If you employ piece-rate workers in California, you need to pay attention to PAGA. The Private Attorneys General Act has become the weapon of choice for plaintiff attorneys targeting piece-rate violations, and the numbers are alarming.
What is PAGA?
The Private Attorneys General Act (Labor Code §2698 et seq.) allows employees to sue employers on behalf of the State of California for labor code violations. Unlike typical lawsuits, PAGA claims:
- Don't require class certification
- Apply penalties per employee, per pay period
- Can cover violations going back one year
- Result in 75% of penalties going to the state, 25% to employees
Why Piece-Rate Employers Are Targeted
Piece-rate compensation under Labor Code §226.2 is extraordinarily complex. A single employer might violate multiple provisions without knowing it:
- Improper rest period calculations - most common
- Missing pay stub itemizations - required under §226
- Incorrect overtime on mixed compensation - frequently miscalculated
- Non-productive time violations - often overlooked entirely
Each violation is a separate penalty. Multiply across employees and pay periods, and damages escalate rapidly.
The Math That Should Scare You
Consider a mid-size auto repair shop with:
- 15 technicians
- Bi-weekly pay periods (26 per year)
- Just two types of violations
Potential exposure:
- 15 employees × 26 pay periods × 2 violations × $100 = $78,000 in penalties alone
- Plus attorney fees (often exceeding penalties)
- Plus back pay for affected wages
A single PAGA lawsuit can easily exceed $200,000 for a business with under 20 employees.
Recent Trends
PAGA filings have increased dramatically:
- 2020: ~4,000 PAGA notices filed
- 2023: ~6,800 PAGA notices filed
- 2025: On pace for 8,000+ filings
Piece-rate violations are among the most common triggers, particularly in:
- Auto repair and dealerships
- Agricultural operations
- Manufacturing facilities
- HVAC and trade contractors
How to Protect Your Business
1. Audit Your Current Practices
Review your pay calculations for:
- Rest period compensation rates
- Non-productive time tracking
- Pay stub itemization completeness
- Overtime calculations on blended rates
2. Fix Documentation Gaps
PAGA plaintiffs love missing records. Ensure you're tracking:
- Productive hours vs. non-productive hours
- All rest and meal periods
- The calculation method for each pay component
3. Automate Compliance
Manual calculations are error magnets. Modern payroll tools built specifically for piece-rate compliance can eliminate the guesswork.
The Cost of Compliance vs. Litigation
Many employers avoid compliance software because of cost. Let's compare:
Compliance tools: $50-200/month depending on employee count
Average PAGA settlement: $50,000-500,000+ depending on scope
The math is clear. Prevention costs a fraction of litigation.
Take Action Now
Don't wait for a PAGA notice to arrive. CompliCalc is built specifically for California piece-rate compliance, automating the complex calculations that create liability.
Join our waitlist to protect your business before it's too late.