California Court of Appeal Affirms a 99% Cut to a $56 Million PAGA Penalty Demand and Trims the Fee Award Too

Taduran v. James R. Glidewell, Dental Ceramics, Inc. (2026) __ Cal.App.5th __ (4th Dist., Div. Three; No. G064718)

Since 2004, the Private Attorneys General Act (PAGA) has allowed a single “aggrieved” employee to pursue civil penalties for Labor Code violations — unpaid overtime, missed meal and rest breaks, noncompliant wage statements, and more — not only for themselves but on behalf of every other affected employee. With default penalties of $100 per employee per pay period (and higher figures for certain violations), even technical, low-harm violations can generate demands in the tens of millions once aggregated across a workforce.

Taduran is a reminder that the number a plaintiff writes on the demand letter and the number a court actually awards can be worlds apart. In a decision employers will want to keep close at hand, the Fourth District affirmed a trial court’s decision to reduce a roughly $56 million statutory-maximum penalty demand to approximately $516,965 — a reduction of more than 99% — and, just as significantly, upheld a reduction of the plaintiff’s attorney’s fee award below the lodestar.

What Happened

Abraham Taduran brought a representative PAGA action against his former employer, Glidewell Dental Ceramics, originally alleging eight categories of Labor Code violations. Through summary adjudication and stipulation, the case narrowed to four claims on which liability was established: noncompliant wage statements, overtime miscalculated on “uptime” (non-productive time) pay, overtime miscalculated on bonus pay, and rest-period violations. Because the parties stipulated to most of the underlying facts — including the number of employees and pay periods involved — the sole issue tried was the amount of civil penalties.

Taduran sought the statutory maximum, roughly $55.9 million in penalties, plus approximately $1.57 million in attorney’s fees (a $1,047,771 lodestar enhanced by a 1.5 multiplier). Glidewell argued for a substantial reduction, emphasizing the technical nature of the violations and the minimal harm to employees.

The trial court agreed with the employer. It awarded $516,965 in total penalties and, on fees, accepted the lodestar but applied a 0.70 negative multiplier, awarding $733,440 rather than the enhanced amount requested.

The Court’s Reasoning: Proportionality and Good Faith

The trial court gave detailed, claim-by-claim explanations for cutting the penalties from their theoretical maximum — and those explanations are a useful template for defense counsel:

• Wage statements (reduced to ~$100,165): The noncompliant statements caused no unpaid wages, and when read together with the “Production Sheets” employees separately received, the documents satisfied the informational purpose behind the wage statement requirement. The court also noted that Glidewell’s weekly (rather than bi-weekly) pay periods artificially inflated the per-pay-period penalty, and that Glidewell had corrected the statements roughly 16 months before summary adjudication.
• Rest-period violations (reduced to ~$188,820): The underlying shortfalls stemmed from rounding errors averaging about $0.26 per pay period, and Glidewell had acted in good faith.
• Overtime on uptime and bonus pay (~$155,980 and ~$72,000): The court applied similar reasoning, crediting the technical nature of the violations and the employer’s willingness to correct them.

Two Holdings Worth Highlighting

On appeal, Taduran raised two arguments; the Court of Appeal rejected both.

First, he contended the trial court was required to reduce penalties on a per-pay-period basis (the same metric used to calculate the maximum), rather than the per-employee method the court used for most violations. The Court of Appeal disagreed, holding that the Labor Code mandates no particular reduction methodology. Once the maximum is calculated, a trial court retains broad discretion to reduce it by any reasonable method — per employee, per pay period, percentage-based, or otherwise.

Second — and this is the holding most likely to be overlooked — the court affirmed the trial court’s authority to apply a negative multiplier to the lodestar when circumstances warrant. Here, the plaintiff’s limited success relative to his demand, the straightforward nature of the claims, and upward-adjusted billing rates justified a 0.70 multiplier. In wage-and-hour litigation, where fee awards routinely eclipse the penalties themselves, the recognition that a prevailing plaintiff’s fees can be reduced below the lodestar is a meaningful development for the defense.

Two Important Caveats

Taduran was tried before California’s 2024 PAGA reforms took effect, so the decision rests on courts’ longstanding discretion under Labor Code section 2699 to reduce penalties that would be “unjust, arbitrary, oppressive, or confiscatory,” together with the “lesser amount” language of section 2699(e)(2). Rather than diminishing the reforms, the decision reinforces their central premise: good-faith compliance and prompt correction materially improve outcomes.

Employers should also note that the plaintiff has petitioned the California Supreme Court for review. Until that petition is resolved, Taduran’s ultimate precedential weight remains unsettled, and the decision should be cited with that status in mind.

Practical Takeaways for Employers

Taduran confirms that an employer’s conduct — before and after a PAGA notice — can dramatically shape penalty and fee exposure. Employers positioned to benefit are those who can show the court concrete evidence of good faith and remediation. Upon receiving a PAGA notice, employers should:

• Promptly investigate the specific allegations;
• Implement corrective measures to remedy affected employees and prevent recurrence; and
• Document every compliance step taken, including the timing of any corrections.

Just as important, the strongest record is built before a claim ever arrives. Proactively auditing pay practices, distributing compliant written policies, training supervisors, and papering compliance efforts all pay dividends if a court later weighs proportionality and good faith — and they are precisely the “all reasonable steps” the 2024 reforms reward with capped exposure.

Ballard Rosenberg Golper & Savitt, LLP advises employers on wage-and-hour compliance, PAGA exposure, and the defense of representative actions. If your organization has received a PAGA notice or would like to strengthen its compliance record before one arrives, please contact your firm contact at (818) 508-3700 or visit us online at www.brgslaw.com.

Sincerely,

Richard S. Rosenberg

Katherine A. Hren

Matthew B. Golper

This bulletin is provided for informational purposes only and does not constitute legal advice.