California's labor enforcement agency raised the documentary proof bar for the reasonable-steps PAGA defense. Here's what the proposed regulations actually require employers to produce.
In February 2026, California's Labor & Workforce Development Agency (LWDA) published proposed regulations interpreting the "all reasonable steps" affirmative defense added to Labor Code §2699 by AB 2288 and SB 92 (2024). The regulations are not yet final — the comment period ran through Q2 — but the direction is settled enough to plan against.
The short version: the proof bar moved upward. The proposed regulations tighten what "reasonable steps" means in evidence, narrow what documentation will satisfy the standard, and impose chain-of-custody expectations that a 2024-vintage compliance program will probably not meet by year-end.
This post walks the four changes that matter most, in operating terms, and what each one requires an employer to do before the regulations finalize.
The amended statute lists "periodic payroll audits and taking action in response" as one of four enumerated examples of reasonable steps. The proposed regulations define what periodic means in operating terms.
Under the proposed standard, periodic requires audits at least quarterly, on a documented schedule, against a documented scope. The scope must include at minimum:
The output of each audit must be a written report. The report must name what was checked, what was found, and what corrective action was taken on findings. The reports must be retained for the duration of the §2699 lookback window — roughly three to four years depending on the underlying claim.
What this changes operationally: an employer who "does audits when something comes up" is not satisfying the new standard. The audit cadence has to be scheduled, the scope has to be defined in writing, the output has to be a retained document, and the corrective action has to be linked to specific findings.
The statute names "supervisor training on the Labor Code and the applicable Wage Order" as a second enumerated reasonable step. The proposed regulations specify that training requires:
What this changes: the generic "annual compliance training" video most employers deploy will not satisfy the new standard unless it identifies the Wage Order, covers the specified topics, and produces a per-supervisor completion record. Many compliance LMS platforms generate completion records by default; many don't surface the underlying Wage Order or the specific topics on the certificate. Employers using a generic platform will need to either swap platforms or supplement with Wage-Order-specific training.
The third enumerated reasonable step is "disseminating lawful written policies." The proposed regulations clarify what disseminated means: every employee covered by a policy must receive the policy in a form they can access, and the employer must retain evidence of acknowledgment.
Practically, this requires:
A handbook on the company intranet does not, by itself, satisfy the new standard. A handbook plus a one-time hire-day acknowledgment is closer, but probably still insufficient if the policy has materially changed since the acknowledgment was signed.
The fourth enumerated reasonable step is "taking appropriate corrective action with regard to supervisors" who are out of compliance. The proposed regulations require:
What this changes: corrective action that exists as an informal conversation between an HR manager and a supervisor is no longer evidentiary on its own. The corrective action has to be written down, dated, and linkable to the finding that prompted it.
This is the change most likely to cause grief on enforcement. Many employers genuinely take corrective action when non-compliance surfaces, but few document the action in a way that survives a records request. Under the proposed standard, undocumented corrective action is functionally equivalent to no corrective action.
The proposed regulations are not yet binding. Final adoption will follow the comment period and any revisions LWDA chooses to make. The practical guidance for employers, in approximate priority:
Now. Establish a documented quarterly audit cadence, even if abbreviated. The first quarter's audit can be a partial scope; the discipline of "we ran an audit, here's the report, here's what we did about findings" is the foundational artifact every other piece of the defense builds on.
Within 60 days. Inventory current supervisor training. Identify whether the existing platform produces per-supervisor completion records with the Wage Order identified and the required topics covered. If not, plan the swap or supplement now, while there's a runway.
Within 90 days. Refresh the policy acknowledgment workflow. Every employee, every active policy, signed acknowledgments retained centrally. Bilingual where the workforce is bilingual. New hires acknowledge on day one; existing employees re-acknowledge on the next material policy update.
Ongoing. Build the corrective-action record as the audits surface findings. Each finding gets a written response, dated, with the corrective action specified. The record lives in the same place as the audit reports.
These four streams, run together, produce the evidence base the proposed regulations contemplate. Employers who wait until the regulations finalize will have months to do work that should have started a quarter earlier.
MicroForensics was built against the §2699 reasonable-steps standard as the statute reads today. The platform produces the per-period attestation that defeats Donohue, reconciles the wage statement under §226, captures the policy acknowledgments under the dissemination requirement, and logs the corrective-action record when findings surface.
The February 2026 proposed regulations tighten the standard the platform was built against. The work of staying compliant as the regulations finalize is, in operating terms, work on the same platform — adding the audit-cadence module, expanding the policy-acknowledgment scope, deepening the corrective-action linkage. Employers running MicroForensics will see the updates as part of the standing platform-level review. Employers who haven't built any of this yet have more catch-up than they think.
If you'd like a read on where your current program sits against the proposed standard, the discovery call is the right starting point. We won't recommend changes you don't need. We will tell you what we see.