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In this episode of California Employment News, Weintraub Tobin shareholder Ryan E. Abernethy and associate John Slavik break down a common misconception about employee meal breaks and explain why an employee choosing to work through lunch does not automatically protect an employer from liability.

 

They discuss the “no policing” rule, meal period records, premium payments, and how employers can address recurring break issues before they become larger compliance risks.

Earlier this month I presented a program for the Beverly Hills Bar Association titled “Defending Businesses to Minimize Litigation Exposure.” The material was built around the questions I get from business owners and HR teams every week: where is the liability actually coming from in 2026, what quietly creates it, and what can an employer do now that will still matter when a claim arrives. I covered a lot in an hour — the PAGA and class action landscape, meal and rest breaks, overtime and regular rate math, classification, records, terminations, and disability accommodations. Rather than try to reproduce the whole outline, this week’s Friday’s Five pulls out the points that generated the most questions and that I think employers will find most useful.

1. Wage and hour claims don’t require a bad actor — only an imperfect system. That is why they scale, and the 2026 numbers show it.

Not every employee experiences harassment or discrimination, thankfully. But every employee gets a paycheck, and a wage and hour claim does not need a supervisor who did something wrong. It needs a payroll setting, a scheduling habit, or a policy gap that repeats across the workforce. That is the structural reason these claims dominate California employment litigation, and the data we track in our settlement database (full disclosure: I co-founded Scaled Comp, the software we use to track and analyze it) bears it out:

• PAGA notices are running at roughly 849 per month, which puts 2026 on pace to be the biggest filing year since PAGA took effect — and that is after the June 2024 reform.
• Tracked PAGA and class settlements reached $1.3 billion in the first half of 2026 alone. We triple-checked that number.
• Roughly half of those settlements resolved for under $500,000, and 44% involved employers with fewer than 200 employees. This is no longer a Fortune 500 problem; it is a small and mid-sized employer problem.
• The top five plaintiffs’ firms account for about 40% of the volume. This is a concentrated, specialized practice on the other side.
• The average timeline from PAGA notice to settlement is running about two years, which means the first settlements under the reformed statute are only now being approved and hitting the database.

I discussed some of these figures in the mid-year 2026 PAGA update, and the trend has not softened since. The practical takeaway I gave the audience: before the reform, the question in a PAGA case was whether a violation occurred. After the reform, the question that matters is what the employer did to prevent and correct it. Policies, training, audits, and consistent enforcement used to be compliance hygiene. Now they are defense evidence with a dollar value attached (see point five).

2. Most wage and hour litigation originates at the termination. How you let someone go determines whether they call a lawyer.

This is the connection I most wanted the audience to draw between the two halves of the program. A departing employee goes to see a lawyer about one grievance — the way the termination was handled, a final paycheck that was late, a comment a manager made — and leaves that office with a PAGA notice being drafted against the employer on behalf of the entire workforce. The termination was the trigger; the wage and hour claims were what the lawyer found when they looked.

That is why I am such a proponent of treating every termination as respectfully and professionally as possible. The employee may not agree with the decision, but they should not leave feeling disrespected or feeling that the only way to be heard is to talk to a lawyer. The mechanics matter too, and they are where I see employers get tripped up:

• Document the true reason, at the time, in concrete terms. The classic mistake is calling a for-cause termination a “layoff” to be kind. That kindness becomes the case: when the real story comes out in litigation, the inconsistency is pretext evidence. And “bad attitude” in a file is useless — three documented instances, with dates, of what the employee did or said is what wins motions.
• Run a red-flag review before the decision. Recent protected leave, wage complaints, accommodation requests, workers’ compensation claims. Under SB 497, an adverse action within 90 days of protected activity is presumptively retaliatory, so if a red flag exists, document why the termination reason is independent of it and note who made the decision. If the same person who hired the employee is making the termination decision, the same-actor inference is a strong defense.
• Stay consistent across every form. The change-of-relationship notice, the termination letter, the EDD response, and eventually deposition testimony all need to state the same reason.
• Plan the final paycheck in advance. Out-of-state employers often cannot cut a check from the California location on the day of termination, so it has to be arranged ahead of time. And an existing direct deposit authorization is not enough for the final wages — get a fresh written authorization (an email or text from the employee works) if you want to pay the final check by direct deposit. Waiting time penalties under Labor Code § 203 run at the employee’s daily rate for up to 30 days; at $200 a day, that is $4,000 per employee for a paycheck that was simply late.
• Have a severance agreement ready before you need it. The call to counsel usually comes the day before, or the day of, a difficult termination. A standard agreement — with the 21-day consideration and seven-day revocation periods for employees 40 and older — should already be on the shelf.

For a deeper dive on the termination decision itself, see the key issues to address before terminating an employee.

3. The liability usually hides in a setting or a calculation, not a policy. Here are the ones I told the audience to audit.

As employers have gotten better at tracking meal breaks and paying premiums, plaintiffs’ firms have shifted to more technical arguments. These are the ones I see most often, and each of them can turn a single configuration error into a class-wide claim:

• The daily overtime toggle. National employers whose payroll platform was configured for the FLSA’s weekly-only overtime are a recurring problem, but employers need to ensure that all of their California locations have the correct settings in the timekeeping software. It is very hard to catch and very expensive when it is not.
• Premiums paid at the base rate. Under Ferra v. Loews Hollywood Hotel, LLC (2021), meal and rest premiums are paid at the regular rate of compensation, including non-discretionary bonuses. Most payroll systems default to the base hourly rate. And because Naranjo v. Spectrum Security Services, Inc. (2022) held that premiums are wages, one unpaid or underpaid premium becomes a wage statement claim under § 226 and a waiting time claim under § 203 as well.
• The flat-sum bonus divisor. Alvarado v. Dart Container Corp. (2018) requires a flat-sum bonus (in that case, a $15 attendance bonus) to be divided by the employee’s non-overtime hours to get the per-hour value that flows into the overtime rate — not by total hours, which is the federal method. Ask your payroll provider which method it uses.
• The “major fraction” rule for rest breaks. Employees earn a 10-minute rest break for every four hours worked “or major fraction thereof,” and Brinker defined a major fraction as anything over two hours. So a 6.5-hour shift earns two rest breaks, not one. Employers who hear “a break every four hours” routinely get this wrong.
• Late, not missed. One of the most common meal period violation we find in audits is not a missed lunch; it is a lunch that started at five hours and one minute. California has no de minimis defense (Troester v. Starbucks Corp. (2018)), so it comes down to the minute. Written meal waivers for shifts of six hours or less — signed once at onboarding and kept in the file — are enforceable and underused, particularly in restaurants and hospitality where employees on short shifts do not want to clock out and lose tips.
• Rounding. Camp v. Home Depot is fully briefed before the California Supreme Court on whether time rounding remains permissible at all. I rarely predict outcomes, but having already held in Donohue v. AMN Services, LLC (2021) that rounding cannot be applied to meal punches, I expect the Court to extend that reasoning to timekeeping generally. Employers should review rounding policies, if not stop rounding altogether, so there is nothing to change when the decision comes out.

And one to calendar for January 1, 2027: the state minimum wage increases to $17.40 per hour, which raises the minimum salary for the executive, administrative, and professional exemptions from $70,304 to $72,384 per year ($1,392 per week). Employers covered by the fast food minimum wage under AB 1228 are already at a higher threshold of $83,200 per year. An exempt employee paid a dollar under the line is non-exempt, full stop — and, as I reminded the audience, an exempt title does not survive a duties test if the manager spends 60% of the day running the register.

4. Two letters deserve more thought than they usually get: the records request and the “litigation hold.”

A request for an employee’s payroll records under Labor Code § 226 or personnel file under § 1198.5 is not routine paperwork. It is very often a plaintiffs’ firm looking for a wage violation, and under the reformed PAGA it can be the event that closes the window for the 15% penalty cap (more on that below). The deadlines are tight — 21 days for payroll records, 30 days for the personnel file — so the employer should get the request to counsel immediately, have counsel review the records for violations before they go out the door, and start on corrective action in parallel.

The second letter usually arrives with the first: the notice that the firm is “contemplating litigation” and that the employer must preserve everything under the sun or face a spoliation claim. Employers tend to treat it as boilerplate and either ignore it or over-comply. I do neither, and carefully craft a response about what documents the employer will be preserving.

5. The strategy that limits exposure has two parts: an arbitration agreement with a class action waiver, and a documented reasonable-steps file.

I closed the wage and hour portion of the program with the combination I recommend to most employers of any size, with the caveat that it is not right for every business and should be discussed with counsel.

The first part is an enforceable arbitration agreement with a class action waiver. Viking River Cruises, Inc. v. Moriana (2022) and Adolph v. Uber Technologies, Inc. (2023) confirmed that these agreements are enforceable in the employment setting and can waive class claims, though not the employee’s ability to bring a PAGA claim. That is still a very good trade. The waiver eliminates the four-year class period and narrows the fight to PAGA’s one-year limitations period; the employee’s individual claim is compelled to arbitration, where the employer has a real chance of winning, and under the reformed statute the employee must prove they personally suffered each violation to pursue it on behalf of others.

The second part is the reasonable-steps defense under the 2024 reform. An employer that took all reasonable steps to comply before receiving a PAGA notice or records request caps penalties at 15% of the maximum; an employer that takes those steps within 60 days after the notice caps them at 30%. The statute lists what counts — periodic payroll audits with action taken on the results, lawful written policies, supervisor training, and corrective action including discipline of non-compliant supervisors. Two things I stressed to the audience: the caps are not automatic, and they are proven with documents. A ten-minute meeting with managers about meal breaks is a reasonable step if there is a dated memo or sign-in sheet; an audit that nobody wrote down did not happen.

Put the two together and the math changes. A one-year PAGA period instead of a four-year class period, an employee who has to prove their own injury in arbitration first, and a 15% cap on whatever penalties survive is a very different case than the one the plaintiffs’ firm filed. Once a notice arrives, the first 60 days should go to an exposure analysis run on the employer’s own data, corrective action documented for the 30% cap, and a push toward early mediation — which, given the two-year average timeline, also stops the pay periods from accumulating while the case sits.

I did not have room here for the disability and accommodation portion of the program — the broader FEHA standard, why one fact pattern generates three independent claims, extended leave as an accommodation after protected leave expires, and how to run the interactive process by letter — and will cover that in a future column.

The post Five Takeaways From My Webinar on California Employer Compliance and Litigation Defense appeared first on California Employment Law Report.

Who knew that rising gas prices would lead to a trap for employers?

Pretty much every class and PAGA action filed in California claims unreimbursed business expenses. As you know, California employers must reimburse necessary business expenses, including certain work-related personal vehicle use. Employers may reimburse through actual expenses, mileage reimbursement, or a stipend.  Generally, using the IRS mileage rate satisfies the reimbursement obligation. 

The IRS increased the business mileage rate to 76 cents per mile (effective July 1, 2026), as a special mid-year adjustment given rising fuel costs.  Accordingly, make sure you reimburse work-related mileage at the updated correct rate (it was 72.5 cents). If you missed it, consider an adjustment now (before your employee finds a lawyer to point out your error and claim unreimbursed expenses)!

The California Legislature recently passed Assembly Bill 1883 (“AB 1883”), which would prohibit employers from using artificial intelligence (“AI”) workplace surveillance tools for two specific purposes: recognizing employees’ emotional states or collecting employees’ neural data.

Earlier versions of AB 1883 were considerably broader. Among other things, prior versions would have restricted the use of surveillance tools to infer protected activity or protected characteristics, regulated facial-recognition technology used in disciplinary decisions, and covered certain independent contractors. The bill now heads to Governor Gavin Newsom’s desk for signature.

Notably, the bill provides for a private right of action, in addition to public enforcement. Available remedies would include injunctive relief, punitive damages, reasonable attorneys’ fees and costs, and penalties of up to $500 for each “violation.” The bill does not define what constitutes a “violation”—for example, if a violation accrues for each employee who is surveilled, or whether individual employees could accrue multiple violations (e.g., each pay period) for the same act of surveillance.

Below are some of the key provisions of the bill:

• Broad Definition of Workplace Surveillance Tools: The bill broadly defines a “workplace surveillance tool” as “any system, application, instrument, or device that collects or facilitates the collection of employee data, activities, communications, actions, biometrics, or behaviors by means other than direct observation by a person,” and the definition expressly includes “video or audio surveillance, continuous incremental time-tracking tools, geolocation, electromagnetic tracking, photoelectronic tracking, or that utilizes a photo-optical system or other means.”
• Recognition of Emotional State: Employers would be prohibited from using an AI-powered workplace surveillance tool to recognize—or make inferences or predictions about—an individual’s emotional state. This restriction arguably could encompass tools that purport to assess employee stress, frustration, or sentiment through facial expressions, voice patterns, movements, or other behavioral signals.
• Collecting Neural Data: Employers also would be prohibited from using an AI-powered workplace surveillance tool to collect “neural data,” defined as information generated by measuring activity in an employee’s central or peripheral nervous system that is not inferred from non-neural information. This definition arguably could reach emerging technologies such as brain-computer interfaces and certain wearable devices.
• Broad Safety Exception: The bill would not prohibit an employer from using workplace surveillance tools to “ensure safety.” This exception may permit, for example, AI-enabled tools designed to detect driver fatigue, clinician burnout, employee distress, impairment, or other conditions that could create an immediate workplace hazard—even if the tools analyze indicators potentially associated with an employee’s emotional state or neurological data. However, the bill does not define what it means to “ensure safety,” and the exception’s precise scope is unclear. Assuming AB 1883 becomes law, employers intending to rely on this exception should be prepared to identify the specific safety risk being addressed, explain how the tool mitigates that risk, and ensure that the data collected is not repurposed for non-safety uses.
• Limited Federal-Compliance Exemption: AB 1883 contains a narrow exemption for certain aerospace, national-security, military, space, and defense operations when use of the surveillance tool is reasonably necessary to comply with a federal statute, federal regulation, or binding federal contract.

We’ll continue to monitor how AB 1883 progresses.

The Governor has until September 30, 2026 to sign or veto enrolled bills from the 2025-2026 session. This status should be verified as the deadline approaches.

SB 947: The Return of the “No Robo Bosses Act”

This bill is enrolled and presented to the Governor for signature.  SB 947 is a revised version of SB 7, which was vetoed by Governor Newsom in 2025. The veto raised concerns about overly broad notification requirements and restrictions on Automated Decision Systems (ADS) use.  The proposed legislation prohibits employers from relying solely on an ADS to make disciplinary or termination decisions. It requires employers to apply human review and independent corroboration before acting on the output of an ADS for these purposes. The bill would also bar using an ADS to infer a worker’s protected characteristics or to predict and retaliate against a worker for exercising legal rights and would require post-use notice to affected employees.

Takeaway:  If enacted, beginning July 1, 2027, SB 947 will create significant operational, compliance, and risk management challenges for employers using or considering ADS in California workplaces. Violations of this new law could expose employers to administrative penalties, civil liability, and reputational risk. Bill Text: CA SB947 | 2025-2026 | Regular Session | Introduced | LegiScan

SB 951: Expansion of Cal/WARN Notice for AI-Driven Mass Layoffs

The Cal/WARN Act already requires 60-day notice for mass layoffs/relocations, with penalties for noncompliance. SB 951 updates this to address technological displacement, a growing concern in California’s labor market.  If enacted, this bill would revise the Cal/WARN Act to also require an employer giving notice of a mass layoff, relocation, or termination caused in whole or in substantial part by an artificial intelligence (AI) system or other automated technology replacing or automating employment positions to include certain information in the notice, including the job functions performed by workers that will be automated by AI.  Also requires employers to provide EDD with “written technology hiring disruption notice” for covered layoffs.

Takeaway:  If enacted, SB 951 would give displaced workers more time, information, and job protection when automation or AI leads to mass job losses, while requiring employers and the EDD to track and report on these impacts.  Bill Text: CA SB951 | 2025-2026 | Regular Session | Introduced | LegiScan

SB 951 establishes a new notice and protection framework that operates alongside — and in some respects supersedes — existing California WARN Act requirements.

The triggering threshold: The standard California WARN Act (Labor Code sections 1400 et seq.) requires advance layoff notice when an employer lays off 50 or more workers within a 30-day period. SB 951 dramatically lowers that threshold for AI-caused displacement: the notice obligation would trigger if just 25 workers, or 25% of the workforce (whichever is less), are displaced due to AI or automation.

The notice period: Where the standard California WARN Act requires 60 days’ notice, SB 951 requires 90 days’ advance written notice for AI-caused technological displacement. Employers would have 30 additional days to provide notice, and they must provide that notice before the displacement occurs — not contemporaneously. The notice obligation under SB 951 is far more detailed than standard WARN Act notice.

AB 1883: Regulation of Workplace Surveillance Tools and Worker Data

This bill is enrolled and presented to the Governor for signature. If signed it would restrict the  use of workplace surveillance tools that use artificial intelligence to, among other things, collect neural data (such as gait analysis) or recognize an individual’s emotional state.  “Neural data” means information that is generated by measuring the activity of a worker’s central or peripheral nervous system and that is not inferred from nonneural information.  The bill would prohibit an employer from using a workplace surveillance tool that incorporates facial, gait, or emotion recognition technology, except as specified.  The bill would also prohibit an employer from using a workplace surveillance tool to infer specified categories of information about a worker, including, among others, their veteran status, ancestral history, religious beliefs, or disability status. Creates potential penalties of up to $500 per employee for each violation and authorizes an employee to bring a civil action for violation.

Takeaway:  May require employers to audit monitoring technologies, data practices, and vendor tools.  Bill Text: CA AB1883 | 2025-2026 | Regular Session | Introduced | LegiScan

MISCELLANEOUS (BUT IMPORTANT)

AB 1961: Easier Access to Workplace Violence Restraining Orders

This bill is enrolled and presented to the Governor for signature. If signed it would allow employers to seek a workplace violence restraining order for threats directed at the workplace or employees generally.  Permits protection for a reasonably identifiable group or class of employees.  Would remove the need to name an individual employee as a protected party in those circumstances if the employer seeks a workplace violence restraining order on behalf of a group or class of employees.

Takeaway: Could make it easier for employers to respond quickly to credible workplace threats.  Bill Text: CA AB1961 | 2025-2026 | Regular Session | Amended | LegiScan

Revisit other key pieces of California employment legislation in the two previous posts in this series: Training Reminders and Related Bills to Watch About Training and Bills to Watch Dealing with FEHA and/or CFRA.

Every wage and hour case that comes into our office starts the same way. Before we talk strategy and long before mediation, we ask the client for one thing: the raw time and payroll data. Not a summary. The punch-level time records, the payroll register with every pay code, and the wage statements. That data is going to testify in the case whether the employer likes it or not, and I would rather hear what it has to say before the plaintiff’s lawyer does.

I have written before about what executives should demand from their defense counsel once a lawsuit lands. This week I want to go behind the desk and show what we actually do with an employer’s records in the first days of a case using the Scaled Comp software, because that process reveals — better than any policy memo — which records matter, why speed matters, and what “reasonable steps” looks like when it is being tested rather than described. Full disclosure: I co-founded Scaled Comp, and Zaller Law Group uses it as a tool under counsel’s direction in our litigation and audit work. More on that at the end.

1. The clock may already be running before the PAGA notice arrives — and your records are the first thing it measures.

Under the 2024 PAGA reform, an employer that took “all reasonable steps” to comply before receiving a PAGA notice can have its penalties capped at 15% of the maximum, and an employer that takes those steps within 60 days after the notice can cap them at 30%. What many employers miss is that the statute ties the 15% cap not only to the PAGA notice but also to the employer’s receipt of a request for personnel or payroll records under Labor Code §§226, 432, or 1198.5 — whichever comes first. The innocuous letter from an employee’s attorney asking for a “copy of my client’s personnel file and pay records” is very often the starting gun, and by the time the PAGA notice follows, the window for the 15% cap may have already closed.

That is why one of the very first things we do is pull the records, and the first thing we learn is whether they exist in usable form. California requires employers to keep payroll records for at least three years (Labor Code § 1174(d)), to keep copies of wage statements for three years (§ 226(a)), and — under the Wage Orders — to record meal periods. When a client cannot produce a clean, punch-level export going back three years, that is the first finding of the case, and it is a bad one: under Hernandez v. Mendoza (1988) 199 Cal.App.3d 721, once an employee shows the employer’s records are inadequate, the burden shifts and the employee’s own recollection of hours worked can carry the day. An employer with no records is not defending a case; it is negotiating a surrender.

2. Within days — not months — we know the actual compliance rate, and that changes every decision that follows.

Here is what the software does once the data is loaded. It measures every shift against the rules: was a meal period started by the end of the fifth hour, was it at least 30 minutes, was a second meal provided by the end of the tenth hour, and — if rest breaks are recorded — were they provided based on hours worked. It flags each late, short, or missed break. It then does the step that most employers never do on their own: it matches each flagged shift against the payroll register to see whether a meal or rest premium was actually paid for that day. The output is a compliance rate — by location, by manager, by pay period — along with the count of pay periods and workweeks in the limitations period and an exposure model built on the employer’s actual numbers rather than the plaintiff’s assumptions. It also keeps two numbers that are easy to confuse: for PAGA penalty purposes, a shift with three flags is still one violation, while premium pay liability is calculated per missed break. Both numbers matter, and they are not the same.

The traditional way to get this analysis was to retain a damages expert months into the case, wait several more months for a report, and pay a fee that could rival a small settlement. The reason we built the software was to compress that to days. And the speed is not a convenience — it is the whole point. The 60-day window for the 30% cap is meaningless if you do not know where the violations are until day 90. The decision whether to push for early mediation — which, as I discussed in the mid-year 2026 PAGA data, cuts off the accrual of pay periods that otherwise add to the exposure every month — depends on knowing the number. A case where 3% of shifts show a late meal period with no premium paid is defended, budgeted, and settled completely differently than one where the figure is 35%. In the first week, we know which case we have.

3. Premium payments are the evidence — record them as though they will be Exhibit A, because they will be.

Under Donohue v. AMN Services, LLC (2021) 11 Cal.5th 58, time records showing a late, short, or missed meal period raise a rebuttable presumption that a violation occurred. That presumption is rebutted with evidence — that the employee was provided the break and chose to skip it, or that the employer recognized the issue and paid the premium. This is where the payroll register becomes the employer’s best witness or its worst. When the analysis shows a late meal punch on a given day and a § 226.7 premium paid on that same day, the story is that the employer’s system caught the problem and paid for it. That does not erase the underlying issue for every purpose, but it eliminates the unpaid-premium claim, it cuts off the derivative wage statement and waiting time claims that Naranjo v. Spectrum Security Services, Inc. (2022) 13 Cal.5th 93 makes available when premiums go unpaid, and it is the single strongest piece of evidence that the employer’s compliance program is real rather than aspirational.

But the software can only give the employer credit for what it can match. Three recordkeeping practices determine whether that credit is available:

• Code premiums separately. Meal premiums and rest premiums should be their own pay codes and their own line items on the wage statement. Naranjo held that premium pay is wages that must be reported on wage statements; premiums buried in “other pay” or “adjustments” are invisible to the analysis and to the court.
• Pay premiums at the regular rate, not the base rate. Ferra v. Loews Hollywood Hotel, LLC (2021) 11 Cal.5th 858. A premium paid at the wrong rate is a documented underpayment on every day it appears.
• Tie the premium to the day. A lump-sum “true up” at the end of the month cannot be matched to the shift it was meant to cover. Pay it in the pay period of the missed break.

4. The analysis becomes the defense at every stage of the case — not just a number for mediation.

Employers sometimes assume the exposure analysis is a one-time exercise to set a settlement authority. It is not. The same data set is reused at nearly every stage:

• The 60-day window. Location- and manager-level results tell the employer exactly where to direct corrective action within the 60 days after the notice, and the documentation of that action is the 30%-cap file.
• Arguing the penalties down. The reform gives courts discretion to reduce penalties that would be unjust or oppressive, and provides a reduced penalty where a violation resulted from an isolated, nonrecurring event of short duration. Neither argument can be made in the abstract; both require showing the court what the records actually reflect.
• The mediation brief. Compliance rates and the pay-period and workweek counts, benchmarked against comparable settlements on a per-pay-period and per-workweek basis, are the difference between negotiating from data and negotiating from fear.
• Opposing certification. When compliance varies widely by location and manager, that variation is evidence that liability cannot be determined on a class-wide basis without individualized inquiries.
• Rebutting the plaintiff’s expert. The plaintiff’s damages model will typically treat every 5:01 punch as a violation and ignore premiums paid, waivers, and shifts short enough that no meal period was required. Our analysis identifies each of those categories shift by shift.

Two structural notes. First, the analysis is run through counsel and at counsel’s direction so that it is protected as attorney work product; an employer that runs the same analysis on its own, outside of counsel, may be creating a discoverable document. Second, the report does not decide the legal questions — whether the employer’s conduct amounts to reasonable steps, and which cap applies, are judgments for counsel and ultimately the court. The data gives counsel something to argue with.

5. Run the same analysis when nobody is suing you. That is what “reasonable steps” looks like on paper.

The statute’s list of reasonable steps starts with “conducting periodic payroll audits and taking action in response to the results of the audit,” followed by disseminating lawful written policies, training supervisors, and taking corrective action with regard to supervisors — evaluated under the totality of the circumstances, including the employer’s size and resources and the nature, severity, and duration of the violations. I have covered the action items under the reform before. The point I want to make here is narrower: the audit the statute describes and the litigation analysis described above are the same analysis. The only difference is when it is run and who is asking.

An employer that runs it on a recurring basis — monthly or quarterly, depending on size — gets a report by location and manager, acts on it (retraining a manager, fixing a scheduling practice, paying the premiums the audit identifies), documents the action, and then runs it again. The trend line is the reasonable-steps story: 12% of shifts at one location showed late meal periods with no premium paid in the first quarter, the manager was retrained and the scheduling template changed, and the figure was 3% the next quarter. That is a narrative a court can evaluate, and it is far more persuasive than a declaration that the company “takes compliance seriously.”

The audit also does something the penalty caps do not: it reduces the exposure itself. Every violation caught and corrected is a premium paid now rather than a premium, a wage statement penalty, and a PAGA penalty litigated later. And because PAGA penalties accrue per aggrieved employee per pay period, shrinking the number of employees who experienced any violation directly shrinks the case a plaintiff’s firm can bring. Two cautions: the audit will identify premiums that are owed, and the employer needs to be prepared to pay them — that is the point of the exercise, not a reason to avoid it. And reasonable steps are proven with documents. The audit report, the memo directing corrective action, the training sign-in sheet, and the follow-up audit are the file. A sincere belief that the company was compliant is not.

The bottom line: in every PAGA case, the employer’s payroll records testify first, and they testify about the period before the employer knew it had a problem. The employers who fare best are the ones whose records already tell the right story — punch-level data that exists and can be exported, premiums that are paid, coded, and matched to the day they cover, a rest break reporting mechanism that leaves a trail, and a recurring audit with documented corrective action behind it. Get those in place now, and the first week of the case looks very different.

The post Your Payroll Records Are Your First Witness — Five Things We Learn From Them in the First Week of a PAGA Case appeared first on California Employment Law Report.

In addition to our last post on Training Reminders and Related Bills to Watch About Training, here are some upcoming bills to watch dealing with FEHA and/or CFRA.

AB 1940:  Menopause-Related FEHA Protections

AB 1940 has passed in both houses and is now en route (or already at) Governor Newsom’s desk for signature. This legislation expressly includes perimenopause, menopause, and postmenopause within the definition of “sex” under the California Fair Employment and Housing Act (FEHA), making discrimination based on these conditions an unlawful employment practice.  Currently, the definition of “sex” includes pregnancy, childbirth, breastfeeding, and medical conditions related to these childbearing stages. Under AB 1940, this definition is broadened to include “perimenopause, menopause, or postmenopause or medical conditions related to perimenopause, menopause, and postmenopause.”

Takeaway:  If enacted, employers may want to prepare for an increase in accommodation requests related to menopause systems such as hot flashes, brain fog, and fatigue. AB 1940’s explicit statutory protections may lead to heightened enforcement activity by the California Civil Rights Department.  Bill Text – AB-1940 Unlawful practices: discrimination: menopause.

Query:  Are protections for monthly menstruation next? 

Reminders:  If enacted, employers will need to:

• Update their EEO and anti-discrimination policies. 
• Update their manager/HR training and accommodation procedures.
• Replace required workplace discrimination poster published by the California Civil Rights Department when the revised version becomes available so that employees are informed about protections concerning menopause and related medical conditions. 

SB 1149: Expanded Bereavement Leave for ‘Designated Persons‘

AB 1949 amended the CFRA to require covered employers to provide eligible employees with up to five days of bereavement leave for family members defined as a spouse, child, parent, sibling, grandparent, grandchild, domestic partner, or parent-in-law. However, the law did not extend to chosen family members – individuals who may not be related by blood, but whose relationship is equivalent to family. This new bill would expand covered bereavement leave to include the death of a “designated person” like it already does for CFRA leaves (other than bereavement).  A designated person includes a blood relative or someone whose association with the employee is equivalent to a family relationship. Covered employees would be entitled to up to five days of bereavement leave for such a death.  Employers may limit an employee to one designated person per 12-month period for bereavement leave.  The leave is unpaid, but job protected under California law.

Takeaway:  If enacted, employees could request bereavement leave for a non‑blood relative (especially older adults, LGBTQ+ individuals, or immigrants) who they consider family, without having to choose between mourning and keeping their job.   Bill Text: CA SB1149 | 2025-2026 | Regular Session | Amended | LegiScan.

Bottom Line:  AB 1940 has cleared the legislature and is on the Governor’s desk for signature.  SB 1149 is alive and moving though not yet enacted.  Employers may want to put it on their 2027 handbook watch list and, if it is signed, California Bereavement Leave policy language should be revised to add “designated person” to the definition of family member. Be on the lookout for our next blog post “Bills to Watch Dealing With AI, Ads and Surveillance.”

AV Club reports: “Despite a little Moana and Grogu hiccup, Disney has had a pretty good year. Its latest co-production, Spider-Man: Brand New Day, just swung across $2 billion, joining Toy Story 5 in the top three biggest movies of the year. In a letter to shareholders this month, Disney announced revenues are up, and…

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France has taken a major step in restraining the ultra-fast fashion industry. Intertek reports: “On July 9, 2026, French Law No. 2026-602 of July 8, 2026 was officially published, making France the first country to enact legislation specifically targeting ultra-fast fashion. The law introduces stringent requirements for ultra-fast fashion manufacturers and online platforms, including mandatory…

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A new fact or fiction series kicks off with a common myth in California employment law. In this episode of California Employment News, Weintraub Tobin attorneys Meagan Bainbridge and Christopher Horsley explain why having a handbook does not automatically shield employers from claims.

Listen for a clear breakdown of what California employers need to know to make their handbook an actual line of defense.

Watch this episode on the Weintraub YouTube channel or listen to this podcast episode here.