85% Penalty Cut for Spotless Records: Understanding the July 2024 PAGA Reform for Your Restaurant Business
For California businesses, being hit with a PAGA lawsuit can feel like a nightmare. They can be tedious, lengthy, and very expensive, and with the continuous rise in inflation, a lawsuit is not in the budget. But luckily, there has been some recent relief!
The Private Attorneys General Act, or PAGA for short, is a California Labor Code statute that allows employees to file lawsuits on behalf of the state against employers for Labor Code violations. Minor infractions can lead to costly litigation and penalties, often making it an expensive and lengthy process. PAGA lawsuits are especially a threat to the restaurant industry, which is vulnerable to Labor Code violations due to its fast-paced nature and shift work.
Luckily, California business owners are getting some relief thanks to the July 2024 PAGA reform. In this article, we’ll explore key changes and tips for reducing PAGA penalties under the new reform.
Understanding the July 2024 PAGA Reform
The goal of the July 2024 PAGA reform is to reduce the financial burden on businesses that take reasonable steps toward Labor Code compliance while creating more severe penalties for employers who act maliciously or fraudulently.
One of the main changes introduced by the PAGA reform is an up to 85% reduction in penalties for businesses that can demonstrate spotless bookkeeping and payroll documentation. To qualify for this reduction, businesses must be able to prove that they’ve proactively taken steps such as:
- Periodic payroll audits
- Compliant written wage-hour policies
- Wage-hour training for supervisors
- Disciplining supervisors who violate labor laws
All of this may sound overwhelming, especially in a chaotic restaurant environment, but there are solutions that can help. For example, Push automates payroll, stores all records digitally, and even allows you to speak to an HR expert on demand with our new HR+ solution. So, you no longer have to do everything yourself.
Beyond the overall penalty reduction, the PAGA reform also caps and reduces certain penalties, including:
- Reduced Wage Statement Penalties: The penalty for technical wage statement violations is reduced from $100 per employee per pay period to $25 if the employee can “easily determine” the information from the wage statement alone.
- Reduced Penalties for Isolated Errors: The penalty for violations that occurred over 30 consecutive days or 4 consecutive pay periods is reduced from $100 per employee per pay period to $50.
- No Derivative Penalties: Employees are no longer allowed to “stack” PAGA penalties for multiple Labor Code violations for the same conduct.
- Reduced Penalties for Weekly Pay Periods: The penalty for employers who pay weekly instead of biweekly is cut in half to promote fairness.
This new reform not only reduces penalties for business owners but also encourages businesses to proactively stay compliant with California labor laws.
4 Best Practices for Keeping Accurate Payroll Documentation
Next, let's explore four tips to prevent a PAGA lawsuit and reduce any penalties if one does occur.
1. Maintain Consistent and Organized Payroll Documents
Maintaining consistent and organized payroll records ensures that everything related to payroll, time tracking, and breaks is accurately documented and easy to find. This best practice will help with labor law compliance and tax regulations, providing a clear and organized audit trail. Push stores all payroll documents and records digitally, so you can say goodbye to messy, cluttered filing cabinets.
2. Conduct Regular Payroll Audits
Conducting regular and thorough payroll audits will help you identify and correct discrepancies in a timely manner. This best practice also helps prevent errors and fraud, along with providing confidence that employees are being paid correctly. With Push, you can automate many HR task, from scheduling to time tracking, reducing the risk of human error. To help identify discrepancies, Push allows you to generate payroll reports in seconds.
3. Create PAGA Compliant Policies and Handbooks
Creating compliant policies and handbooks establishes clear guidelines and expectations for both employees and employers. An easy-to-read handbook outlining company policies is an essential resource, preventing any misunderstandings and promoting transparency. It is essential that all your team members, especially management, understand the California Labor Code and local regulations. Push’s HR+ provides a Smart Employee Handbook to ensure California compliance, while also offering state-specific guidance for businesses operating across the U.S. These customizable employee handbooks offer automatic policy updates that are sent straight to employees whenever laws change, ensuring that you and your team stay compliant.
4. Provide Training to Managers on Labor Code Compliance
Providing proper training to managers and supervisors on Labor Code compliance equips them with the information they need to enforce policies and identify issues. Well-trained managers and supervisors are necessary for maintaining consistent compliance and minimizing the risk of violations. There’s no doubt that being a manager in a restaurant can be a busy job – that’s where Push’s HR+ can help bridge the gap. Managers can speak to an HR expert at the push of a button, so they can feel confident that they are staying compliant.
Don’t Let PAGA Penalties Eat Your Profits: Protect Your Business With Push
Keeping clean and accurate records is key for California businesses to minimize PAGA penalties under the July 2024 reform. It is important to be diligent and organized, and luckily solutions like Push can make that easy. Our all-in-one people management software automates your payroll and scheduling while providing guidance and support to keep you on the right side of the law. Book a demo today to discover the power of an integrated system!
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