PAGA Update: Michael Adreani on What California Restaurant Operators Should Know

Michael Adreani is an attorney and partner at Roxborough, Pomerance, Nye & Adreani, where he advises businesses on employment, labor, insurance, and workers’ compensation issues.

In this episode, you’ll learn:
 What PAGA is and why it matters for California restaurant operators
 What changed under the 2024 PAGA reforms
 Why early evaluation conferences are not always working as expected
 What operators can do now to reduce risk

Resources: https://www.crmbc.com/

Topic requests: info@crmbc.com

Chapters
 00:18 Introduction
 02:01 What Is PAGA?
 03:10 PAGA Abuses
 08:02 2024 Reforms
 10:22 Reality of the Reforms
 12:58 Impact on Employers
 14:46 How Restaurant Operators Can Protect Themselves

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Transcript

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2026 PAGA Update: Michael Adreani on What California Restaurant Operators Should Know

Michael Adreani: Document everything, keep track of your time, make sure the payments are accurate, and if something comes in regarding PAGA, get to your attorney immediately.

Introduction

Kaya Stanley: Welcome to the Self-Insurance Podcast, brought to you by CRMBC. Today we're joined by attorney Michael Adreani, and we're going to talk about PAGA. Michael, thank you so much for joining us again on the CRMBC podcast.

Michael Adreani: It's nice to be here again. Nice to see you, Kaya.

Kaya Stanley: So Michael, for our guests, will you tell us a little bit about your background and what you do?

Michael Adreani: Sure. Uh, I'm an attorney in Los Angeles at a par- uh, a partner at Roxborough, Pomerance, Nye, & Adreani. Uh, we have a business litigation and business advisory specialty. Um, in particular, as, as your restaurant clients, uh, might be interested in, we do a lot of work in the areas of employment and labor law, and also i- insurance as it pertains to workers' compensation.

So we advise clients if, if they've been the victim of over-reserving, class code problems, uh, classification of employees, um, any number of things that can affect, uh, you know, your bottom line. Over-collateralization is a big one, as I'm sure you know. So those two things together, the employment and the workers' comp, uh, in my mind, I've always thought they went together because you're really looking at these issues as employee-level issues.

So it's been a very good specialty, and a lot of business clients, especially restaurants, are interested in talking to us about our specialties.

Kaya Stanley: And today we're gonna talk a little bit about PAGA because this is one of the most frustrating pieces of legislation that our members deal with today, and there's been a lot of changes in PAGA.

So first, can you give a high-level reminder, not that anyone needs it anymore, we ... It seems like we eat, sleep, and breathe this, but first give us a high-level, uh, iss- statement of the problem with PAGA.

What is PAGA?

Michael Adreani: Well, PAGA is, uh, just what it says. It's the Private Attorneys General Act. Um, I've been on your show a couple of times talking about it and the nightmares involved with it.

But what it does is it allows an employee, uh, and more specifically their attorney, to literally become deputized and become the attorney general of California. So when you get sued for these minor, uh, labor code violations, one missed break, one failure to have seating accommodation, one pay stub violation, you're really being sued by the state of California, which is unfortunate when it comes to certain arbitration issues because the state of California didn't sign your arbitration agreement.

So, so these PAGA cases are exempt for the most part from arbitration, and arbitration was, and still is in some respects, a, a, a security blanket against representative actions like PAGA. So the problem with PAGA has always been- That first it's an end around the Supreme Court cases on arbitration, and second, it creates a, a much larger case than something needs to be.

One employee with one violation can represent other employees in a much larger case involving other violations. Now, these reforms in 2024 did change a little bit a- a- about that, but we can get to that, right?

Kaya Stanley: Yeah. So let's talk about ... Well, first, before we talk about the reforms, just real briefly, talk about some of the abuses that we were seeing, and obviously we know that there was a lot of lobbying to change the legislation.

But give us, give us a, a, just a snapshot of the abuses that we were seeing.

PAGA Abuses

Michael Adreani: Well, we, we were, and we still are. I, I will say w- when we talk about the reforms, it was a half measure. It, it- Mm-hmm ... it, it did, it did create some benefits, but these horrors are still out there. So he- here's an example of an abuse.

An employee, uh, maybe missed o- one rest break in, in, in the year of employment at, at the restaurant, or maybe the clock wasn't working that day and checked out for lunch more than five hours after they started their shift, but that's the only thing that ever happened to this one employee. Well, that employee then has the ability to hire an attorney and file a PAGA notice and file a PAGA lawsuit on behalf of everybody who had every sort of violation.

So even if this person, this individual representing the state, didn't suffer something like an actual meal break violation or th- getting, uh, pa- working overtime without getting paid for it, that person would still- Mm ... have the standing and the ability to sue on behalf of others who did have that problem.

A- and so that creates a, a mountain out of a molehill, literally. So that was one of the big abuses. The other is that it's very easy to file a, a PAGA lawsuit. You just have to file a notice, wait 65 days for the state to pass, and they always pass, and then you file a lawsuit. And it's expensive to litigate on behalf of the em- employers.

Restaurants don't wanna be dealing with the massive defense costs, so it becomes almost a shakedown. You have to settle, and you have to hire an expensive mediator. All aspects of litigation, even mediation these days, is really expensive. And so th- that i- in a nutshell is the abuse and the problems that PAGA has created and continues to create today.

Kaya Stanley: And one of the most egregious, and you and I are attorneys, and we're, we're gonna talk about attorneys who give us all a bad name, is that this is attorneys that are exploiting this because employer, em- the employees behind it often don't get anything or very, very little out of these settlements. Most of it's going to the lawyers, right?

Michael Adreani: Most of it's going to the lawyers, and I'd like to give you an example of, of- Attorney abuse. The agency that deals with this is called the LWDA. Um, the LWDA is the agency that oversees this prior to the, these actions getting to the courts. So you file your notice with the LWDA, and then you wait 65 days, and then you can go to court.

There was one law firm based here in Los Angeles that in about six months filed over 300 of these notices, and finally, uh, the LWDA actually cracked down and sent them a notice and said, "Look, you, you can't do this. I mean, you do have to have some specific allegations." They found that this rampant filing, which amounted to two per day, and not just the law firm, one lawyer at that law firm filed two per day for about six months.

Hundreds and hundreds of these, and they were boilerplate. They weren't specific to any one employee. Um, so, you know, a little bit of good news is that they cracked down on it, and they said, "Hey, you gotta revise these. You can't do this anymore." But think about that. Mm-hmm. Cracking down on it was in 2025.

That, that letter was only last year. Years and years of, of, of this kind of behavior was going on at the expense of employers and a lot of people in your group, I'm sure.

Kaya Stanley: Yeah, yeah. We have a lot of members, uh, very, uh, almost every one of our board members has seen it- For sure ... where, and, and some of these settlements end up in the millions of dollars.

Like, this isn't a small thing. This has been devastating for many of our members and many restaurant operators throughout California.

Michael Adreani: For sure. Uh, and not just restaurants. Uh, you know, one of the industries that gets hit really hard is also staffing- Mm ... employment agencies, um, because they send, uh, temporary labor to places where they have no control a- and they get, they get hit with that.

So restaurants, though, in particular can get, uh, you, you know, they're really susceptible to these kind of lawsuits.

Kaya Stanley: Yeah, and I just end up focusing on restaurant because that's what our- Of course. ... insurance covers. But, um, but talk to us a little bit about the reform. I know it didn't go as far as we hoped it would, but it did do some good things.

It, it- Will you talk a little bit about that?

2024 Reforms

Michael Adreani: It did, and, and again, I'll call it a half measure, but a, a, a good measure. So the reform, um, did away, in theory, with the situation I mentioned earlier. One of the big reforms was that an employee has to have actually suffered, uh, been aggrieved by the behavior on each of the violations.

Okay. So an employee would need to have actually suffered the overtime violation, the meal break violation, the rest break violation. Before, it was just you needed one, and you covered all of them. So now that employee needs to, uh, have suffered all of them. Another, uh, key issue is that the- The, the reform created what's called an early evaluation conference.

So PAGA was always meant to be ... It wasn't meant to be a gotcha. It was meant to give you notice of a violation or a possible violation and allow the employer to fix it. They've expanded that now with these early evaluation conferences, which requires courts and sometimes the LWDA to put a pause on things and give the employer a chance to come to the court and s- before the litigation gets off the ground, come to the court and say, "You know what?

That one thing, you're right. We- that was happening. Can, can we just take care of it now? We fixed it. We understand that we only fixed it because of the attorney and the, the, the, the PAGA representative, so let's get to the table, find out exactly what this universe is, and we'll pay our fines, maybe a little bit of fees, but it won't be this massive litigation, um, that, that we've been experiencing for the last 20 years."

Mm-hmm. So that's how it was supposed to work, and that is good news. It, it gives an employer, like a restaurant, a chance to come into court and say, "Okay, fine." Or alternatively, "This didn't happen. This didn't happen. And if it did, it was only five people. So look, let's, you know, get to the table." Now, the courts are supposed to appoint somebody, maybe even themselves.

A judge might say, "I'm gonna look at this. I'll be your early evaluator," or, "I will appoint an early evaluator," kind of like a mediator or a settlement conference judge or something like that. So that's how it's supposed to go, and that is good news. But of course, it's not going that way, is it? Right.

Kaya Stanley: Exactly. So now, yeah, now let's get into what, now let's get into what is actually happening.

Reality of the Reforms

Michael Adreani: So recently there was a, uh, continuing, uh, MCLE, a continuing legal education seminar, and the person from the LWDA was there, and he had to respond to questions like, "What are you doing? This isn't happening. Noth- none of-- Nothing is happening here."

And, and they said, "Look, we're trying. We're trying to catch up." This reform kind of came out of nowhere, and the LWDA I don't think was ready for it, and certainly not the courts. So that situation I described- Yeah ... earlier where the courts are supposed to take an early look, appoint somebody, have everybody come into a room and settle these things early, it's not happening.

It's just not happening. Yeah. The courts are too busy. The courts weren't ready for this. The courts, s- most of the courts don't know what to do. We were in court this morning on one of these, and this was supposed to be the day of the actual early evaluation conference. We were prepared. We had our expert.

We looked at-- We made some spreadsheets. We said, "Only these things happened and not those things." And the judge looked at us and said, "I'm not doing this. Go hire a mediator." Yeah. Uh, you know, so- So there's that expense now. Go- Right ... literally go hire one of these neutrals. And Kaya, the- these neutrals, if, if they're any good, are over $20,000 a day now.

Right. It's still better than litigating. So w- when these, when you request these early evaluation conferences, the case will be stayed. Your court case stops. You have some work to do, but it's all for the purpose of getting on the same page and trying to settle it. So that's good. Um, it's also causes a lot of delay.

Uh, now I am not one to, um, advocate for f- intentional delay, but there are a lot of attorneys and a lot of clients who would automatically say delay is good. So, a- and I think it's frustrating for the plaintiffs. You know, to the extent there are valid complaints out there, I think it's probably very frustrating for those attorneys out there who, who are m- maybe trying to do good work on behalf of employees.

Mm-hmm. Um, very frustrating for them because these cases aren't going anywhere. Yep. Yep. Um, it, it's, it's, um ... There are euphemisms for what's going on, but, but I won't use them on your podcast.

Impact on Employers

Kaya Stanley: Well, the de- the, the devastation ... A- and to, and I wanna also preface what I'm gonna say with yes, there are some valid claims, w- of course.

Yes. But the devastation to employers that, uh, from these kind of predatory claims, it's, it's enormous. And some of these are smaller restaurant groups where $20,000 a day, they already got hit by, during COVID. Their businesses were affected during COVID. Then they have the minimum wage increase. They've got, uh, just operating in California in itself is, is very challenging for restaurants, and then you've got this on top of it with, with the predatory claims in, in particular.

I've seen restaurant groups be devastated by this. Are you seeing that?

Michael Adreani: Uh, uh, absolutely. And, and I used the example of staffing companies earlier. I have a staffing company client, and this is not a giant company. I have a staffing company client who is defending 11 of these. 11. Because i- in, in that industry, and, and restaurants are similar because they have all these locations.

Right. Y- you, you send temps out to different locations. Well, a different plaintiff or lawyer might come after you for PAGA for each location, so- Mm-hmm ... if, if you're staffing warehouses or logistics companies, for example. A- and that is not unusual, for one client to have 11 different PAGA actions- Yeah, it's- going at the same time. It's, it's insanity. A- and, and some of them are old PAGA, some of them are new PAGA. It, it's, it, it is, to use your word, devastating Yep, yep.

Kaya Stanley: Well, we don't wanna leave any- everyone with only doom and gloom. Let's talk about- ... the, the positive sides of what employers can do. What ... How can they use this new reform to their advantage? How can they protect themselves?

How Restaurant Operators Can Protect Themselves

Michael Adreani: W- well, as I said every time I talk to you, document, document, document. Get everything documented. Make sure you have a good payroll system. Make sure you have a good timekeeping sy- Mm-hmm ... system. Make sure you track all employment activity on the front end, meaning timekeeping, and the back end- Mm-hmm meaning payroll and, and, and wage statements. That's where all the trouble lies, the timekeeping and the statements a- and then the payments. So document everything. Make sure your systems are up to date. A- any time there's a violation that you catch, make sure you pay that premium wage. Make sure you take care of it.

Um, that's always gonna be the advice from any lawyer, uh, uh, dealing with PAGA or individual cases. Another part of the good news is that this early evaluation process only works if you use it. Take advantage of it. If you get hit with a PAGA action, timing is everything. Immediately get to your counsel.

Immediately. Because you wanna, uh, request this early evaluation conference very early. Mm-hmm. And if it, if it ends up in a big delay, so be it. That's better than litigating. Uh, I also recommend having arbitration agreements, uh, with each employee that comes in. A- as I said earlier, arbitration agreements don't apply to PAGA, but PAGA's better than a class action.

Yeah. And the, the arbitration agreement will, will take care of the class action. So documents, arbitration agreements upon intake, and get to your attorney quickly if you get a PAGA case. Uh, even if you just get the notice, don't just say, "Well, they haven't sued me yet." You ... There are things you can do with just the notice. You can go to the LWDA, and they have their own sort of mini version of a early evaluation conference. That only applies if, uh, the employer has less than 100 people. So it may not apply to all of your clients, but maybe some of them.

Kaya Stanley: Michael, thank you so much for coming on to the podcast again and giving us your wisdom, especially about PAGA, something that is so, uh, painful to so many of our members.

In short, if you could summarize one or two sentences, what is the most important thing that our, our members need to know about PAGA?

Michael Adreani: Document everything, keep track of your time, make sure the payments are accurate. And if something comes in regarding PAGA, get to your attorney immediately. Thank you, Michael.

Kaya Stanley: We'll see you again next time. Thank you, Kaya For more webinar sessions and resources, visit us at crmbc.com. If you have an idea for a future topic or you'd like to be a guest, please email us at info@crmbc.com.