From $56 Million to $516,000: What Correcting Wage & Hour Violations Early Can Do for Your PAGA Exposure

If you run a business in California, you already know the Private Attorneys General Act (PAGA) can turn routine payroll mistakes into staggering liability. A single missing line item on a wage statement, repeated across hundreds of pay periods for employees can generate a penalty with five or six figures attached. What a lot of employers don’t realize is how much control they still have over that number. A recently published decision is one of the clearest illustrations yet of that principle in action.

In Taduran v. James R. Glidewell, Dental Ceramics, Inc., the plaintiff sued his former employer, Glidewell, under PAGA, alleging multiple Labor Code violations, including wage statement, overtime pay and rest period violations. The former employee sought penalties of roughly $55.9 million. The trial court instead awarded a total of $515,965 in civil penalties, a reduction of about 99 percent. The Court of Appeal affirmed this award in its decision.

Why the Penalties Came Down So Far

The court’s reasoning was fairly consistent across the violations at issue:

• the harm to employees was minimal or nonexistent
• the errors were technical rather than willful, and
• most importantly, Glidewell had already taken good-faith steps to correct the problems and make employees whole before the case reached judgment.

Courts have long had discretion under PAGA to reduce a penalty that would otherwise be unjust, arbitrary, or oppressive, and this case shows just how far that discretion can move the number when an employer can document real corrective action.

The Bigger Picture

Catching and correcting violations before they turn into a lawsuit is often the single most effective way to shrink a PAGA penalty. This case was decided under PAGA’s general discretionary standard, not the 2024 PAGA reform, which didn’t apply to this case.

• The 2024 PAGA reform expanded employers’ opportunities to have potential PAGA penalties capped by taking proactive steps to comply with the Labor Code and promptly correct violations.
• The 2024 reform takes the exact reasoning that saved Glidewell tens of millions of dollars and writes it directly into the statute.
• An employer that takes “all reasonable steps” to comply before receiving a PAGA notice can cap penalties at 15 percent of what would otherwise be owed, and one that corrects issues within 60 days after receiving notice can still cap exposure at 30 percent.

Put simply, the steps you take before a violation becomes a lawsuit can mean the difference between a manageable cost and a devastating one.

What Employers Should Be Doing Now

• Audit pay practices proactively. Make sure to have compliant wage statements, timekeeping practices, overtime, and meal & rest period policies. These are exactly the categories at issue in this case. Having legally compliant wage and hour policies is crucial to prove you are compliant with California law.
• Fix problems as soon as they’re identified, rather than waiting for a legal demand letter or PAGA notice.
• Move quickly once a PAGA notice arrives. Under the 2024 reform, the window to act and still qualify for the reduced penalty cap is limited.