A new client of mine opened for business in California less than a week ago. Fifty employees, good intentions, and a genuine desire to get it right from day one. Before a single paycheck went out, the company received two letters from an enterprising plaintiffs’ firm demanding personnel files because the employees “may have claims” against it.
Really? Not a wage complaint. Not a workplace incident. A demand for records before anyone had even been paid.
Frustrating? Yes. Surprising? Not if you’ve been watching the data.
Unfortunately for CA employers, this feels like the new baseline. We’re at the midpoint of 2026, and the numbers so far are tracking right in line with the last several years, which is exactly the problem. California’s litigation environment for employers hasn’t spiked; it’s simply stayed elevated, year after year, regardless of reform efforts.
• PAGA notices hit a record 10,098 in 2025, the highest total since the statute was enacted in 2004, and that’s after the widely touted 2024 reforms that were supposed to ease the burden on employers.
• Federal employment litigation set a national record in 2025, with 26,635 cases filed in federal courts. The Central District of California was the single busiest venue in the country, handling 5.6% of all employment cases nationwide.
• Small employers aren’t spared. Roughly 37% of businesses with fewer than 50 employees were hit with an employee lawsuit in 2024, with discrimination claims making up nearly half of those.
None of this means the new client did anything wrong. It means that in California, “we just started” is not a shield, it’s often a target. Plaintiffs’ firms know that brand-new employers haven’t had time to build out handbooks, train managers, or paper their files, which makes early demand letters a low-risk, high-reward move for the sender.
The lesson isn’t to panic. It’s to treat compliance infrastructure, classification decisions, handbooks, meal and rest break policies, personnel file practices, as day-one priorities, not cleanup projects. The data makes clear that the letters will come whether or not you’re ready for them. The only variable you control is how ready you are to defend.