protocols clearly communicated and enforced?
• Is equipment regularly inspected and maintained?
• Are employees properly trained on safety procedures?

Action Tip:
Conduct regular safety drills and training sessions to keep employees informed and compliant.

 

5. Review Recordkeeping Practices

Under California law, employers must maintain detailed records of hours worked, wages paid, and other employment-related data for at least three years. Poor recordkeeping can not only lead to PAGA claims but also make it difficult to defend against them.

What to Check:

• Are time and payroll records accurate and up to date?
• Are personnel files complete and securely stored?
• Are policies and procedures documented and accessible to employees?

Action Tip:
Use digital tools to streamline recordkeeping and ensure data is organized and easily retrievable.

 

Common Mistakes to Avoid During Audits

 

1. Not Involving Key Stakeholders: Include HR, payroll, and legal teams to ensure a thorough review.
2. Failing to Document Findings: Keep detailed records of your audit process, findings, and corrective actions.
3. Ignoring Employee Feedback: Employees can provide valuable insights into workplace practices and potential compliance issues.
4. Delaying Corrective Action: Address any violations immediately to minimize risk.

 

How Often Should You Conduct Workplace Audits?

 

Workplace audits should be conducted at least annually. However, audits may need to be more frequent if your business is undergoing significant changes, such as:

• Implementing new policies or systems.
• Expanding your workforce.
• Responding to changes in California labor laws.

 

How Rupal Law Can Help With Workplace Audits

 

Conducting a workplace audit can feel overwhelming, but it’s an essential step in protecting your business from PAGA claims. At Rupal Law, we specialize in helping California employers navigate labor law compliance and implement proactive strategies to reduce legal risks.

 

Call Rupal Law for the Legal Guidance You Need to Protect Your Business

 

If you need assistance with conducting a workplace audit or defending against a PAGA claim, our team is here to help. Protect your business and your peace of mind by working with experienced employment law attorneys.

 

Call us today at (951) 460-0830 to schedule a consultation and take the first step toward compliance and protection.