Labor Code §2699.6 puts some construction work outside PAGA entirely, now through 2038. It is the most valuable provision in the statute for the employers it reaches — and the reason it gets misread is that people describe it as a status when it is a checklist.
Most of what anyone can do about PAGA is defensive: keep the records, run the audits, document the response, and hope the argument lands. Labor Code §2699.6 is different in kind. Where it applies, the statute does not apply — not capped, not mitigated, not argued down. Out.
That makes it the single most valuable provision in Part 13 for the employers it reaches, and it also makes it the most frequently misdescribed, because it gets summarized as "union construction is exempt from PAGA." It is not a status conferred by being a signatory. It is a set of conditions the agreement itself must satisfy, and an agreement that misses any one of them leaves the employer exactly where a non-signatory stands.
Section 2699.6 provides that PAGA does not apply to employees in the construction industry performing work under a valid collective bargaining agreement — where that agreement does all of the following:
Provides for the wages, hours of work, and working conditions of employees. The ordinary substance of a CBA.
Provides premium wage rates for all overtime hours worked. All of them, not the ones the parties bargained about.
Provides a regular hourly rate of pay not less than 30 percent more than the state minimum wage. This is the condition that moves every January. Against California's $16.90 minimum wage in 2026, the floor is $21.97 an hour. It re-indexes each January 1 with the minimum wage, which means an agreement that cleared the threshold when it was signed can stop clearing it without anybody renegotiating anything.
Prohibits all of the violations of the Labor Code that would be redressable under PAGA, and provides a grievance and binding arbitration procedure to redress those violations. Not a general grievance clause. A procedure that reaches the violations PAGA would reach.
Expressly waives the requirements of PAGA in clear and unambiguous terms. This is the magic-words condition, and it is where otherwise-strong agreements fail. A general arbitration clause is not a PAGA waiver. A waiver of "all statutory claims" is not express. The instrument has to say the thing.
Authorizes the arbitrator to award any and all remedies otherwise available under the Labor Code — with the exception of the civil penalties that would be recoverable by the LWDA.
Six conditions, conjunctive. An agreement that satisfies five is an agreement that satisfies none of them for this purpose.
Assembly Bill 1034 was chaptered September 28, 2024 and took effect January 1, 2025. It did two things to §2699.6, and both are structural rather than technical.
It deleted the date condition. The prior version required that the qualifying agreement have been in effect before January 1, 2025. That made the exemption a closing door: agreements entered afterward would not qualify, and the provision would decay into a legacy carve-out. The deletion means a conforming agreement entered today triggers the exemption.
It moved the sunset from January 1, 2028 to January 1, 2038. A three-year horizon became a thirteen-year one.
Together those turn a provision that was winding down into a live piece of planning. An employer bargaining a construction agreement in 2026 is bargaining under a rule that will outlast the agreement, and the six conditions above are things that can be put in an agreement at the table rather than discovered absent from it in a deposition.
For anyone trying to understand where PAGA exposure sits in California construction, §2699.6 sorts the industry into three groups, and only one of them is quiet.
Open-shop employers. No agreement, no exemption, full exposure. This is the largest group in most regions and the one where the whole apparatus of records, audits, and documented response does the work.
Signatory employers whose agreement does not satisfy all six conditions. The dangerous middle, because the belief of being exempt is itself a compliance risk: an employer who thinks the statute does not reach it does not build the record that would matter if the statute does. The waiver language and the 30-percent floor are the two most common failure points, and the floor can fail through nothing but the passage of a January.
Signatory employers with conforming agreements, for covered classifications, on covered work. Genuinely outside PAGA for that work, through January 1, 2038.
Note the qualifiers on the third group, because they are not decorative. The exemption reaches employees "in the construction industry" performing work "under" the agreement. The office staff are not covered by it. Neither is a classification the agreement does not reach, or work performed outside its scope. A single employer can be exempt as to a framing crew and fully exposed as to its shop, its drivers, and its administrative employees — which means "we're covered" is rarely true of a company, only of a population within one.
We are not going to tell you whether your agreement qualifies. That is a legal conclusion applied to a specific instrument and specific facts, it turns on the exact words in a document we have not read, and it is exactly the kind of question where a confident vendor answer is worth less than nothing to the person relying on it.
What we will say is what the question requires in order to be answered: someone with the agreement in front of them, reading it against six conditions, one at a time, with the current minimum wage in hand. That is a counsel exercise, it is not a large one, and for a signatory employer it is probably the highest-value hour available in this entire subject area — because the answer determines whether everything else in the compliance program is load-bearing or belt-and-suspenders.
Because they get conflated, and conflating them produces confident wrong answers:
Meal periods. Labor Code §512(e) and (f) exempt certain employees covered by a qualifying CBA from the meal-period requirements of §512, on their own conditions.
Paid sick leave. The sick leave article contains a construction-industry CBA carve-out with its own criteria at §§245.5 and 246.
Wage Order 16. The construction wage order itself permits a valid agreement to provide otherwise on specific provisions — reporting-time pay among them.
Four different instruments, four different condition sets, four different scopes. An agreement can satisfy one and fail the others. The practical consequence is that intake has to capture per-crew CBA status once, early, and then check it against each provision separately instead of carrying a single mental flag labeled "union."
Which is most employers, including every signatory as to some part of its workforce. The reasonable-steps record is the same one §2699(g)(2) enumerates — periodic payroll audits with action taken in response to the results, lawful written policies, supervisor training on Labor Code and wage order compliance, and corrective action as to supervisors. What those steps buy, and the several things they do not, we have set out in full elsewhere.
The reason to mention that here is a sequencing point rather than a sales one. An employer who is genuinely exempt for a covered population does not need to build that record for that population. An employer who believes it is exempt and is not has skipped the record on the strength of a belief nobody tested. Testing the belief costs one reading of one document, and it should happen before the compliance program is scoped around it.
One reading of one document decides whether everything else in your compliance program is load-bearing, and that reading is your counsel's. Once you have it, the discovery call is where the program gets scoped to the crews it has to cover — bring the classification list. On whether §2699.6 reaches your work, we will not offer a view.