Running a restaurant in California comes with a long list of labor laws to follow, and one of the trickiest is the Private Attorneys General Act (PAGA) PAGA allows employees to sue on behalf of the state for labor code violations, which means small mistakes can quickly turn into major lawsuits.
This blog is the second in a three-part PAGA series focusing on the foundations of PAGA compliance: Processes
Other blogs in this series can be found below:
Pat Darling, Co-founder and COO of ForteSG has over 35 years of experience in restaurant technology and leadership. Pat is dedicated to helping businesses streamline their compliance processes. In this blog, she shares expert insights on common compliance blind spots, process failures that lead to PAGA claims, and how to mitigate risk.
Why Processes Matter for PAGA Compliance
“When it comes to staying compliant with California’s Private Attorneys General Act (PAGA), one of the biggest mistakes businesses make isn’t intentional wrongdoing. It’s failing to get their processes right,” says Pat Darling, Co-founder and COO of ForteSG.
PAGA doesn’t just penalize bad actors; it penalizes bad processes. Without structured workflows, clear tracking, and proper documentation, even well-meaning restaurant groups can face claims. A strong system ensures payroll is accurate, breaks are properly recorded, and compliance risks are flagged before they become costly mistakes.
Well-defined processes protect your business, employees, and bottom line. They should align with and enforce the policies and procedures you’ve established with your legal team, reducing legal risk, building employee trust, and giving you confidence everything is done right.
The Biggest Payroll & Scheduling Mistakes That Lead to PAGA Claims
Most PAGA claims come from a handful of common payroll and scheduling errors. If your business isn’t actively tracking and correcting these, you might be sitting on a compliance risk without realizing it.
Missing, Late, & Incomplete Meal Breaks
One of the most common issues is missing or incomplete meal and rest break records. California law requires employees to take breaks at specific times. Tracking and documenting those breaks is critical. If there’s no record, there’s no proof the break happened, leaving businesses vulnerable to claims.
Payroll Miscalculations & Incorrect Regular Rates of Pay for Overtime
Payroll miscalculations also lead to compliance trouble. Whether it’s misclassifying employees, failing to pay overtime correctly, or making mistakes on final paychecks, minor payroll errors can trigger big lawsuits.
Poor Time Tracking Practices
Poor time tracking is another major risk. Relying on manual systems or expecting employees to track their own hours without oversight often leads to disputes over hours worked and unpaid wages. Having a clear, employee-driven process for resolving missed or incorrect punches is also critical, as well as ensuring compliance and proper communication with employees. This not only helps you stay aligned with labor laws but also creates transparency and reduces the risk of wage claims.
Incorrect Wage & Earnings Statements
Wage statements are another area where restaurants can get into trouble. California has strict rules about what information must be included on pay stubs, and missing even one required detail can result in penalties.
How Automation Reduces Compliance Risk
Technology can help businesses track hours, wages, breaks, and flag risks in real-time, making it easier to stay on top of labor laws.
With automation, businesses can:
- Ensure payroll calculations are more accurate and reduce human error
- Generate detailed, compliant wage statements automatically
- Ensure only scheduled employees can clock in and only clocked-in employees can create POS checks
- Track meal and rest breaks with precise documentation
- Receive alerts about potential compliance issues before they turn into claims
- Store all payroll and HR records in a secure place
“Time tracking, wage calculations, and compliance alerts are three things businesses should automate,” says Pat.
How to Audit & Improve Your Compliance Processes
If you’re unsure whether your payroll and HR processes are PAGA-compliant, now is the time to audit and improve your workflows.
Start by reviewing payroll records to ensure wage statements are accurate and detailed. Check time-tracking practices to verify that all breaks and hours are properly recorded. Conduct a systems audit to review employee pay, classification, and break setups, ensuring they align with labor laws and company policies.
Identify manual processes where human errors are most likely and replace them with payroll automation tools. Your systems are only as good as their setup, so regular audits are key to maintaining compliance.
Training managers on compliance best practices is essential. Even the best systems won’t help if employees don’t know how to use them. Schedule regular training refreshers and provide micro-content, like short videos or quick guides, to reinforce key compliance concepts and ensure information is retained.
Leverage a software solution with built-in alerts. “Automated alerts for missed breaks, punches, or pay discrepancies help prevent costly mistakes. Most businesses don’t take full advantage of these,” says Pat. Pairing alerts with proper scheduling practices, like ensuring only scheduled employees can clock in, adds another layer of protection and helps keep timekeeping accurate from the start.
Final Thoughts
PAGA compliance might feel like a moving target, but with the right processes and tools, businesses can eliminate guesswork and significantly reduce risk.
Want to make compliance easier? Learn how Forte helps automate your payroll process—calculating compliance penalties, validating payroll data quality, and integrating seamlessly with your payroll processor.
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