Running a business in California means navigating one of the most complex employment law landscapes in the nation. Employee lawsuits, whether for wage and hour violations, wrongful termination, or retaliation, can create massive out-of-pocket costs for employers, not to mention business and reputational disruption. Yet many of these disputes can be prevented, or at least mitigated. With the right policies and practices, employers can significantly reduce exposure in ways that strengthen, not weaken, the business.
At Weinberg Gonser LLP, we help employers take proactive steps to avoid the courtroom and, when necessary, we defend them vigorously when claims do arise. Below are three essential strategies every California employer should have in place to reduce risks arising from employee lawsuits.
Disciplined Recordkeeping Protects Your Business
Few areas create more liability for California employers than wage and hour claims. Courts place the burden squarely on the employer to maintain accurate time and payroll records, and even small inconsistencies can create significant liability.
Conversely, when the timekeeping records are accurate and clean, this provides employers with a powerful presumption in court that the plaintiff must work to rebut. Thus, scrupulous, disciplined timekeeping practices are a front-line defense against wage-and-hour litigation.
Employers should insist that employees clock in and out accurately, with no tolerance for shortcuts. For example, if the records reflect that every employee in a unit starts and ends lunch at precisely the same time every day, that pattern raises red flags. Such records invite claims, including class-action claims that workers were denied their required meal breaks.
Supervisors must be trained not to overlook or “fix” discrepancies, as doing so creates the appearance that the employer is manipulating the data. Employers should clearly communicate expectations and requirements for accurate time logging and insist that employees avoid inaccuracies to maintain good standing.
Just as important is ensuring employees are not working off the clock. With the rise of remote and hybrid work, this has become a growing area of exposure. Employers of hourly employees should establish clear policies prohibiting after-hours work without authorization, and managers should avoid sending late-night emails or texts that implicitly encourage employees to respond. An employer will be liable if it knows, or should know, its employees are working without pay.
Lawful Terminations Start with Documentation and Consistency
Terminating employees is an inevitable part of running a business, but it is also one of the riskiest. Wrongful termination, retaliation, and discrimination lawsuits often hinge on whether the employer can prove that a discharge was based on legitimate, non-discriminatory reasons. Even when an employer has acted lawfully, an employee may claim otherwise, forcing the company into a costly and fact-intensive dispute.
The best defense begins long before termination. Employers should document all performance and conduct issues as they arise and should do so uniformly and consistently across the workforce. Employers should also train managers to avoid offhand comments or emails that could later be misinterpreted. Consistency and contemporaneous documentation are what persuade courts and juries that a termination was legitimate.
A critical tool in this process is the Performance Improvement Plan, or PIP. A well-crafted PIP provides employees with a structured opportunity to improve while giving the employer a written record of the problems and the chance given to address them. PIPs should not be used sporadically or only in anticipation of termination; doing so makes them look like a pretext.
Instead, they should be applied consistently whenever any employee’s performance issue warrants formal attention. Each PIP should include clear, measurable standards tied to objective criteria, ensuring the process reflects fairness rather than arbitrary judgment.
Proactive Audits Safeguard Against PAGA Penalties
California’s Private Attorneys General Act (PAGA) has long been one of the most powerful weapons in the plaintiff’s bar’s arsenal. It allows employees to step into the shoes of the state and bring claims for civil penalties against employers for alleged labor code violations. Historically, PAGA claims have been difficult to defend and expensive to settle.
Recent reforms, however, have shifted the landscape. As of October 2024, employers now have several reasons to conduct regular, proactive audits of their wage-and-hour practices and cure any violations promptly, whether or not the employer has received notice that it is being prosecuted under PAGA.
For example, employers who take “reasonable steps” to follow California wage-and-hour law can have penalties capped at 15-30% of prior maximums. Relatedly, employers now have the option of engaging in an early-stage cure process that can result in the PAGA claim being dismissed outright if the employer addresses the issues and pays employees any wages owed.
To make these reforms work in your favor, businesses should schedule periodic wage and hour and HR compliance audits and supervisor training, ideally with counsel, and document all efforts thoroughly. And of course, if you do receive notice that you are being sued under PAGA, you should immediately contact a qualified attorney who can
(1) advise you on how to cure ongoing issues and achieve compliance for your business and
(2) best leverage your cure efforts to minimize PAGA penalties.
Conclusion
Employee lawsuits are not just legal problems; they are business problems that drain resources and damage reputations. By observing these three tips, disciplined timekeeping, a standardized and documented approach to lawful terminations, and proactive wage-and-hour compliance audits, California employers can dramatically reduce the likelihood of ending up in court.
At Weinberg Gonser LLP, our team works with businesses of all sizes to audit practices and provide practical, defensible solutions. And when litigation is unavoidable, we bring the same thorough, strategic approach to the courtroom. If your business has questions about compliance, policies, or defending against employee claims, we are here to help.