What to Expect
Q: What does the audit process actually look like, and how disruptive is it to my operations?
The audit is entirely behind the scenes and has zero impact on your daily operations. We work from payroll exports, timekeeping reports, and org structure documents that your payroll administrator can typically pull in under an hour. There are no employee interviews, no on-site visits, and no disruption to patient care or business workflow.
Once we receive your data, we complete the exposure analysis within approximately 10 business days and present findings in a confidential executive session. From there, the remediation phase — things like timeclock reconfigurations and payroll protocol updates — is implemented in coordination with your existing managers and vendors, not around them.
Q: We have an HR manager and use a major payroll platform. Why would we need an outside audit?
This is one of the most common situations we encounter — and often where we find the most significant exposure.
Payroll platforms like ADP and Paychex are excellent at processing what they are told to process. They do not audit whether your break policies are being followed, whether your hygienists' paystubs include the required rest period line items under AB 1513, or whether your time clock settings are inadvertently allowing short lunches that trigger derivative penalties.
Likewise, most HR managers are generalists with broad responsibilities. California's wage and hour framework — particularly the derivative penalty structure under Labor Code §§ 203 and 226 — is a specialized area that many HR professionals encounter only after a claim is filed.
Our audits are not a referendum on your team's competence. They are a forensic review of the specific, often technical compliance gaps that payroll software and general HR oversight are simply not designed to catch.
Q: What if the audit uncovers significant violations? Are we required to report them or take action?
No. The audit is a confidential internal risk assessment, and you are not legally required to report findings to any government agency. What you do with the results is entirely within your control.
As a licensed California attorney, I can structure your engagement in a way that supports an attorney-client privilege framework over the audit findings. This means the report and our communications may be protectable from disclosure in future litigation or agency proceedings — a layer of protection that a standard HR consultant or payroll auditor simply cannot offer.
We recommend discussing the privilege structure during your initial consultation so the engagement is set up correctly from the start. Privilege is significantly easier to establish at the outset than to assert after the fact.
That said, there are compelling practical reasons to act on material findings quickly. Under California's 2024 PAGA reforms, employers who proactively audit, implement corrective systems, and issue targeted backpay before a PAGA notice is filed can significantly reduce or eliminate civil penalties. The window to take advantage of those protections closes the moment a notice arrives.
Knowing your exposure and doing nothing is the highest-risk posture of all.
Q: How do I know if the cost of an audit is worth it for my business?
The short answer: if you have non-exempt employees in California, the audit almost always pays for itself.
Here is the math. Our audits start at $4,500. The average California wage and hour claim — before attorney fees — settles for $40,000 to $120,000. A representative PAGA action involving a multi-location business with 30 employees and two years of meal break violations can easily model to $300,000 or more in statutory penalties alone, before a single attorney has billed an hour.
More specifically, the businesses we audit most often have no idea that 85% of their exposure is not in unpaid wages but in the derivative penalties stacked on top of them. A $50,000 unpaid premium problem is manageable. The same problem left unaddressed for 18 months, with terminations along the way, can reach $500,000 in total modeled exposure.
The audit tells you exactly where you stand. That clarity — knowing your actual number — is valuable regardless of what you decide to do next.
Q: Once we complete an audit and fix the issues, are we protected going forward?
Completing an audit and implementing corrective measures significantly reduces your exposure, but California compliance is not a one-time event — it is an ongoing operational discipline.
The law changes. Minimum wages adjust annually at the state and local level. New statutes take effect, like the 2026 worker notice requirements and expanded family care leave protections. PAGA continues to evolve. And your business changes too — new hires, new locations, new pay structures, and new managers who were not trained on the protocols you put in place.
The most common pattern we see is a business that addresses a known problem well, then drifts back into non-compliance 12 to 18 months later because no one is actively monitoring. That drift is exactly what plaintiff's attorneys are looking for.
For clients who want ongoing protection, we offer fractional compliance officer services — monthly audits, quarterly policy reviews, and on-call guidance — that keep your systems current without the cost of a full-time hire. Think of it as the difference between a one-time physical and an annual health plan.
"Most businesses we work with come to us not knowing how exposed they are. They leave knowing exactly where they stand — and exactly how to fix it. That's the value of the audit, regardless of what you decide to do next."