When California employers hear about “wage and hour lawsuits,” it can feel like a distant problem—something that happens to giant corporations with armies of lawyers, not to small- or mid-sized businesses just trying to do the right thing. But the truth is that wage-and-hour claims like class actions or PAGA lawsuits are among the most common and the most expensive lawsuits filed against employers in California, and they hit companies of all sizes and in every industry.
In fact, data shows that large companies rarely get sued anymore. Why is that? Because they’ve already been hit multiple times and they put systems and processes in place to help prevent them. We are in the new era, where the next wave of wage and hour cases is against smaller employers and even nonprofits!
Even businesses with fewer than 50 employees have found themselves blindsided by claims worth six or seven figures. Why? Because even a single compliance slip—like a meal break late by one minute or inadvertently short by two minutes, a rest break interrupted by a supervisor, that one quick task done after clocking out, a paystub missing a few technical details like the proper punctuation or business address, or the unintentional miscalculation of the overtime rate by $.01—can snowball into a lawsuit that covers every single current and former employee going back as far as four years, making damages balloon into the millions, not including your own defense fees. To make matters worse, California is a “fee-shifting” state, meaning it views wage and hour cases as a public benefit (because the state believes meal and rest breaks are a matter of health and safety). This means that if you decide to fight one of these cases and you win 99% of your defenses at trial, you still pay 100% of the other side’s attorneys’ fees, plus your own! That’s usually an average of $1 million from start to finish in legal fees to take a wage and hour case to trial.
Understanding how these violations turn into lawsuits is critical for every California employer. By seeing the progression from “small issue” to “catastrophic lawsuit,” you can better appreciate why proactive compliance isn’t optional—it’s a financial survival strategy.
#1 Small Mistakes in Daily Operations
Wage and hour class and PAGA lawsuits often begin with things that feel routine and minor:
- A foreman asks a crew to skip a meal or test break to pour concrete before it sets
- A laborer spends 15 minutes loading tools before clocking in
- Paystubs fail to include the contractor’s full legal name and address
For example, Section 226 of California’s Labor Code requires employers to provide employees with written, accurate, itemized paystubs (either attached to the pay or separately) that show nine specific items.
Omitting one of these pieces of information doesn’t look like a disaster. Under California law, however, it would be a strict violation, and each violation carries its own penalties. In construction, these errors often multiply because scheduling pressures, job site logistics, and subcontractor arrangements make compliance harder to manage.
What makes matters worse is that these “minor” issues are usually systemic. If one worker is missing breaks, chances are others are too. If you get sued, the other side is entitled to all your time records to find all those violations. And under a California Supreme Court case from 2021, if those time records show a violation, such as a late, short, or missed meal period, it will be presumed to be your fault. Guilty until proven innocent! Additionally, if payroll software is misconfigured, it affects every employee’s paystub. This is why even small mistakes can turn into massive liability.
#2 Frustration Turns into Complaints
California is arguably the most employee-friendly state in the U.S., and California employees know it. If breaks are consistently late, they feel it. If overtime pay looks off, they notice it in their paycheck.
- Carpenters expect overtime when a framing job runs late
- Electricians know when they’re working through breaks to meet deadlines
- Field crews talk when their travel time between sites isn’t being compensated
If concerns are ignored, workers quickly turn to the Labor Commissioner or a plaintiffs’ attorney. In an industry where crews are tight-knit, word spreads fast, and what starts with one employee’s complaint can grow into a coordinated claim.
Employers who discourage open communication and do not provide a clear process for employees to report concerns, or who do not respond promptly to complaints, leave themselves open to costly litigation and penalties.
#3 Attorneys See an Opportunity
California’s enforcement system for wage and hour violations is unique. Unlike workplace safety rules, which Cal/OSHA enforces through its own administrative process, California’s wage and hour laws are enforced both by the state’s Division of Labor Standards Enforcement (DLSE) and—more significantly—through private lawsuits under the state’s class action laws and the Private Attorneys General Act (PAGA).
This system effectively deputizes every employee and lawyer in California to act as “bounty hunters,” allowing them to sue employers for wage and hour violations on behalf of themselves and other employees, often covering large groups of nonexempt workers. Because these cases are relatively low risk and can generate large payouts, with attorneys typically taking 30–35% of settlements or judgments, lawyers are heavily incentivized to bring them, creating a multi-billion dollar industry of wage and hour litigation that often substitutes for direct government enforcement. In fact, the State of California takes 65% of every PAGA judgment, further incentivizing California to pass employee-friendly laws.
In short, wage-and-hour claims are attractive to plaintiffs’ attorneys for two reasons:
- They’re easy to prove. Unlike harassment or discrimination cases, wage claims are backed by records—timecards, paystubs, schedules. If your documentation doesn’t line up, the case becomes very strong for the employee. And intent is irrelevant. You either violated the law or you didn’t. This is called “strict liability.”
- They scale quickly. Under California’s Private Attorneys General Act (PAGA) and class action rules, one employee’s complaint can potentially represent dozens, hundreds, or even thousands of employees going back up to four years.
Here’s how the math adds up:
- A single missed meal break incurs its own damages in a class action
- That same missed break has a separate PAGA violation of $100
- That same missed break requires employers to pay a meal period premium equal to one hour of pay at the employee’s regular rate of pay (which is not necessarily the standard hourly rate)
- If the premium is not paid, that’s a separate violation
- And that premium is considered wages, so that is a separate paystub violation
- And if that employee quits or is terminated and is not paid the premium, then his final paycheck, even if timely, is not accurate as required by law, subjecting you to “waiting time penalties” of 30 days of pay.
That’s up to five violations for one missed, short, or late meal period. Combine that with any other provable violations, plus the other side’s attorneys’ fees and you can see how even small employers routinely face exposure in the seven to eight figures.
That’s just meal periods. Add rest breaks (which also require the payment of rest period premiums for violations), overtime miscalculations, inaccurate wage statements, unreimbursed expenses, and penalties, and liability easily escalates into the multi-millions. Keep in mind that wage and hour claims in California typically have a three-year statute of limitations (or four years for certain claims under the Unfair Competition Law), meaning violations from years past can still result in significant liability. And that liability continues each day until the case resolves in a settlement or at trial. If you have unresolved violations, that’s like a taxi meter running every day!
#4 Lawsuits Grow Beyond the Original Issue
Once attorneys get involved, the scope of a lawsuit often expands. What began as a meal break claim quickly morphs into a multi-violation case because attorneys investigate every aspect of your wage and hour practices.
They’ll ask questions like:
- Were travel and mobilization hours between job sites tracked and paid?
- Did paystubs list all required items for prevailing wage jobs?
- Were final wages paid on the day of termination when workers were let go at the end of a project?
- Were rest breaks actually provided on job sites, especially during long shifts in extreme heat?
If the answer is “no” to even one of these, the lawsuit grows. Suddenly, you’re not just fighting one claim—you’re facing a full-scale challenge to your entire payroll and HR system.
#5 Settlement Pressure and Soaring Costs
And then there’s the pressure to settle amidst rising costs. Defending a wage and hour class or PAGA lawsuit is very expensive, even before damages are awarded. Between gathering certified payroll records, producing timecards from multiple job sites, and paying attorneys, legal defense often costs hundreds of thousands of dollars—even if you ultimately settle.
A mid-sized concrete contractor in California, for example, settled a case for $2.5 million after crews alleged years of missed breaks and off-the-clock work. Another small subcontractor paid nearly $500,000 in penalties when paystubs for every worker on public works projects omitted key details.
Additionally, most settlements don’t include admission of wrongdoing. Employers may genuinely believe they did nothing wrong, but they settle because it’s the only financially viable path forward.
Real-World Examples
Let’s review a couple real-life examples:
The Concrete Contractor
A mid-sized California concrete contractor was sued when workers alleged they were routinely denied meal and rest breaks to keep pours on schedule. What began as a complaint from just two finishers grew into a certified class of more than 150 employees across multiple projects. Attorneys uncovered years of scheduling practices that failed to provide legally required breaks. The result? A $2.5 million settlement that nearly derailed the company’s ability to bid future public works jobs.
The Electrical Subcontractor
A small electrical subcontractor with fewer than 35 employees was sued over pay stub violations tied to prevailing wage projects. The stubs failed to include the employer’s full legal name and pay period dates. Because the errors were repeated on every certified payroll submission for three years, penalties multiplied across every worker and pay period. The company settled for $480,000—an amount that wiped out its profit from several projects.
Why California Is Different
California is one of the most employee-friendly states in the nation, especially when it comes to wage and hour law. Requirements here are stricter than federal law and stricter than most other states.
- Federal law (FLSA) requires overtime after 40 hours in a week. California requires it after 8 hours in a day.
- Federal law has no requirement for meal or rest breaks. California mandates both, with specific timing rules.
- Federal law requires paystubs but doesn’t prescribe specific formatting. California requires nine separate items of information.
This means employers can’t rely on “federal compliance” or multi-state policies—they must tailor their practices to California’s unique rules. Also, certain industries, such as healthcare or construction, may have exemptions or modified rules for meal and rest breaks, so it’s important to consult with an attorney, preferably one versed in California law, to understand industry-specific requirements.
Construction adds unique risk factors:
- Piece-rate & prevailing wage rules: Specialized pay structures create compliance traps.
- Mobile crews: Travel time between sites and waiting time at staging yards often goes unpaid.
- Heat illness prevention: Missed rest breaks during hot days can carry both Cal/OSHA and wage-and-hour penalties.
How Employers Can Avoid the Trap
The good news is there’s hope for California employers. Under New PAGA, signed by Governor Newsom in 2024, employers who take “reasonable steps” towards compliance prior to a PAGA lawsuit or immediately after notice of a PAGA lawsuit can dramatically reduce their penalties by up to 85% (class actions are a different story).
California is attempting to incentivize wage and hour compliance. Employers should leverage every tool at their disposal to:
- Train Managers, Supervisors, and Employees
Most violations begin on the front lines. Managers who don’t understand meal and rest break rules make scheduling decisions that trigger liability. Regular training, like Cal Comply’s wage and hour training, ensures they know the law and apply it consistently. - Audit Payroll and HR Practices
Regular self-audits—or better yet, third-party audits—help identify violations before employees or attorneys do. Pay stub compliance, overtime calculations, termination pay, and expense reimbursements are frequent trouble spots. - Document Everything
In wage-and-hour cases, documentation is your best defense. Keep detailed records of time worked, travel time, equipment usage, breaks taken, expenses reimbursed, and pay provided. If you can’t prove compliance, the assumption is that you weren’t compliant. - Stay Current with California Law
Labor laws change frequently. What was compliant three years ago may not be today. Employers need to review policies annually to ensure they’re up to date. - Leverage Technology for Compliance
Automated systems ensure employees clock in and out correctly, generate compliant records for audits, and flag potential issues like missed breaks or unreimbursed expenses. Mobile timekeeping apps like BusyBusy help ensure crews clock in/out at job sites, track breaks, and generate compliant records for audits.
The Bottom Line
Wage and hour lawsuits don’t happen overnight. They start with small oversights, build through employee frustration, and explode once attorneys get involved. By then, it’s rough—the costs are already astronomical.
In construction, tight deadlines and tough jobsite conditions make wage and hour compliance even more challenging. But ignoring the rules is far more expensive than building compliance into your operations.
The smartest employers don’t wait until they’re sued. They invest in compliance improvements, wage and hour training, updated policies, proactive audits, and reliable timekeeping tools now, knowing that prevention costs a fraction of litigation.
At Cal Comply, we make this easy. Our expert-reviewed training, testing, and certifications are designed specifically for California employers. Protect your employees, your reputation, and your bottom line—schedule a demo today and/or identify your biggest wage and hour lawsuit risk with our Free Risk Assessment.
This post is for informational purposes only and does not constitute legal advice. California’s meal and rest break laws are complex and vary by industry and workforce. Consult an experienced employment attorney for guidance tailored to your business. Cal Comply is a compliance training provider; other compliance resources are available.
Written by Jeff Russell, CEO, Cal Comply
