Wage and hour claims are one of the biggest legal threats facing businesses in California. In 2024 alone, over 16,000 wage claims were filed, with 8,400 of them escalating into class action or PAGA lawsuits. If you’re a business owner, HR professional, or employer, understanding California’s complex wage and hour laws is critical to protecting your company from costly litigation.
In this article, we’ll break down key risks, employer obligations, and proactive steps you can take to avoid legal trouble.
What Are Wage & Hour Claims?
A wage and hour claim is a legal complaint filed by an employee who believes they have not been properly compensated for their work. These claims often involve:
- Unpaid wages (including overtime pay)
- Missed meal and rest breaks
- Failure to provide accurate pay stubs
- Misclassification of employees as independent contractors
If a single employee files a claim, it could quickly escalate into a class action or PAGA lawsuit, putting your entire business at risk.
The Risk of Class Action Lawsuits & PAGA Claims
Class Action Lawsuits: What You Need to Know
Class actions occur when one employee files a lawsuit on behalf of all similarly affected employees. This means one minor violation could turn into a large-scale lawsuit involving every non-exempt employee in your company from the past four years.
For example, if one employee claims they missed meal breaks, they can sue on behalf of every employee who may have faced the same issue. This can lead to massive financial penalties and legal fees.
What Is PAGA & Why Should Employers Be Concerned?
The Private Attorneys General Act (PAGA) allows employees to sue employers for labor code violations on behalf of the state and other employees—even for violations they didn’t personally experience. Since PAGA lawsuits have a lower threshold for certification than class actions, they have become a popular tool for employees and attorneys.
Why is PAGA so dangerous for businesses?
- Massive penalties: PAGA claims can result in seven-figure settlements.
- No requirement to prove damages: Employees can join the claims even if they were not directly harmed.
- Difficult to settle: PAGA cases are often harder to resolve than traditional lawsuits.
How California Businesses Can Protect Themselves
While wage and hour laws in California are strict, there are proactive steps you can take to avoid legal risks:
1. Audit Your Payroll & Timekeeping Practices
- Ensure all employees are properly classified (exempt vs. non-exempt, employee vs. independent contractor).
- Confirm that overtime is calculated correctly.
- Review payroll records for compliance with California law.
- Use accurate time-tracking systems to ensure accuracy.
2. Ensure Meal & Rest Break Compliance
- Employees must receive an uninterrupted 30-minute meal break for shifts over 5 hours.
- Provide 10-minute rest breaks for every 4 hours worked.
- Document break compliance to avoid disputes.
3. Keep Accurate & Transparent Wage Statements
- Provide detailed pay stubs with accurate information with:
- hours worked
- wage rates
- deductions
- overtime pay
- sick time accrual
- vacation or PTO accrual
4. Conduct Regular Employee Training
- Educate managers and supervisors on wage and hour laws.
- Train HR and payroll teams to identify and correct errors.
- Foster an open-door policy where employees can raise concerns before they escalate into claims.
5. Work with an Employment Law Attorney
- Conduct proactive legal audits to spot and fix compliance issues.
- Develop employee handbooks with clear wage and hour policies.
- Have a legal expert on call to handle any emerging issues before they become lawsuits.
Final Thoughts: Don’t Wait for a Lawsuit to Take Action
Wage and hour claims, class actions, and PAGA lawsuits can be devastating for businesses of all sizes. But with proper compliance and proactive legal strategies, you can significantly reduce your risk.
At Koegle Law Group, we specialize in helping California businesses stay compliant and defend against employment-related lawsuits. If you have questions about wage and hour laws or need a legal audit, contact us today.
Contact us here https://www.koeglelaw.com/contact/
Call us at (661) 362-0813
