Wage-and-hour litigation continues to be a major concern for California employers. Two of the most common, and often misunderstood, types of claims are (1) class actions and (2) claims brought under the Private Attorneys General Act (PAGA). They can arise from the same alleged Labor Code violations, but they operate under different rules, seek different remedies, and require different defense strategies. Recent PAGA reforms have also reshaped the risk analysis.
Below, we answer some of the most common questions employers ask when confronting these claims.
What Is the Difference Between a Class Action and a PAGA Claim?
Although class actions and PAGA claims may look similar on the surface, they are fundamentally different legal tools.
Class Actions
In a class action, one or more employees sue on behalf of a larger group of individuals who allegedly suffered from the same unlawful employment practices. Before the case can proceed as a class action, the court must certify the class. That requires the plaintiffs to establish, among other things, that:
Class actions primarily seek damages owed to employees, such as unpaid wages (including overtime pay), missed meal or rest period premiums, wage statement penalties, and unreimbursed business expenses.
PAGA Claims
A PAGA claim is not a traditional lawsuit for damages. Instead, the employee acts as a “private attorney general,” stepping into the shoes of the State of California to enforce Labor Code violations on behalf of the State of California and other employees. A PAGA case may resemble a class action at first glance because it can involve one plaintiff seeking relief tied to workplace-wide practices. But the mechanics and exposure are different.
Key distinctions include:
Because PAGA does not require class certification, these claims can sometimes proceed even when a class action cannot.
Can Employees Bring Both Class Action and PAGA Claims?
Yes. In fact, plaintiffs often assert both in the same lawsuit.
A common strategy is to:
Even if class claims are narrowly defeated, PAGA exposure can remain. That is one reason PAGA has been such a powerful (and expensive) tool for plaintiffs.
Do Mediation or Arbitration Clauses Prevent Class Actions?
Often, but not always. The answer depends on how the agreement is written and what type of claim is being asserted.
Arbitration Agreements and Class Actions
Properly drafted arbitration agreements with class action waivers can often prevent employees from pursuing class actions in court. In many situations, employees can be required to arbitrate their claims individually instead.
Arbitration Agreements and PAGA Claims
PAGA is different because the claim is asserted, at least in part, on the State of California’s behalf. As a result, employers generally cannot eliminate PAGA exposure simply by using a class waiver.
However, arbitration provisions can still materially affect how PAGA claims proceed, including whether certain components must be arbitrated and what stays or sequencing issues arise. This is a technical and fast-evolving area of law, so arbitration agreements should be drafted carefully and reviewed periodically.
If I Settle With One Employee, Does That End the Class Action?
Not necessarily.
Class Actions
Settling with the named plaintiff does not automatically end a class action. Until a class settlement is approved by the court (and class members are addressed through the required process), other employees may still pursue the same claims, and another employee may step in as the class representative.
PAGA Claims
PAGA claims are even harder to resolve through an individual settlement. Since these claims seek civil penalties on behalf of the State, a PAGA settlement generally requires:
In other words, paying off one plaintiff rarely buys a clean exit unless the settlement follows PAGA’s procedural requirements.
How Recent PAGA Reforms Affect Employer Strategy
California’s 2024 PAGA reforms created new tools and incentives for employers to manage risk, including:
The practical takeaway is simple: treat PAGA notices like real litigation, because they are the front end of real litigation. Fast internal investigation, targeted remediation, and strategic early positioning can materially change the outcome.
If your business is facing a wage-and-hour claim (or wants to reduce exposure before one shows up), experienced counsel can help you evaluate the claims, pressure-test the evidence, and take advantage of the current statutory framework.
Resources:
https://flasllp.com/business-owners-key-laws-and-updates-to-watch-in-2025/
https://www.legalprofessionalsinc.org/class-action-vs-paga-whats-the-difference/
