California
Discussion
California: Court Discretion to Reduce PAGA Penalties
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APPLIES TO All Employers with Employees in CA |
EFFECTIVE JUL 1, 2026 |
QUESTIONS? Contact HR On-Call |
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Discussion
In Taduran v. Glidewell, the California Court of Appeals said that the trial court has discretion to reduce Private Attorneys General Act (PAGA) penalties. The Labor Code does not mandate any particular method for reducing a maximum civil penalty.
In this case, an employee sued his former employer for a series of Labor Code violations, resulting in a finding of liability against the employer. Although the theoretical maximum PAGA penalties totaled tens of millions of dollars, the trial court exercised its statutory discretion to reduce the penalties, ultimately awarding about $516,000. It calculated most reductions on a per-employee basis (except the bonus pay issue, where it imposed the full penalty), reasoning that imposing the maximum would be “unjust, arbitrary, and oppressive” given factors like the lack of actual unpaid wages on some claims, the employer’s good-faith practices, and its willingness to correct the problems and repay affected workers.
On appeal, the employee argued that the trial court was legally required to reduce penalties on a per-pay-period basis rather than a per-employee basis. The appellate court rejected this, holding that the Labor Code simply authorizes a “lesser amount” without mandating any particular reduction formula. While the maximum penalty is initially calculated per pay period, nothing in the statute dictates how the court must apply a reduction, meaning a court may reasonably use a percentage, per-pay-period, or per-employee method. Ultimately, the appellate court found no abuse of discretion in either the method used or the size of the reduction.
While this ruling may give hope to employers looking for a reduced penalty, the case still highlights the need to maintain good-faith practices to pay wages appropriately and promptly correct any errors. Having policies and practices that support a compliant culture can go a long way, even when errors are found.
Action Items
- Review wage and hour policies and practices for compliance.
- Implement a regular audit schedule to verify wage and hour compliance.
- Consult with legal counsel when implementing wage and hour corrections.
- Have appropriate personnel trained on applicable wage and hour requirements.
California: Federal FAA Exceptions Adopted
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APPLIES TO All Employers with Employees in CA |
EFFECTIVE JAN 1, 2027 |
QUESTIONS? Contact HR On-Call |
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Discussion
AB 2155 adopts exclusions to arbitration under the Federal Arbitration Act (FAA) into the California Code. The FAA specifically excludes contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce, and the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (9 U.S.C. Sec. 401 et seq.), including claims that relate to a sexual harassment dispute or sexual assault dispute. These exclusions cannot be forced to arbitration, even with a signed agreement.
By adopting the FAA’s exclusions into California law, it closes a previously existing loophole where some claims could not be forced to arbitration under federal law but may be compelled under state law. Employers with employees who may be in the excluded class should review arbitration agreements with legal counsel to determine whether they will still be enforceable. Similarly, such employers may need to rethink their arbitration strategy altogether.
Action Items
- Have arbitration agreements reviewed by legal counsel.
California: FMCSA Preempts Meal and Rest Requirements for Passenger-Carrying Drivers
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APPLIES TO All Employers with Employees in CA |
EFFECTIVE JUN 4, 2026 |
QUESTIONS? Contact HR On-Call |
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Discussion
In California v. Federal Motor Carrier Safety Administration, the State of California challenged a 2020 decision by the Federal Motor Carrier Safety Administration (FMCSA) that preempted California’s meal and rest break (MRB) rules as applied to drivers of passenger-carrying commercial motor vehicles (such as buses). The Ninth Circuit Court of Appeals denied California’s petition for review and upheld the preemption. Under the Motor Carrier Safety Act, the Secretary of Transportation reviews state commercial-vehicle safety laws and may preempt any that are “additional to or more stringent than” federal regulations if the state law provides no safety benefit, is incompatible with federal rules, or imposes an unreasonable burden on interstate commerce.
California’s MRB rules, contained in state wage orders, require a 30-minute meal period for shifts over five hours (plus a second meal period for shifts over ten hours), along with a 10-minute rest break for every four hours worked, and penalty pay for noncompliance. These requirements are more demanding than the federal hours-of-service (HOS) regulations, which cap consecutive driving and on-duty hours for bus drivers but, unlike the rules for freight drivers, do not mandate a mid-shift 30-minute break.
In 2020, the FMCSA determined that California’s MRB rules were preempted by federal law. The agency found that the rules qualified as regulations “on commercial motor vehicle safety” and were more stringent than the federal HOS rules. It further concluded that the MRB rules provided no measurable safety benefit beyond the federal framework, and could even create unsafe conditions when drivers struggle to find safe parking to comply. The FMCSA also found the rules incompatible with the flexibility built into the federal framework, and that they imposed an unreasonable burden on interstate commerce by creating a “patchwork” of differing state requirements.
Reviewing the agency’s decision under the deferential arbitrary-and-capricious standard of the Administrative Procedure Act, the court found that its earlier decision in International Brotherhood of Teamsters, Local 2785 v. FMCSA (2021) (which upheld the FMCSA’s parallel 2018 preemption of California’s MRB rules for freight drivers) largely foreclosed California’s arguments. The court rejected California’s contention that the rules fell outside the FMCSA’s authority because they are laws of general applicability rather than being “specifically directed at” commercial motor vehicle safety, explaining that Teamsters had already held such rules qualify when they cover the same subject matter as existing federal regulation.
The court also rejected California’s narrower argument that the FMCSA could not preempt mid-shift break rules for bus drivers because the agency had not itself promulgated specific break regulations for passenger-carrying vehicles—holding that California read Teamsters too narrowly, since the MRB rules fall within the FMCSA’s regulatory domain and the same subject matter is already federally regulated. Finally, the court found the FMCSA did not act arbitrarily or capriciously in concluding the rules imposed a significant operational burden on interstate commerce, which alone was sufficient to justify preemption. Accordingly, the panel denied the petition and upheld the FMCSA’s preemption determination.
Action Items
- Have meal and rest policies reviewed and updated for compliance.
- Have appropriate personnel trained on the requirements.
California: New CRD Fact Sheet
On May 20, 2026, California’s Civil Rights Department (CRD) issued a new fact sheet on religious discrimination and workplace accommodations. Governed by the Fair Employment and Housing Act (FEHA) and the Workplace Religious Freedom Act of 2012 (WRFA), California’s protections extend beyond federal Title VII, covering interns and volunteers in addition to employees, and reaching both perceived religious beliefs and associational discrimination (adverse treatment based on a connection to someone of a particular faith). Unlawful conduct can include hostile work environment harassment, religious stereotyping, discriminatory dress and grooming policies, and retaliation against employees who raise faith-based objections or accommodation requests. Employers with California employees should review religious accommodation policies and train managers on these broader protections.
California: Documentation Defeats Alleged Protected Activity
On June 26, 2026, in Han v. Pfizer, a federal district court said that historical documentation supporting an employer’s decision to terminate within two months of an employee making an alleged whistleblowing claim showed the legitimate, independent reasons for termination. Specifically, the employer had long documented the employee’s performance issues, given weekly negative feedback on performance, and was in process of preparing a notice of underperformance. The documentation showed that the employer would have terminated the employee even if he had not engaged in the alleged whistleblowing. This case highlights the need for consistent performance documentation to support legitimate business decisions, including but not limited to, employee terminations.
Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser. © 2026 ManagEase