The 2024 PAGA reforms (AB 2288 / SB 92) substantially reduce penalties for employers who can document “all reasonable steps” toward compliance before a notice arrives — and 18 months into the reforms, courts are actually applying that reduction. The pattern is clear: employers with payroll audits, written policies, supervisor training rosters, and prompt-correction documentation are getting the cap. Employers without those records are not. The single highest-leverage move in 2026 is documenting your existing compliance — not waiting for a notice.
It's been a year and a half since the 2024 PAGA reforms went into effect, and the early case law is starting to fill in the picture. The headline of the reforms hasn't changed: PAGA penalties can be substantially reduced for employers who took reasonable preventive steps toward compliance, and further reduced where the employer cures within the statutory window. The question that mattered in 2024 was whether courts would actually apply those reductions consistently. The answer in 2026, increasingly, is yes — but only for employers who have the documentation.
Labor Code §2699(g)(1), added by AB 2288, sets out a substantial cap on PAGA penalties where the employer can show all reasonable steps to comply with the law that was allegedly violated were taken before receiving the notice. The reasonable-steps showing is fact-driven and includes (among other things):
A separate (less generous) reduction applies where the employer takes reasonable steps after receiving the notice. Both reductions require the employer to bear the burden of proof. Both reward employers who can produce contemporaneous records.
Three patterns are now clear in California PAGA litigation:
1. Documentation is dispositive. Trial courts treating the reasonable-steps showing as a real defense have looked for dated training rosters, written audit reports, signed handbook acknowledgments, and corrective-action files. Employers who walk in with a binder get the cap. Employers who walk in with verbal recollections that "we always told supervisors to follow the rules" do not.
2. Cure rights matter, but the window is short. The expanded cure right under the reforms has produced multiple early dismissals of curable claims, but the statutory cure window doesn't move — consult counsel immediately on receipt of a notice. Employers who took the cure path successfully shared three things: prompt LWDA correspondence, documented remediation (paid premiums, fixed wage statements, updated policies), and a clean explanation of what was cured.
3. The "reasonable steps" defense doesn't fix everything. The reductions apply to the penalties under PAGA. They do not reduce underlying wage owed, do not waive the plaintiff's attorney's fees on claims that survive, and do not eliminate exposure on the parts of the notice that aren't covered by the cured violations. The most expensive matters in 2026 are the ones where the employer thought the reasonable-steps cap would cover everything and didn't address the underlying liability.
The right time to build the reasonable-steps record is before a notice arrives. The window between receiving a notice and needing to respond is too short to manufacture records that should have existed for the prior three years.
The five things every California employer should have on file by year-end:
The compliance program described above takes some upfront work but pays for itself many times over the first time a PAGA notice arrives. Employers who came to us in 2025 with no documentation typically faced exposure in the high five or six figures on facts where employers with documentation faced manageable resolution costs on similar facts. The investment math is straightforward.
If you're not sure where your business stands, the Compliance Gap Calculator is a 10-question diagnostic with a letter-grade report. It's free and takes about three minutes. If you've already received a PAGA notice, the right move is to talk to counsel today — the statutory cure window doesn't restart.
