Recently, while recording a podcast, I found myself talking about something I’ve been thinking about for a long time: how much harder HR is than people give it credit for.

We tend to see HR as “soft” compared to the other seats in the C-suite. CFOs, COOs, and CTOs have hard numbers and clear metrics. They work in a world where things are either right or wrong. But HR? HR lives in the gray.

And I’ve come to believe this: HR is more art than science.
That’s exactly what makes it so hard—and so undervalued.  This week’s Friday’s Five, explains why HR is so difficult (and undervalued):

1. HR Operates in the Messy Human World

Accounting and finance are governed by rules and logic. HR deals with human beings, which means emotions, personalities, conflicts, potential, and fear. There’s no formula for managing people. What worked brilliantly with one person may fail with another. It’s more like painting or composing music than solving math equations.

2. Hiring Is One of the Hardest—and Riskiest—Skills

It is widely known that highly experienced leaders are only about 50/50 when it comes to making successful hires. Why? Because interviews are theater. Candidates put forward their best selves, and your job is to see through the performance and predict how they will act under real pressure, on real teams, over real time.

That’s not a science. That’s pattern recognition, intuition, and sometimes luck—the hallmarks of art.

3. HR’s Wins Are Invisible

When HR does its job well, nothing dramatic happens. Culture is stable. People work well together. Turnover stays low. But these wins rarely show up on spreadsheets. Unlike revenue or expenses, you can’t point to a single line item that says “HR succeeded.”

HR’s impact is critical on an organization, but often invisible until it’s gone.

4. Finding the “Obvious” Is an Art

In Obvious Adams by Robert R. Updegraff, Adams becomes legendary not because he’s more analytical than everyone else, but because he sees what others overlook.

As he explains:

“Picking out the obvious thing pre-supposes analysis, and analysis pre-supposes thinking… They don’t gather all the facts and then analyze them before deciding what really is the obvious thing.”

And:

“I never stopped to think in those days whether a thing was obvious or not. I just did what occurred to me naturally after I had thought things over.”

That’s what makes it art.

It looks simple only after he says it — but seeing it requires a cultivated instinct. HR works the same way. The best people decisions rarely come from spreadsheets. They come from the hard, quiet work of observing patterns, understanding human behavior, and having the courage to trust your judgment.

5. HR Shapes the System Everyone Else Operates In

Every other C-suite role relies on having the right people in the right seats. HR creates that system. They build the culture that makes execution possible. They influence the trajectory of every hire, every promotion, every leader.

And yet—because their work is hard to quantify—they often don’t get the credit. They are judged on lagging indicators, which are often not valued until they are missing from the organization.

The Takeaway

We undervalue HR because we expect it to behave like a science, when it’s actually an art.And art is harder.

If you lead in HR—or support those who do—remember: you’re doing one of the hardest jobs in business. Just because it’s hard to measure doesn’t mean it’s not the most important.

And if you want a quick, powerful reminder of how to see the truths others miss, I highly recommend reading Obvious Adams — it’s one of the best short business books I’ve ever read, and I think every business executive should read it.

The City of Long Beach recently passed an ordinance that imposes new staffing and operational requirements on grocery and drug stores using self-service checkout (“SCO”) systems. The law, Ordinance No. ORD-25-0010, was approved on August 21, 2025, and goes into effect September 21, 2025.

For this week’s Friday’s Five, here are the five key points business owners should know and why employers need to understand the dynamics at issue here:

1. Who is Covered?

The ordinance applies to two types of retail establishments operating within the City of Long Beach:

Food Retail Establishments:

The ordinance defines Food Retail Establishments as:

“retail store that is either: (1) over fifteen thousand (15,000) square feet in size and sells primarily household foodstuff for offsite including fresh produce, meats, poultry, fish, deli products, dairy products, canned foods, dry foods, beverages, baked foods and/or prepared foods (other household supplies or products are secondary to the primary purpose of food sales); or (2) over eighty-five thousand (85,000) square feet and with ten percent (10%) of their sales floor area dedicated to the sale of non-taxable merchandise including the sale of fresh produce, meats, poultry, fish, deli products, dairy products, canned foods, dry foods, beverages, baked foods and/or prepared foods.”

Drug Retail Establishments:

The ordinance defines Drug Retail Establishments as:

“retail store that sells a variety of prescription and nonprescription medicines and miscellaneous items, including drugs, pharmaceuticals, sundries, fresh produce, meats, poultry, fish, deli products, dairy products, canned foods, dry foods, beverages, prepared foods, and other merchandise.”

2. Checkout Requirements

  • If SCO stations are available, the store must also have at least one traditional staffed checkout station open at the same time.
  • SCO shall limit sales (and advertise this) to 15 items or fewer.
  • Certain items cannot be sold through SCO:
    • Alcohol and tobacco (anything requiring ID).
    • Items with theft-deterrent devices (tags, locked cases).

3. Staffing Ratios

The ordinance establishes strict staffing rules:

  • At least one dedicated employee must supervise SCO stations whenever they are in operation.
  • If more than one SCO station is open, the store must maintain a 1:3 ratio (one employee for every three SCO stations).
  • Supervising employees may not be assigned other tasks that interfere with SCO monitoring.

4. Enforcement and Penalties

  • Private right of action: Customers and employees can sue for violations.
  • Penalties start at $100 per employee, per day, escalating by $100 each day until cured, up to $1,000 per employee, per day.
  • Prevailing plaintiffs can also recover attorneys’ fees and costs.
  • The ordinance prohibits retaliation against employees who exercise their rights under this law.

5. Effective Date

The ordinance was adopted by the Long Beach City Council on August 12, 2025, approved by the Mayor on August 21, 2025, and becomes effective September 21, 2025.

My Take: A Dangerous Path for Regulating Automation

While the ordinance is framed as a measure to reduce retail theft and protect workers, it sets a troubling precedent. By mandating staffing ratios and limiting how self-checkouts may be used, the City of Long Beach is effectively regulating automation out of existence in grocery and drug retail stores.

This is dangerous for three reasons:

  1. Competitive Disadvantage: Other cities and states allow businesses to adopt new technologies to stay competitive. By imposing labor mandates on technology, Long Beach is tying the hands of local businesses while competitors in neighboring jurisdictions can modernize more freely.
  2. Policy Overreach: Instead of targeting criminal activity directly, the ordinance burdens employers with staffing requirements and liability exposure. The risk is that this type of regulation spreads to other municipalities or industries, making it harder for businesses to innovate and control costs. 
  3. May Create Additional Legal Obligations for The City: If businesses comply with these regulations but the City fails to provide adequate police presence to protect employees and property, employers may argue the City has created a legal burden for itself. Because the ordinance is explicitly tied to public safety and theft prevention, a lack of sufficient law enforcement could be framed as bad faith regulation or an unreasonable regulatory scheme, raising broader legal challenges. 

Employers should pay close attention—not only to compliance with this ordinance but also to the larger policy trend it represents.  While this ordinance currently targets grocery and drug stores, it sets a precedent for how local governments may regulate the use of automation more broadly. If this approach spreads, employers in retail, hospitality, manufacturing, and beyond could face similar mandates that drive up costs and restrict their ability to innovate.

This past week, we hosted the Prosper Forum in Amelia Island, Florida. The gathering brought together leaders from across the hospitality industry to share not only strategy and insight, but also wisdom about what it truly means to lead.

A handful of short quotes from the speakers stuck with me. They may sound simple at first, but each carries a depth that every leader—whether in hospitality, law, or any industry—can learn from.

1. “Actions speak louder than words.” – Greg Creed

It’s a cliché, but one that endures because it’s true. Teams don’t follow lofty mission statements or corporate slogans—they follow what leaders do day in and day out.

When a leader takes responsibility, shows respect, and demonstrates consistency, those actions cascade throughout the organization. On the other hand, when there’s a disconnect between what leaders say and what they do, the credibility gap grows fast. The Prosper Forum was a reminder that leadership is never abstract—it’s lived in the small, daily behaviors that set the tone for everyone else.

2. “Do the job that no one else wants to do.” – Greg Creed

This lesson resonates across industries. Leadership is often portrayed as glamorous—big speeches, important meetings, bold strategy. But the reality is that the best leaders are willing to step into the unglamorous tasks too.

When leaders roll up their sleeves—whether it’s cleaning up a mess, tackling a complex compliance issue, or handling a difficult conversation—they send a message: “I’m not above the hard work. I’m with you in it.” That kind of humility builds loyalty and trust, because teams see that leadership isn’t just about giving direction, but also about being part of the grind.

3. “Embrace the detour.” – Greg Creed

Life and business rarely unfold in straight lines. Detours can be frustrating, but they often carry hidden opportunities.

A detour might force a team to slow down and see problems differently. It might lead to a new innovation or a stronger bond among colleagues. Leaders who embrace the detour cultivate resilience—not only in themselves but in their organizations. They show that setbacks are not roadblocks, but stepping stones.

4. “As a high-level executive, your decisions are 50/50.” – Christine Barone, CEO of Dutch Bros

This was one of the most powerful lessons reinforced at the Forum that Christine mention during a panel discussion in the general session.  Then, during a webinar I was hosting from the Forum, two stories brought it to life even more for me:

Reggie Stover shared a memory from his time in the Army. While in training, his squad was ambushed. In that moment, he froze. Afterward, his general asked him what he had done wrong. Reggie admitted he had made no decision at all. The general explained that the problem wasn’t whether the decision was “right” or “wrong”—it was that he hadn’t moved forward. Leaders must make decisions, even with imperfect information. Standing still is the greater risk.

Josh Halpern, CEO of Big Chicken, echoed this lesson with a story from earlier in his career. He was tasked with choosing between two advertising agencies. Torn between the options, he asked his boss which one he should hire. His boss replied, “If I had to make the decision, I wouldn’t need you.” Josh made the call, it worked out, and later he asked which agency his boss would have chosen. The boss laughed and admitted he would have gone with the other one. The point? Leadership isn’t about finding the perfect choice—it’s about owning the decision and leading forward.

Both stories drive home that high-level leadership is about decisiveness. In reality, most executive decisions are 50/50. The key is to make the call, own it, and keep moving.

5. “So goes the leader, so goes the rest.”  – Christine Baone & “Organizations can forget how to win.” – G.J. Hart, Former CEO of Red Robin

These two insights from Christine and G.J. go hand in hand.

Leaders set the tone—if they’re energized, committed, and resilient, their teams will be too. But if they are burned out or disengaged, the organization will reflect that. At the same time, companies can lose their edge when they drift from the fundamentals of discipline, execution, and celebrating wins.

Leaders have to guard against complacency, continually reminding their teams what “winning” looks like. And they must embody the mindset they want to see: sharp, hungry, focused, and optimistic.

Closing Thought

The Prosper Forum was a powerful reminder that leadership isn’t about theory—it’s about practice. These lessons are deceptively simple: lead with action, humility, resilience, decisiveness, and a contagious example. But simple doesn’t mean easy.

As I left Amelia Island, I kept coming back to one thought: the best leaders aren’t the ones with all the answers. They’re the ones who keep moving forward, bringing their teams with them, and teaching organizations how to win again and again.

Over the summer, I like to expand my reading list into different topics. This year I discovered Rory Sutherland and his book Alchemy: The Power of Ideas That Don’t Make Sense. Sutherland is a British marketing executive and vice chairman of Ogilvy, but his insights go far beyond advertising. His book weaves together ideas from economics, psychology, evolutionary biology, and philosophy. It’s packed with practical wisdom for personal growth as well as for running and marketing a business.

While the book is full of insights on nearly every page, here are five key takeaways that I found especially relevant for employers and business leaders.

1. “If you are wholly predictable, people learn to hack you.”

Sutherland argues that the best ideas often come from unexpected places. He urges readers not to rely solely on logic, but also to leave room for chance, counterintuitive thinking, and the quirks of human psychology.

One of his fascinating examples comes from bee colonies: roughly 20% of bees ignore the “waggle dance” instructions that tell them where to find pollen. Instead, they set off in random directions, often discovering new sources of food. Without these “adventurer bees”—which I like to think of as modern venture capitalists—the hive would eventually fail once its known sources ran dry.

Takeaway: There’s risk mitigation in being unpredictable. Businesses benefit when they experiment, explore new opportunities, and avoid becoming entirely predictable.

2. Psycho-logic

Sutherland introduces the idea of “psycho-logic”:

“Logic is what makes a successful engineer or mathematician, but psycho-logic is what has made us a successful breed of monkey, that has survived and flourished over time. This alternative logic emerges from a parallel operating system within the human mind, which often operates unconsciously, and is far more powerful and pervasive than you realize. Rather like gravity, it is a force that nobody noticed until someone put a name to it.”

He points out that strict logic always leads to the same place as your competitors. The problem is that business often underestimates—and even ignores—the role of psychology in determining whether a product or service succeeds.

Takeaway: Employers and business leaders should remember that psychology, not just logic, drives customer and employee behavior.

3. Rethinking Hiring

Sutherland makes an important observation:

“[W]e are much more likely to take risks when hiring ten people than when hiring one.”

This, he argues, can naturally lead to more diversity without imposing quotas. He even says he’d interview a candidate with a “rotten” degree if that person were also the reigning under-25 UK backgammon champion. Why? Because unusual achievements signal qualities you won’t uncover by applying identical hiring criteria across the board.

Takeaway: Be wary of hiring averages. Standardized criteria produce standardized hires. Employers who take calculated risks in hiring can uncover exceptional and unexpected talent.

4. Two Types of Businesses

Sutherland describes two business models:

  1. The tourist restaurant approach – focused on maximizing profit from a single transaction.
  2. The local pub approach – focused on cultivating long-term relationships and repeat visits.

The latter model is built on trust. For example, businesses that resolve customer problems at their own expense demonstrate they are invested in long-term relationships. On the other hand, businesses that squeeze for short-term profits often come across as untrustworthy.

Takeaway: Employers should ask themselves whether they’re building for one-time transactions—or building for loyalty.

5. Why Branding Matters

Sutherland explains:

“Without the feedback loop made possible by distinctive and distinguishable petals or brands, nothing can improve.”

His example comes from Soviet factories, which were once required to produce a quota of rivets each month. Since the rivets couldn’t be stamped with the factory’s name, no one could tell which factories were producing poor-quality rivets. Over time, the incentive to care about quality disappeared – and the factories found it was easier to hit monthly quotas of rivets of poor-quality. Without names, the rivets became commodities. Once factories were required to stamp their names on the rivets, quality improved dramatically.

Takeaway: Branding provides accountability, feedback, and differentiation. Without it, quality suffers and products become commodities.

Alchemy is filled with unconventional wisdom that challenges the way we think about business and human behavior. These five lessons only scratch the surface, but they highlight the importance of embracing unpredictability, understanding psychology, taking smart risks in hiring, building long-term trust, and valuing the power of branding.

For employers, Sutherland’s message is clear: the best solutions often don’t make sense at first glance—but that’s exactly what makes them powerful.

The recent California Court of Appeal decision in Allison v. Dignity Health (June 24, 2025), involving claims over meal and rest breaks, is a reminder that class certification in wage and hour cases is not the end of the story. Even after a class is certified, it can still be decertified if evidence shows that individual issues outweigh common ones. Here are five lessons California employers should take from this important case.

1. Class Certification Is Not Set in Stone

In Allison, two registered nurses sued Dignity Health alleging missed meal and rest breaks, unpaid work time, and related claims. The trial court initially certified the class based largely on time records and a survey showing a high rate of meal-period noncompliance.

But after 19 months of discovery, the employer successfully moved to decertify the class. The Court of Appeal affirmed the decertification, showing that certification can be revisited—and reversed—if new evidence reveals that common proof won’t work for the whole group.

2. Post-Certification Discovery Can Change the Case

What led to decertification? Discovery revealed significant variations in employee experiences:

  • Some nurses voluntarily skipped or shortened breaks.
  • Timesheet entries were inconsistent and sometimes inaccurate.
  • Many employees testified that they were able to take compliant breaks.

These differences meant that the court would have to assess individual reasons for missed breaks—making a class action unmanageable. Employers should understand that thorough discovery can uncover facts that undermine the “commonality” element required for class claims.

3. Time Records Alone Are Not Enough

The plaintiffs relied heavily on time records and an expert survey to prove widespread violations. The Court of Appeal emphasized that these data sources were not conclusive:

  • Time entries can reflect voluntary choices rather than employer-caused violations.
  • Statistical surveys can be challenged for accuracy, methodology, and reliability.

The Court explained: “In Donohue, the Supreme Court held that a rebuttable presumption of liability arises when an employer’s time records show employees suffered noncompliant meal periods…. [But] it does not result in ‘automatic liability’ for employers.”

4. Employee Declarations Can Make or Break the Case

The court emphasized that testimony from employees themselves could rebut the presumption of liability. As the opinion explained:

“None of plaintiffs’ authorities bar the use of anecdotal testimony to rebut the presumption of liability….Pointing to class members’ conflicting deposition testimony, Dignity argued ‘class member testimony show[ed] wide variation of relevant experiences’ regarding meal period compliance and premium requests. For example, one RN testified that she ‘sometimes chose not to request premiums’; another testified he may have clocked in early from lunch on occasion because he ‘lost track of time’; and another RN stated she did not take a meal period on days when she wanted to go home sooner. In sum, Dignity argued ‘[n]early all of [the deponents] agreed their records were not entirely reliable indicators of when breaks were missed, late, or short because they sometimes chose to skip, shorten, or delay a meal period, or because they simply made mistakes.’”

5. The Decision Affirms Employer’s Defenses to Class Certification and Offers Guidance for PAGA Cases

The Allison decision confirms that employers can—and should—seek decertification when discovery shows that individual issues predominate. This is particularly relevant in:

  • Industries with variable work patterns (healthcare, hospitality, retail, etc.),
  • Cases relying heavily on time records without context,
  • Situations where employee choice plays a role in break practices.

While Allison itself was not a PAGA case, its reasoning also provides a roadmap for employers facing PAGA claims, since courts are increasingly scrutinizing manageability when individualized issues predominate.  By proactively documenting break compliance, training supervisors, and preserving favorable employee testimony, employers can create the evidence needed to challenge certification.

Final Thoughts

Allison v. Dignity Health is a timely reminder that wage and hour class actions cannot simply be determined based on a review of time records.  Courts will look closely at whether the plaintiff’s theory can truly be proven with common evidence—or if individual differences make a class unmanageable.

For California employers, the takeaway is clear: invest in compliance now, ensure accurate employment policies, train supervisors on wage and hour compliance, and don’t hesitate to revisit class certification if the facts support it. Allison also underscores the value of conducting robust discovery and developing evidence that highlights employee choice and variation — tools that can be decisive in defeating class certification.

Mediation is all about finding common ground. As I discussed in my prior article, Mediation in Litigation: Five Key Tips for Success, employers can approach mediation far more effectively when they understand not only what mediation is, but also the tools that may be used during the process. One of the most common — and often misunderstood — tools is called bracketing. This week’s Friday’s Five covers what bracketing is, why it’s used, and five key points for negotiating effectively with it.

1. What Bracketing Is (and Why It Matters)

Bracketing is when one party proposes a range of settlement numbers rather than a single offer.

Example: Instead of saying:

“We’ll offer $75,000,”

A party might say:

“We’ll move to a bracket of $50,000 to $150,000.”

The range itself is important, but often the midpoint is what the other side focuses on. For example, if you propose a bracket of $100,000–$200,000, the midpoint ($150,000) might be interpreted as the settlement zone you are signaling—whether you mean to send that message or not.

Bracketing can change the tone of the negotiation. Instead of fighting over whether the next offer should be $90,000 or $95,000, a bracket reframes the discussion to “are we negotiating in this general range?” That shift can open the door to resolution.

2. Why Mediators Use Bracketing

Mediators often suggest bracketing when the parties are far apart and traditional back-and-forth offers aren’t making progress. Common reasons include:

  • Signaling flexibility without commitment: Bracketing lets a party suggest a broader settlement zone without moving all the way to a specific number.
  • Resetting unrealistic expectations: If one side is anchored to an extreme number, a bracket can re-center the conversation toward a more reasonable range.
  • Testing the waters: Sometimes a mediator uses brackets to see if there’s overlap between what the parties might accept without forcing either side to commit yet.

By shifting from fixed offers to a flexible range, mediators can reduce tension and focus the discussion on zones of potential agreement rather than positional bargaining.

3. Strategies for Using Bracketing Effectively

If you decide to bracket, you need a plan. Here are some ways to use it to your advantage:

  • Control the midpoint narrative: Even though mediators sometimes say “don’t read too much into the midpoint,” experienced negotiators know that’s often exactly what the other side will do. Offer ranges that have a midpoint you can live with.
    • Example: If you want to settle around $125,000, offering a bracket of $100,000–$150,000 can steer discussions toward that zone.
  • Use bracketing to reset expectations: If negotiations are stuck in small moves, proposing a range can disrupt the “inch-by-inch” stalemate and invite more meaningful movement.
  • Make it conditional: To avoid giving away too much, you can make your bracket contingent on the other side offering their own bracket.
    • Example: “We’ll bracket at $80,000–$120,000 if you’ll come in at $100,000–$140,000.”
  • Communicate clearly with the mediator: Make sure they understand whether your bracket is a firm settlement zone or simply a testing range. Without clear communication, the mediator may present your bracket with more flexibility—or more rigidity—than you intend.

4. What to Watch Out For

While bracketing can be useful, it carries risks if not handled carefully:

  • Revealing your bottom line: If your bracket’s midpoint is close to your true walk-away number, you may tip your hand too early.
  • Perception of weakness: Offering a range that makes large concessions can signal desperation and invite the other side to push for even more.
  • Misinterpretation: Without clear framing, your bracket could be taken as your actual settlement zone, even if it was meant as a discussion tool.

Think ahead: if the midpoint becomes the focal point, are you prepared to defend or move from it?

5. When to Decline to Bracket

You’re never required to use bracketing just because a mediator suggests it. Situations where you might decline include:

  1. You’re near your last, best, and final offer. Bracketing could pressure you into revealing a range you’re not comfortable with.
  2. The facts or liability issues are still unsettled. If there’s a major dispute over legal or factual issues, negotiating numbers through a bracket may be premature.
  3. The other side is fishing for your number. If they won’t reciprocate with their own bracket, you may be giving away strategic information for free.
  4. The midpoint doesn’t work for you. If the mediator is pushing a midpoint that’s outside your acceptable range, it’s okay to walk away from the bracket discussion.

Final Thought

Bracketing can be a powerful settlement tool when it’s used strategically. The key is preparation:

  • Know your real settlement range before you start.
  • Work closely with your attorney to frame brackets that advance your position.
  • Understand that the midpoint will often be interpreted as your target—so choose carefully.

And remember: just because bracketing is offered doesn’t mean you have to use it. Only bracket when it serves your negotiation goals.

In a July 2025 decision, the California Court of Appeal for the Fifth Appellate District ruled that so-called “headless PAGA” lawsuits are allowed—actions in which a plaintiff drops their own Labor Code claims but continues to pursue penalties on behalf of other employees under the Private Attorneys General Act (PAGA). This holding, in CRST Expedited v. Superior Court, intensifies an existing split among California appellate courts and sets up a definitive ruling by the California Supreme Court in Leeper v. Shipt, Inc.

Here are five things California employers should know about this growing legal divide and its implications:

1. What Is a “Headless” PAGA Case?

A “headless PAGA” case refers to a situation where a PAGA plaintiff disclaims or dismisses their individual claims—typically to avoid arbitration pursuant to an agreement to arbitrate all employment issues—and instead continues only with representative claims on behalf of other allegedly aggrieved employees. These plaintiffs argue that they may proceed solely as proxies for the State of California to enforce the Labor Code, even if they no longer pursue any relief for themselves.

This procedural strategy aims to bypass arbitration agreements that contain a class action waiver and require the plaintiff to arbitrate their individual claims prior to being a representative in a PAGA case.  These arbitration agreements have been upheld by the US Supreme Court in Viking River Cruises v. Moriana. 

2. CRST Expedited v. Superior Court: The Fifth District Approves Headless PAGA Claims

In CRST Expedited, the plaintiff initially asserted both individual and representative PAGA claims. After the court compelled the individual portion to arbitration, the plaintiff voluntarily dismissed those claims and proceeded in court with the representative portion alone—thus rendering the case “headless.”

The employer argued this stripped the plaintiff of standing. The appellate court disagreed, finding that the statutory phrase allowing an aggrieved employee to bring a civil action “on behalf of himself or herself and other employees” was ambiguous. The court reasoned that the word “may” is permissive, and to promote PAGA’s core purpose of Labor Code enforcement, the word “and” could reasonably be read as “and/or.”

In short: the Fifth District held that plaintiffs may bring representative PAGA claims even after discarding their own, at least under the version of PAGA in effect before the July 1, 2024 amendments.

3. Leeper v. Shipt, Inc.: The Second District Says “No” to Headless PAGA

In a prior case, the Second District Court of Appeal reached the opposite conclusion in Leeper v. Shipt, Inc., holding that every PAGA action inherently includes both individual and non-individual claims. According to Leeper, a plaintiff cannot surgically remove their own claim to avoid arbitration and still retain standing to prosecute claims on behalf of others.

The court emphasized that under the ordinary reading of the statute, the phrase “on behalf of himself or herself and other employees” requires inclusion of both types of claims. It argued that allowing purely representative (headless) actions rewrites the statute and undermines legislative intent.

4. The California Supreme Court Will Decide: Leeper Now Under Review

On April 16, 2025, the California Supreme Court granted review in Leeper, even though neither party petitioned for it. This rare move reflects the urgency and importance of resolving this issue, which is also been addressed in Williams v. Alacrity Solutions Group, which is also under review pending Leeper.

The Court has asked the parties to address two key questions:

  1. Does every PAGA action necessarily include both individual and non-individual PAGA claims, regardless of whether the complaint expressly alleges them?
  2. Can a plaintiff choose to bring only a non-individual PAGA action?

Employers across California should closely watch for this decision, which could significantly reshape how PAGA claims are structured and litigated.

5. Key Takeaways and Employer Action Items

While the legal landscape remains uncertain, California employers should:

  • Review arbitration agreements carefully. Language and structure still matter—and may determine how courts handle bifurcated claims.
  • Proactively audit wage-and-hour practices. The best defense to PAGA claims remains full compliance and routine audits and training to potentially cap PAGA penalties at 15%. Learn more about how employers can reduce their liability by routine audits in our prior article here.
  • Track the Leeper and CRST developments closely.
  • Consider the cost of delay and dual-forum litigation.
  • Consult experienced employment counsel to tailor strategies to this shifting environment.

Final Thoughts

The CRST Expedited ruling and the issue of headless PAGA cases will impact California’s PAGA landscape. With the California Supreme Court set to resolve the issue in Leeper, now is the time for employers to audit their arbitration agreements, examine potential PAGA exposure, and stay informed.

Need help reviewing your policies or responding to a PAGA notice? Our team is actively helping clients defend PAGA claims as well as advising on proactive steps to mitigate PAGA exposure. 

In today’s employment climate, workforce scheduling isn’t just an operational issue—it’s a legal one. With increasing scrutiny over wage and hour practices, California employers must understand the boundaries when it comes to scheduling flexibility. While California has not adopted “predictive scheduling” mandates on a statewide level, that doesn’t mean employers are in the clear. Local ordinances, case law, and existing Wage Order obligations all come into play.

Here are five key scheduling considerations that sophisticated employers in California must understand:

1. No Statewide Predictive Scheduling—Yet

There is currently no state-level law requiring predictive scheduling in California. However, that hasn’t stopped individual municipalities from stepping in.

Local Ordinances to Watch:
Los Angeles’ Fair Work Week Ordinance mandates that certain retail employers provide 14 days’ advance notice of schedules and penalizes last-minute changes. Other jurisdictions, like San Francisco and Emeryville, have enacted similar rules for specific industries.

Legislative Landscape:
The California Legislature regularly considers predictive scheduling proposals—SB 878 (2016) being one of the more ambitious attempts. It would have required 28 days’ advance scheduling for retail, grocery, and restaurant workers. While no such bill has become law as of 2025, employers should expect continued efforts in this area.

Key Takeaway:
Even in the absence of a statewide mandate, California employers should proactively monitor local developments and consider adopting consistent scheduling practices across jurisdictions to mitigate risk.

2. Reporting Time Pay Obligations Remain a Trap for the Unwary

Under California’s Wage Orders, “reporting time pay” rules create de facto scheduling obligations.

Basic Rule:
If an employee reports to work but is not provided at least half of their usual or scheduled day’s work, they must be paid for at least half the day—no fewer than two hours and no more than four—at their regular rate (not below minimum wage).

Second Reporting Rule:
If the employee is asked to return later that same day and receives less than two hours of work during the second shift, the employer must pay two hours at the regular rate.

Best Practice:
Avoid scheduling practices that result in employees being sent home early unless you’re prepared to pay for their time. Review timekeeping systems and scheduling workflows to ensure compliance.

3. Mandatory Meetings and On-Call Calls May Trigger Reporting Time Pay

Several recent cases have expanded what it means to “report for work,” with serious implications for on-call practices and short-notice meeting requests.

Court Guidance:

  • Ward v. Tilly’s, Inc.: Requiring employees to call two hours before a potential shift was deemed a form of “reporting,” triggering reporting time pay.
  • Price v. Starbucks: Calling employees into work on a non-scheduled day, even for a short meeting, can obligate employers to provide two to four hours of pay depending on the employee’s usual shift.
  • Aleman v. AirTouch: No reporting pay is required when employees are scheduled for two hours or less and work at least half of that time.

Key Insight:
Employers relying on on-call scheduling or last-minute meeting attendance must review their practices to ensure they’re not inadvertently creating reporting time pay liabilities.

4. Split Shifts: Small Oversight, Big Risk

California’s Wage Orders define a split shift as a schedule interrupted by unpaid, employer-mandated breaks (excluding bona fide meal or rest breaks). These arrangements can trigger additional compensation requirements.

Split Shift Premium:
Employees must be paid one extra hour at the state (or local) minimum wage rate. However, if the employee earns enough over minimum wage, this can offset the premium.

Example:
An employee earning $10/hour works two separate shifts totaling 8 hours in one day. As an example, if the applicable minimum wage is $8/hour, the $16 in “excess wages” earned over minimum wage offsets the split shift premium.

Compliance Tip:
Review shift structures in retail, hospitality, and food service operations, which often use staggered schedules. Even if you’re paying above minimum wage, it’s critical to document how those wages are calculated to offset the premium.

5. On-Call and Travel Time: Control Is the Key Metric

Time spent on-call or traveling may be compensable—even if no actual work is performed—if the employee is under the employer’s control.

Critical Cases:

  • Mendiola v. CPS Security Solutions, Inc.: Security guards required to stay overnight in trailers were entitled to pay for all hours on call, including sleep time.
  • Morillion v. Royal Packing Co.: Agricultural workers required to ride employer-provided buses were entitled to compensation for the travel time.

Strategic Consideration:
If your employees are subject to mandatory check-ins, required to remain on premises or use company-provided transportation, their “non-working” time may still be compensable. Review on-call policies and travel logistics to ensure proper wage payments.

Final Thoughts

In a state with aggressive wage and hour enforcement and a high volume of class and PAGA actions, employers must treat scheduling as a compliance priority. While predictive scheduling isn’t law statewide, the legal framework already imposes several indirect but significant scheduling obligations through reporting time pay, split shift premiums, and case law.

Proactive audits, strong documentation, and clear policies are your best defense. Make sure your legal and HR teams are aligned—and stay alert to the legislative horizon.

The financial strain caused by federal taxes on tips and overtime pay has long been a burden for service workers and the employers who support them. In a historic bipartisan move, the “One Big Beautiful Bill” has been signed into law, delivering on promises to eliminate federal income tax on tips and overtime.

Zaller Law Group and TipHaus are proud to have supported this effort, advocating for legislation that directly improves the lives of millions of American workers and strengthens the hospitality industry. Here’s what you need to know:

1. A Landmark Win for Workers — and Bipartisan Cooperation

The “No Tax on Tips and Overtime” policy had rare bipartisan momentum:

  • Donald Trump, who made it a campaign pledge.
  • Kamala Harris, who voiced strong support during her own run.
  • President Biden, whose administration confirmed he would sign the legislation if passed.

On Friday, July 5, 2025, the bill was officially signed into law. This is a transformative moment for the hospitality sector, acknowledging the critical role that tipped and overtime-reliant workers play in the U.S. economy.

2. What’s in the Law: How the Deductions Work

 No Tax on Tips

  • Workers can now deduct up to $25,000 in tip income above the line on their federal return.
  • Applies to tips that are voluntarily paid — not mandatory service charges.
  • Available from tax years 2025 through 2028.
  • Phases out for individuals earning more than $150,000 (or $300,000 for couples).

 No Tax on Overtime

  • Deduction of up to $12,500 per individual, or $25,000 for couples filing jointly.
  • Only applies to FLSA-defined overtime — not state-only or contractual OT. Therefore, California’s daily overtime earned for work over eight hours in one day would not be eligible for this tax benefit.
  • Follows the same income and time limits as the tips provision.

While state/local taxes and payroll taxes still apply, the federal income tax relief is estimated to save workers thousands annually.

3. Implementation Still in Progress

The IRS and Treasury Department will now begin the process of writing the rules that guide:

  • Which jobs and positions are eligible.
  • How tips and OT must be reported.
  • What counts as a qualified tip or overtime payment under the law.

Employers should be ready to adapt their payroll and reporting systems — and expect further clarification in the coming months.

4. Zaller Law and TipHaus: Supporting the Hospitality Industry

From the beginning, Zaller Law Group and TipHaus have been strong advocates for tax policy that reflects the reality of working in the service sector and are proud to have submitted over 4,000 signatures in support for the no tax on tips and overtime bill. This win represents:

  • A culmination of months of engagement with stakeholders and policy leaders.
  • Continued legal and payroll support for restaurant operators and hospitality employers.
  • A clear opportunity to retain staff, reduce turnover, and attract top talent through a more financially rewarding work environment.

We’re proud to have helped shape the conversation and push for smart reforms.

5.  What’s Next for Employers

While the law offers much-needed relief, it also brings new considerations:

  • Reworking W-2 classifications to reflect tip/overtime separation.
  • Determining which staff fall within the qualified categories.
  • Preparing documentation to support employees who take the new deductions.

As new rules emerge, Zaller Law Group will continue to advise employers on compliance, risk management, and payroll readiness. And TipHaus remains committed to giving operators the tools to track and report tip earnings with clarity and precision.

A Win for Workers, A Boost for Business

The “No Tax on Tips and Overtime” law is not just a political victory — it’s a practical one. It makes the hospitality industry more competitive, puts more money in workers’ pockets, and reflects long-overdue recognition of how these jobs power our economy.

Zaller Law Group and TipHaus will continue to champion forward-thinking solutions that support employers and elevate the employee experience in hospitality.

We would like to thank the over 4,000 people and businesses who signed our petition to support this effort. Your voices helped drive this important change, and we’re honored to have worked alongside you to make it happen.

I have published this post since 2015 (I cannot believe this year marks a decade of publishing this article) recognizing the Fourth of July. This is one of my favorite holidays.  Hopefully I’ll be able to keep publishing it for many years to come.  Wishing you a great Fourth, and hope you have some time to put aside your work for a bit and enjoy some time with your family.  Happy Fourth of July!

Five things I’m thankful for this Fourth of July:

1.     For the great risk and sacrifice our Founding Fathers took to establish the country. 

When learning about the Founding Fathers in high school history class I did not have a perspective about the risks the Founders took in establishing the country.  Only now that I have a business, a family, and am relatively successful, can I realize the huge risks the Founders took.  By all means, they were the establishment, the elite of the American society, and if anyone had an interest in preserving the status quo, it was them.  Their sacrifices of life (theirs and their family members) and their fortunes helped build the foundation we benefit from today.

2.     The ability to speak freely and practice (or not practice) any religion I want.

It is great being able to freely speak your mind and believe in whatever you want.  It is also great be free to practice (or not) any religion you want.  We live in a very tolerant society, and it is even better when the government is not telling you how to live your life.  It is important to remember that throughout history, this is the exception for how a government normally behaves.

3.     Our Country’s ability to attract creative people.

Creative and productive people want to practice their trade where the government will basically leave them alone and provide a good environment to protect their gains derived from their hard effort (see item #5 below).  The U.S. provides this environment, and that is why so many people come to the U.S. to create a business or to practice their trade.  It is also important to recognize how lucky we are to be in the U.S.

4.     My right to practice any profession and access unlimited resources to learn required skills.

No one is dictating what students need to be after they graduate high school or college.  Everyone is free to pursue their interest, and the market decides the value of the effort.  With basically any information freely available on the Internet, anyone can learn almost any skill, and like no other time in human history individuals have an almost free method to sell their services or products over the Internet.  In your mid-40’s and want to make a career change?  Perfect, and you don’t even need to go back to school as the information is freely available on the Internet.  Didn’t finish college and are 20 years old with an idea?  Perfect.  Venture capitalists don’t care about your pedigree, they are only interested if you work hard and don’t give up.

5.     Our legal system.

Yes, it sounds trite.  But while I don’t think our legal system is perfect by any means, it is the best system established in the history of mankind.  Everyone living in the U.S. presently is very lucky to have this benefit.  It is a foundation for many of the items I mentioned above.  Because people have a good basis for predicting the outcomes of their actions, such as being able to retain property legally obtained, and knowing if someone breaches a contract there will be repercussions, it creates an environment that attracts hard effort and the best talent from around the world.  This is why the U.S. has been the leader in ideas and new businesses.  However, just because the system is established does not mean our work is done.  We have to be vigilant not to lose the fairness, reasonableness, and lack of corruption in the legal system.

Happy Fourth of July!