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San Francisco has expanded its Fair Chance Ordinance protections. In this episode of California Employment News, Weintraub Tobin shareholders Shauna Correia and Meagan Bainbridge explain what employers need to know about the new restrictions on certain out-of-state arrests and convictions and the steps employers should take now to comply.
Watch this episode on the Weintraub YouTube channel or listen to this podcast episode here.
Getting served with a wage and hour class action or PAGA lawsuit is one of the worst days a California business owner or executive can have. The complaint typically alleges nearly every wage and hour violation in the Labor Code, claims to be brought on behalf of every employee you have had over the last four years, and threatens penalties that can look like an existential number. I have written before about the immediate action items after being named in a PAGA or class action lawsuit, but this week I want to step back and address something more fundamental: what executives need to understand about how these cases actually work, and how to be an informed participant in your own defense.
That last point is the theme of this article. Too many employers hand the case to their lawyer and passively wait for updates and invoices. These cases are defensible, and the decisions made in the first 60 to 90 days often determine the outcome. You have a say in those decisions — but only if you understand the framework. Here are five things every business facing one of these lawsuits needs to know:
Executives do not need to become procedural experts, but they do need a working understanding of the two vehicles plaintiffs’ lawyers use, because the defenses, the exposure, and the settlement dynamics are different for each. Many complaints assert both, and treating them as one undifferentiated lawsuit is a mistake.
A class action is a procedural device that allows one or more employees to sue on behalf of a larger group of “similarly situated” employees. The critical battleground is class certification: the plaintiff must convince the court that the claims can be tried on a class-wide basis with common proof, and cases can be won or lost at this stage — as I explained in my discussion of the Allison v. Dignity Health decertification decision. Class claims seek the underlying unpaid wages and related damages, and can reach back four years under California’s unfair competition law. For a refresher on the basics, my earlier article on five common questions about class actions every employer should understand still holds up.
A PAGA action is a different animal. Under the Private Attorneys General Act, a single “aggrieved employee” can step into the shoes of the state and seek civil penalties — not wages — on behalf of all allegedly aggrieved employees, with 65% of the penalties going to the State of California and 35% to employees. There is no class certification requirement, which is a large part of why plaintiffs’ firms favor PAGA, and the statute of limitations period is generally one year. The stakes and mechanics of PAGA are worth understanding in detail, as are the penalty caps created by the June 2024 reform — 15% if the employer took all reasonable steps toward compliance before receiving the PAGA notice, and 30% if it takes them within 60 days after — which I covered in my article on key action items under the PAGA reform law. Why does the distinction matter to an executive? Because the leverage points differ: class claims can be defeated or narrowed at certification and can be sent to arbitration, while PAGA claims turn on penalty caps, manageability arguments, and the reasonable-steps defenses. A defense strategy that does not distinguish between the two is not a strategy.
The single most important thing you can do as an executive is insist that your defense counsel conduct a realistic exposure analysis early in the case — not on the eve of mediation a year and a half later. That analysis should answer concrete questions: What do our time and payroll records actually show? What are our meal break compliance rates? How many pay periods and workweeks are at issue? Which claims have real exposure, and which are boilerplate? You cannot make intelligent decisions about early mediation, arbitration strategy, or litigation budgets without those answers, and you should expect your counsel to walk you through them — this is a business decision, and you have a say in it.
Here is where many companies waste money: they assume this analysis requires retaining an expensive testifying expert at the outset of the case. It does not. A testifying expert may become necessary if the case proceeds toward class certification or trial, but you do not need one to analyze your own time records and calculate compliance rates in the first months of the case. This is exactly the kind of work we built Scaled Comp to do — it is why I founded the company — analyzing time and payroll data to produce meal break compliance rates and exposure models at a fraction of the cost of an expert. Whatever tool your counsel uses, the point is the same: the data exists in your own records, the analysis can be done early and affordably, and an employer who knows its actual compliance rates negotiates from knowledge while everyone else negotiates from fear.
For many employers, the arbitration agreement is the single most important document in the case. Since the U.S. Supreme Court upheld arbitration agreements with class action waivers in the employment context, a well-drafted agreement can take the class claims out of court entirely and require the named plaintiff to arbitrate individually. And under the framework following Adolph v. Uber Technologies, the plaintiff’s individual PAGA claim can be compelled to arbitration as well, with the representative component stayed in the meantime — a sequencing that fundamentally changes the settlement dynamics of the case.
But three questions need answers in the first weeks of the case, not months in. First, is the agreement enforceable? Courts continue to scrutinize these agreements closely, and drafting details matter — the Ninth Circuit’s decision in O’Dell v. Aya Healthcare Services is a recent reminder of how enforceability fights play out. Second, does it contain a valid class action waiver? An agreement without one may accomplish far less than you think — and a poorly drafted agreement can get you more than you bargained for. Third — and this is the one employers almost never know off the top of their head — how many current and former employees in the proposed class actually signed it? If 95% of the workforce signed, the realistic class shrinks dramatically and your leverage increases accordingly. If the rollout was inconsistent and only half signed, that is a very different case. Get the signature count early; it drives everything from the motion to compel strategy to the settlement number.
At some point in nearly every one of these cases, the conversation turns to settlement, and the first question every executive asks is: what do cases like this settle for? Do not accept “in my experience, these cases usually settle around…” as the answer. The data exists. As I detailed in my mid-year review of the 2026 PAGA and class action settlement data, we are now tracking thousands of settlements pulled from public filings and court records through Scaled Comp, and the numbers tell a much more precise story than gut feel ever could.
The key is comparing apples to apples. The headline settlement amount tells you very little — what matters is the dollars per workweek for class claims and dollars per pay period for PAGA claims, benchmarked against settlements involving similar claims, similar industries, and similarly sized workforces. Armed with genuine comparables, you can evaluate whether a mediator’s proposal is in the market range or an outlier, and your counsel can make a data-backed argument for why your case should resolve below the median — because your compliance rates are strong, because your arbitration coverage is high, or because the plaintiff’s theory is weak. This is another analysis Scaled Comp performs, and whether you use our data or another source, insist that any settlement recommendation you receive comes with comparable settlements attached. You would not price any other multi-hundred-thousand-dollar business transaction on instinct; do not price this one that way either.
Finally, when a settlement does come together, the total dollar figure is only the beginning of the negotiation. The structure and terms of the agreement can shift meaningful value, and executives should understand which levers exist rather than treating the long-form agreement as boilerplate. I walked through many of these in detail in my recent article on five things California employers should understand about a PAGA settlement, and the same discipline applies to class action settlements.
A few examples of what is on the table: the scope of the release (what claims and what time period are actually being released, and who is covered); the allocation of the settlement between class claims and PAGA penalties, which affects both the release and the portion paid to the state; whether the settlement is non-reversionary or whether unclaimed funds return to the company; the payment schedule, including whether the settlement can be paid in installments; the treatment of employer-side payroll taxes; and the mechanics of the workweek or pay period caps and escalator clauses that protect you if the class turns out to be larger than represented. None of these terms negotiate themselves. An executive who understands the framework can push counsel on each of them — and the difference between a well-negotiated agreement and a signed-as-drafted one is real money.
The bottom line: a wage and hour class action or PAGA lawsuit is a serious event, but it is a manageable one — and the employers who fare best are the ones who engage as informed participants rather than passive check-writers. Understand the vehicles being used against you, demand a data-driven liability analysis early, know exactly where your arbitration agreement stands, benchmark any settlement against real comparables, and negotiate the terms — not just the number. Do those five things and you will have taken control of the case instead of letting the case take control of you.
The post Five Things Businesses Need to Know About Defending a Wage and Hour Class Action and PAGA Lawsuit appeared first on California Employment Law Report.
Beginning January 1, 2027, California’s statewide minimum wage will increase to $17.40 per hour.
The minimum wage increase also affects the minimum salary an employee must earn to meet part of the test for exemption from overtime requirements.
$17.40 x 2 x 40 hours per week x 52 weeks per year = $72,384
Accordingly, a salaried exempt employee must earn an annual salary of at least $72,384 to meet the salary threshold for exemption. In addition, employees must also satisfy the duties and other requirements applicable to the specific exemption.
Employers must also ensure compliance with Labor Code 226, including listing employees’ wage rates on their pay stubs. Remember, many California cities and counties have local minimum wage rates that are higher than the state rate. Where applicable, employers must comply with the higher local rate for hourly employees.
At our recent masterclass, “Exiting with Confidence: Best Practices for Lawful Terminations and Litigation Prevention,” Anne McWilliams, Caylee Scott, and I went back to basics on one of the highest-risk moments in the employment relationship: the termination. We debated whether a back-to-basics topic would draw interest, but preparing for it reminded me why it is worth revisiting — the forms, the severance rules, and the practical landscape around terminations keep changing, and a process that was compliant a few years ago may not be today.
Two themes ran through the entire presentation. First, the obligations are immediate: the moment you end the relationship, the clock starts running on final pay and required notices. Second, treat the employee with respect. An employee will rarely like the decision in the moment, but an employee who is treated with dignity, paid everything owed on time, and handed a clean set of paperwork is far less likely to spend the drive home calling a plaintiff’s lawyer. Here are five key issues from the masterclass that every California employer should have dialed in:
It sounds simple, but it is remarkable how often litigation arrives and there is no documentation of the reason for the termination. If the termination is for cause — performance, behavior, a policy violation — say so and document it that way. Do not take the easy route and call it a “layoff” to soften the conversation. That is the employee who sues, and now the company’s real defense is not documented anywhere, the paperwork says something different, and the shifting explanation becomes a credibility problem that a plaintiff’s lawyer will use to argue pretext.
Be concrete. “Bad attitude” in a file means nothing. Three documented instances where the employee talked back to a supervisor during coaching, called a coworker a name, or made an inappropriate comment in a meeting tells a story a jury can follow. If a written policy was violated, identify the specific policy, the key dates, and the prior coaching or discipline. And your handbook should be reviewed annually so the conduct you are terminating for is actually addressed in your policies — though keep in mind you do not need a written policy for every conceivable infraction to terminate for misconduct.
Before the termination is final, run a red-flag audit of the entire personnel file. Has the employee recently complained about wage and hour issues? Recently returned from a protected leave? This matters more than ever: California law now creates a rebuttable presumption of retaliation when an employer takes an adverse action within 90 days of an employee engaging in certain protected activity. The presumption can be rebutted — but what rebuts it is the contemporaneous documentation in your file. If the timing looks bad, that is exactly when to get advice of counsel before pulling the trigger. Also document who made the termination decision: if the same person who hired the employee is the one terminating them, the “same actor” inference can be a helpful defense.
Just as employers use a new-hire packet, we recommend building a standing end-of-employment packet, because California requires certain documents to be provided at termination.
First, the Notice to Employee as to Change in Relationship, required under the Unemployment Insurance Code. It applies to terminations, layoffs, and leaves of absence (not voluntary quits or promotions), and it must be given at the time of the termination. Critically, the reason listed on this form must match what you tell the employee and what is in the file — an inconsistency here creates a presumption against you in litigation.
Second, the EDD’s “For Your Benefit” pamphlet explaining California’s unemployment insurance programs. It runs over twenty pages, and you are permitted to email it to the employee rather than printing it every time — just think through your distribution method in advance.
Third, the applicable health coverage continuation notice — a federal COBRA notice for employers with 20 or more employees, or a Cal-COBRA notice for employers with 2 to 19 employees. Your health insurance carrier typically prepares these; you do not need to reinvent the wheel, but you do need to confirm they actually go out.
Fourth, the HIPP notice issued by the California Department of Health Care Services regarding the Health Insurance Premium Payment program — a state form, not to be confused with federal HIPAA. This is the one employers forget most often, so build it into the packet.
Beyond these documents, employers should consider other optional documents, such as: a termination letter clearly stating the reason for the separation, and a final-pay acknowledgment form itemizing everything included in the final check, which the employee signs to confirm timely payment. If the employee refuses to sign, do not force the issue — give them the documents and the final pay anyway, and note on your copy that it was presented and the employee declined to sign.
The timing rules are simple, but they are the most common compliance failure we see. For a termination or layoff, all final wages are due immediately, at the time and place of termination. For an employee who quits with at least 72 hours’ notice, final pay is due on the last day; with less notice, within 72 hours of the notice of quitting.
Final wages include everything owed and calculable at separation: earned regular and overtime wages, all accrued but unused vacation and vested PTO (which California treats as earned wages), commissions and bonuses to the extent they can be calculated, and unreimbursed business expenses. Accrued paid sick leave is not paid out at separation — but remember it must be reinstated if the employee is rehired within a year. If a commission or bonus has not yet vested and cannot be calculated, advise the employee in writing that it will be paid when calculable.
The penalty for getting the timing wrong is severe: waiting time penalties of one full day’s wages for each day the final check is late, up to 30 days. For an employee earning $200 per day, a check that is 20 days late generates a $4,000 penalty — and untimely final pay is a favorite add-on claim in class and PAGA actions precisely because it is so easy to prove. A few practical traps from the masterclass: a direct deposit authorization signed at hire is not valid for the final check — you need a fresh written authorization to direct deposit final wages. If the employee asks you to mail the check, get that authorization in writing with the address; the check is then deemed paid on the date of mailing. And do not forget the reporting time pay trap — if you bring an employee in for a scheduled shift and terminate them at the start of it, you owe reporting time pay (generally half the scheduled shift, no less than two and no more than four hours). The cleanest approach for an hourly employee: prepare the final check the day before and simply pay for the full final day, rather than trying to predict exactly when the meeting will end.
We opened the masterclass with the viral video of an employee who, knowing her termination was coming, recorded the meeting and posted it online — what I have been calling “TikTok terminations.” California is a two-party consent state, so recording a confidential conversation without everyone’s consent is unlawful and likely inadmissible — but that will not keep the clip off the internet. The practical rule: conduct every termination meeting, especially remote ones, as though it will be played back later. Be professional, be consistent, and never say anything you would not want a jury or the internet to hear. (And a note on a question we get more and more: should the employer record the meeting itself, with everyone’s consent? My thinking has shifted — much like police body cameras, your own accurate recording can protect you if your process is done right.)
The most damaging moment in that video was the answer to “why am I being let go?” The company representatives did not have the reason ready and offered to circle back later with data. Do not let that happen. Have the reason locked down before the meeting, state it, and stick to it. This is where the Moneyball approach comes in: in the movie, Billy Beane teaches his young assistant how to cut players — keep it direct, deliver the decision, avoid over-explaining and over-apologizing, and do not get drawn into a debate. The decision has been made; the meeting is to deliver it, not to relitigate it. That said, do not swing to the other extreme and be robotic about it — this is a hard, human moment, and handling it with dignity is one of the most cost-effective forms of litigation prevention there is. Have a second management witness present who takes notes, so the person delivering the news can stay engaged with the employee. And train for it: role-play these meetings with your managers before they ever have to conduct one, using videos like the one we reviewed as training material. How would your manager answer “why am I being let go?” Find out in a practice session, not in a recorded meeting.
Severance is not required under California law, but when you pay an employee anything beyond what is owed in final wages — whether to mitigate risk on a difficult termination or to recognize a long-term employee in a layoff — get a release of claims in exchange. A properly drafted release covers all claims, known and unknown, through the date of signing, and it is worth obtaining even for a modest payment. There is no set formula for the amount; one to two weeks of pay is common for hourly employees, but it varies with tenure and risk.
The drafting rules keep changing, which is why your template needs regular updating. For employees 40 and older, releasing a federal age claim requires giving the employee 21 days to consider the agreement and 7 days after signing to revoke — which means do not pay the severance until the revocation period expires, and explain that timing to the employee up front. Separately, California now requires giving employees at least five business days to consider a severance agreement and written notice of their right to consult an attorney. An old template can leave you having paid the money without a valid release.
Finally, records and process. Keep payroll records for at least four years — the Labor Code requires less, but wage claims can reach back four years, and never rely solely on a payroll vendor to store them; download and maintain your own copies, because switching vendors can mean losing access precisely when a lawsuit needs them. Personnel files should likewise now be kept for at least four years after separation. Establish a strict reference protocol — verify dates of employment and job title, nothing more, through one designated person — to avoid defamation and privacy claims. And put all of it on a written termination checklist: reason documented, red-flag audit done, final pay calculated (including vacation, commissions, and any reporting time pay), required notices assembled, property return and system access handled. A termination is an emotional, high-pressure event for everyone in the room, including the manager conducting it. A checklist built in advance is what keeps a hard conversation from becoming an expensive one.
Terminations will never be easy, but they can be clean. Document the honest reason, hand over the required paperwork, pay everything owed on time, deliver the decision directly and with dignity, and paper the exit properly. Do those five things consistently and you have turned one of the riskiest events in the workplace into one of your best-defended ones.
The post Key Issues Every California Employer Must Get Right When Terminating an Employee appeared first on California Employment Law Report.
The most prominent recent public citation announcement is from August 3, 2026 (news release), involving three Los Angeles County roofing contractors after a January 9, 2026 fatal fall. This is the clearest high-profile case in the latest available reporting window.
Other higher-penalty examples from DIR’s list of inspections with initial penalties ≥$100,000 (data through early May 2026; many earlier 2025–2026 cases remain open/contested): Pacific Coast Producers (Oroville, fruit/vegetable canning, ~$138k, March 2026); Pacific Northern Environmental LLC / PNE Construction (Sacramento area, ~$180k); All FAB Precision Sheetmetal, Inc. (San Jose, ~$212k, January 2026, linked to amputation); various public entities and contractors.
Recent inspection openings (examples from aggregator data around late July 2026, many still $0 pending): Various construction, care network, distribution, crane/rigging, and other firms (e.g., Rain Defense, USA Construction Management, DPR Construction, Redwood Family Care Network, SRS Distribution, Bigge Crane). Exact past-24-hour openings are not fully itemized in public feeds.
High Hazard Status: Cal/OSHA’s High Hazard Unit targets industries with elevated DART rates (>200% of private-sector average, threshold >4.0 based on recent data). Roofing/construction (framing, specialty trades), certain manufacturing, warehousing, agriculture, and others appear on the FFY 2025–2026 High Hazard Industry List. The Unit uses workers’ compensation loss data, citation history, and other indicators. Performance data shows high violation rates in targeted inspections. Specific company “High Hazard” designation is not always publicly listed per firm.
Employee/Injury Data Notes: Establishment-specific DART, TCR, or exposure counts are often unavailable or lagged in public OSHA Data Initiative / BLS sources for current cases. Industry averages and High Hazard lists provide proxies. BLS IIF and CHSWC reports offer broader California injury trends.
Company Histories (Selected): Atlas Building and Roofing, Inc. (West Hills/Los Angeles area) is a licensed roofing contractor (active C-39, issued ~2019). Public records show prior Cal/OSHA activity. Larger “Atlas Roofing” entities exist nationally (manufacturing focus, different company); local contractor history emphasizes residential/commercial roofing services. Limited public employee-relations stories specific to the cited LA firms beyond safety citations; roofing is recognized as high-risk for falls.
Data is dynamic; citations can be amended, settled, or reduced on appeal. For the absolute latest, search IMIS by establishment name or inspection number and contact Cal/OSHA district offices.
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