California LWDA Proposes New Regulations to Address PAGA Litigation and Settlement Practices

The comment period is scheduled to run through March 23, 2026. No public hearing is currently scheduled, but the LWDA will hold one if it receives a written request from any interested person. After holding a hearing, if one is requested, and in consideration of “all timely and relevant comments,” the LWDA may adopt the proposed regulations as described. However, if the LWDA makes modifications to the original proposed regulations, the changes will be made available to the public for at least 15 days prior to the date on which the LWDA adopts the revised regulations.

Based on the currently proposed language, the regulations may apply to existing cases, once adopted. This means that if the proposed regulations are adopted as is, they would be applicable to any outstanding PAGA claims that have yet to be resolved at the time the regulations go into effect. As described in more detail below, this could alter the resolution strategy for outstanding PAGA claims, as employers may be limited in resolving overlapping and competing PAGA claims through a single settling employee because the proposed regulations mandate that employers now address each claim individually. At the same time, however, the regulations aim to allow employers to resolve more claims at the outset and curb any frivolous claims from moving forward.

Pertinent PAGA History

PAGA, enacted in 2004, authorizes “aggrieved employees” to act as private attorneys general and sue employers for Labor Code violations on behalf of themselves, other employees, and the state. Created to address declining enforcement resources, the law allows employees to stand in the place of the State of California and recover 35% of penalties previously only available for recovery by the state (with 65% of penalties going to the LWDA).

In 2024, PAGA was amended with the intent of reducing litigation and encouraging early compliance. Key changes included stricter standing requirements such that any alleged violation must be personally suffered by the PAGA representative, reduced penalties for certain employers, and new early evaluation procedures and expanded cure provisions to provide employers an opportunity to resolve claims at the outset.

The LWDA’s Proposed Regulations

The LWDA’s proposed regulations, issued February 6, 2026, seek to adopt new sections of the California Code of Regulations intended to assist the agency in implementing the provisions of PAGA. The proposed rules are designed to clarify the purpose of PAGA’s administrative notice requirements, expand cure processes for employers, and address ambiguities with litigation reporting obligations. Specifically, the proposed rules seek to:

Address Abuses in PAGA’s Administrative Exhaustion Process

To initiate a lawsuit under PAGA, an employee must first provide notice to the LWDA and the employer to satisfy the administrative exhaustion requirement by giving the administrative agency a “right of first prosecution” before an employee is authorized to sue. (Williams v. Alacrity Solutions Group, LLC (2015) 110 Cal.App.5th 932, 941, review granted July 9, 2025, S291199.) In essence, the notice requirement grants the LWDA the ability to decide whether to devote resources to investigating and prosecuting alleged violations of the Labor Code. An employee’s PAGA notice must identify the “specific provisions” of the Labor Code the employer allegedly violated, include “the facts and theories” supporting each alleged violation, and “must be specific enough such that the LWDA and the [employer] can glean the underlying factual basis for the alleged violations.” (Ibarra v. Chuy & Sons Labor, Inc. (2024) 102 Cal.App.5th 874, 882, quoting Gunther v. Alaska Airlines, Inc. (2021) 72 Cal.App.5th at p. 881.)

Even after the 2024 reforms, the LWDA has now made clear that the current filing requirements fail to satisfy the purpose of the statutory notice requirement, as many attorneys and law firms are filing mass-produced, boilerplate templates that are used to repeat the same or similar allegations in a manner that fails to address the unique circumstances of individual employees. As a result, the LWDA seeks to impose the following additional requirements:

• Plaintiff’s attorneys or law firms would be required to use a new standardized form to file PAGA notices with the LWDA whereby they will be required to describe 1) employee and employer names, employment dates, workplace location, position title, and a description of the employee’s job duties and 2) the specific Labor Code sections allegedly violated and a clear statement of facts and theories supporting each violation personally suffered by the employee.

• If the LWDA identifies an attorney or law firm as a high-frequency or vexatious filer, additional obligations are required prior to filing any notice:
  • A “high-frequency filer” is any attorney or law firm that has filed more than 200 or more PAGA notices during the prior 12-month period. If designated as a high-frequency filer, these individuals or firms must self-identify as such on all PAGA notices filed with the LWDA and must also include a signed certification from the employee that the claims are not being submitted for any improper purpose and that they are supported by both law and evidence.
  • A “vexatious filer” is defined as an attorney who the LWDA has found repeatedly filed noncompliant PAGA notices. If designated a vexatious filer, the attorney will be subject to a prefiling screening order (that may also apply to the attorney’s entire law firm) and will need permission from the LWDA before filing PAGA notices.
  • The LWDA will publish a list of both high-frequency and vexatious filers on its website.

Provide Clarity in the Cure Process for Small Employers

In 2024, the PAGA amendments included a cure mechanism for “small employers,” or those with fewer than 100 employees. The new regulations address ambiguities in the definition of the employees included in the small employer designation and also address how employers can avail themselves of the cure process. Specifically, the proposed regulations include both non-exempt and exempt employees in the definition of “small employers” (i.e., those with fewer than 100 employees) and also specify the information to be included in an employer’s cure proposal submitted to the LWDA, how notice of cure conferences will be provided, the information the parties will need to submit prior to participating in a cure conference with the LWDA, and the procedure for disputing and/or appealing LWDA determinations as they relate to cure.

Added Oversight for PAGA Settlements

For employees, the proposed rules would: 1) prohibit employees from amending a PAGA notice to add alleged Labor Code violations after a settlement has been reached, or during the settlement process; 2) require a settling employee to provide notice of the settlement in all overlapping cases; and 3) impose an affirmative obligation on a settling employee to locate all overlapping cases using the LWDA website’s PAGA case search function.

For employers, the LWDA’s proposed rules would require a settling employer in a PAGA action to verify that the list of overlapping actions identified by the settling employee is both accurate and complete.

For both parties, the LWDA’s proposed rules require that LWDA be provided 45 days to review any proposed PAGA settlement and that the parties can neither 1) consent to a court approval process shortening the time period, nor 2) settle PAGA matters after a PAGA notice has been submitted to the LWDA, but before a lawsuit is filed.

Critically, parties in overlapping cases would now be able to submit settlement objections to the LWDA within 21 days after receiving notice.

According to the LWDA, these additional proposed regulations would function as a mechanism to curb reverse auction practices and may limit employers from resolving overlapping PAGA claims via one settling employee, significantly impacting resolution strategy.

Conclusion

The LWDA’s proposed regulations are in their earliest stages, and what is enacted following the close of the public comment period and any hearings may look very different. However, the proposed regulations do provide a window into the agency’s current concerns.

For questions or guidance on how the proposed regulations or related PAGA issues may impact your organization, please reach out to your GRSM attorney, an author of this legal alert, or a member of GRSM’s Employment team.