Key Highlights PAGA reforms elevate the importance of proactive compliance: The 2024 amendments reallocate penalties, expand cure opportunities, and give courts more discretion to reduce penalties for good-faith errors—making prompt remediation and well-documented compliance efforts critical in 2026. Wage-and-hour fundamentals continue to drive exposure: Daily overtime rules, regular rate calculations, evolving minimum wage requirements and strict meal and rest period obligations remain the primary sources of liability despite PAGA changes. Operational gaps can create outsized risk: Payroll misconfigurations, off-the-clock work, missed break premiums and delayed final pay can quickly compound across employees and pay periods, leading to significant penalties and litigation risk. California’s wage-and-hour framework is one of the nation’s most complex and vigorously enforced. In 2024, the California legislature enacted significant reforms to the Private Attorneys General Act (PAGA) affecting civil penalties allocations, employers’ ability to cure certain violations and PAGA case management. Those reforms took effect in 2025 and continue to influence statewide risk exposure in 2026. The PAGA Context: Reforms That Matter in 2026 PAGA deputizes employees to pursue civil penalties on behalf of the State of California and other employees for Labor Code violations. Historically, employers faced large PAGA penalties because: PAGA actions do not require class certification; Penalties could accumulate per employee, per pay period; and Procedural requirements and enforcement timing often created settlement pressure. The 2024 reforms recalibrated several parts of this framework as they: Reallocated civil penalties so that 65% now goes to California’s Labor and Workforce Development Agency and 35% to aggrieved employees (subject to certain adjustments); Expanded cure opportunities to give employers the chance to fix certain violations within defined windows and limit penalty exposure; and Adjusted penalty structures to give courts clearer guidance to reduce penalties for isolated and good-faith errors while preserving high penalties for persistent or bad-faith violations. The PAGA reforms might seem procedural. But in practice, they highlight how documented compliance efforts, rapid remediation and coordinated cross-functional responses to notices carry strategic importance for California employers. Wage-and-Hour Fundamentals That Still Drive Risk Even following the PAGA reform, the underlying wage-and-hour requirements of the California Labor Code remain central to most claims. (1) Overtime Pay California’s overtime structure is distinctive: 1.5× the regular rate for hours over 8 in a day or 40 in a week; and 2× the regular rate for hours over 12 in a day Employers with multistate payroll systems often find that other states’ “weekly-only” overtime rules do not meet California’s daily requirements. Misconfigured systems can systematically underpay overtime, and small errors compound quickly across a workforce. Because overtime is based on the regular rate and not necessarily the employee’s base hourly rate, items like nondiscretionary bonuses and differentials can change the overtime calculation—another common source of underpayment when payroll rules are not configured to California’s requirements. (2) Minimum Wage California’s statewide minimum wage is $16.90/hour in 2026, with many cities and counties requiring higher rates. Industry-specific minimum wages, like in fast food and health care, may also apply. Minimum wage exposure often stems from: Off-the-clock work; Unpaid pre- or post-shift tasks; Misapplied meal or rest period premiums; and Pay practices that inadvertently reduce effective hourly rates. Minimum wage violations also interact with exempt status thresholds, which are tied to the state minimum wage. (3) Meal and Rest Periods California requires a: 30-minute off-duty meal break for shifts over five hours; Second 30-minute meal break for shifts over 10 hours (with limited waiver options); and Paid 10-minute rest breaks for every four hours worked. Missed meal or rest breaks trigger premium wages—one additional hour of pay per violation. Additionally, meal and rest period premiums count as wages, so they must appear correctly on wage statements and be paid in the next regular payroll cycle. (4) Off-the-Clock Work Employers must compensate for all time an employee works. Common “off-the-clock” risks include: Pre-shift setup or security checks; Donning/doffing time; After-shift duties; and Remote work outside scheduled hours. Even small increments of unpaid time can push employees into unpaid overtime. (5) Final Pay and Waiting Time Penalties Final pay must be issued immediately upon termination and within three days of voluntary resignation or immediately with proper notice. Delays—even for legitimate administrative reasons—can lead to waiting time penalties that accrue daily for up to 30 days. Why This Matters California’s recent PAGA reforms do not reduce employers’ wage-and-hour obligations; they reinforce the importance of getting compliance right. While the amendments create new cure and penalty-management mechanisms, the underlying requirements governing overtime, minimum wage, meal and rest periods and final pay remain unchanged and continue to drive litigation risk. Employers should reassess payroll systems, break practices, classification decisions and final pay procedures. For more information about the PAGA reforms or California wage-and-hour compliance, contact your Polsinelli Labor and Employment attorney.

Key Highlights Brand ambassadors and influencers can present growing misclassification exposure. Luxury, retail and hospitality brands increasingly rely on short-term, brand-facing talent and when these workers are closely integrated into marketing, customer engagement and brand presentation, they can trigger the same wage-and-hour risks as traditional employees. California’s ABC test presents a high bar for independent contractor models. Prong B, in particular, creates challenges when brand ambassadors, stylists and pop-up personnel perform work tied to core brand functions such as customer experience and brand presentation. Control and brand standards drive risk across jurisdictions. Even outside ABC-test states, factors such as training, scripted interactions, fixed schedules, exclusivity or content approval for influencers can undermine independent-contractor classification, regardless of engagement length. Luxury brands increasingly rely on brand ambassadors, stylists, influencers and pop-up personnel to deliver curated customer experiences and reinforce brand identity. These engagements are often short-term or campaign-based and are frequently classified as independent contractor relationships. As worker-classification standards continue to tighten nationwide, however, that model carries growing legal risk. For luxury, retail and hospitality brands, misclassification claims are no longer confined to traditional retail staffing. Brand-facing marketing talent — often viewed as flexible and external — can present the same exposure as in-store employees when classification rules are not carefully applied. Why Classification Has Become a Pressure Point Misclassification can expose brands to significant liability, including unpaid minimum wages and overtime, missed meal and rest periods, payroll tax exposure, statutory penalties and representative or class actions. These risks are amplified in luxury and hospitality settings, where brand standards, customer experience and messaging consistency are central to the business. Although many brand ambassadors view themselves as independent creatives, classification turns on legal standards — not job titles or worker preferences. California’s ABC Test: A High Bar for Luxury Brands California remains the most challenging jurisdiction for contractor models. Under California Labor Code § 2775, a worker is presumed to be an employee unless the hiring entity establishes all three prongs of the ABC test: The worker is free from the control and direction of the hiring entity in performing the work, both under the contract and in practice; The worker performs work outside the usual course of the hiring entity’s business; and The worker is customarily engaged in an independently established trade or business of the same nature as the work performed. Failure to satisfy any prong results in employee status. For luxury brands, prong B often presents the greatest challenge. Brand ambassadors, stylists and pop-up representatives frequently perform work that goes to the core of the brand’s business: marketing, customer engagement and brand presentation. When the brand experience itself is the product, it becomes challenging to argue that these services fall “outside the usual course” of business. Control and Brand Standards Still Matter Elsewhere Outside California, some brands assume classification risk is lower. That assumption can be misleading. For example: New York does not apply the ABC test for wage-and-hour purposes. Instead, courts apply a common-law “control” test that examines factors such as supervision, scheduling, training and integration into the business. Illinois similarly relies on a right-to-control analysis for most wage claims, though ABC-style tests apply in certain statutory contexts, including unemployment insurance. See 820 ILCS 405/212. In practice, these standards still present meaningful risk for luxury brands. Extensive training, required attendance at brand briefings, fixed schedules, exclusivity requirements or detailed scripts and presentation guidelines can all weigh in favor of employee status, even in jurisdictions without an ABC test. The more control a brand exercises over how ambassadors interact with customers and represent the brand, the harder it becomes to sustain a contractor classification. Influencers and Pop-Up Activations: Added Complexity Influencer marketing and pop-up activations present additional classification challenges. Some influencers operate established businesses with multiple clients, supporting independent-contractor status. Others, however, function more like on-demand brand representatives. Classification risk increases when brands require pre-approval of content, dictate posting schedules, restrict work for competitors or tie compensation to strict compliance with brand directives. Engagement length alone does not eliminate exposure. Even short campaigns can give rise to misclassification claims if the underlying relationship resembles employment. Looking Ahead Luxury, retail and hospitality brands will continue to rely on flexible, brand-forward talent to remain competitive. But as worker-classification standards evolve and enforcement intensifies, contractor models that once seemed routine may no longer be defensible. Addressing classification issues at the outset of a campaign rather than after it concludes can help brands preserve flexibility while reducing legal exposure. Brands with questions about independent contractor classification or campaign staffing strategies should consult their Polsinelli Labor & Employment attorney.

Governor Hochul signed legislation titled the “New York State Fashion Workers Act” (the “Act”), which has a widespread impact on the modeling industry as it relates to compensation, contractual restrictions, and other workplace protections. The Act takes effect on June 19, 2025. Applicability The Act is geared towards protecting models, regardless of employee or independent contractor status. The Act aims to close any loopholes by placing affirmative requirements and restrictions on model management companies and their clients. Model management companies include those persons or entities engaged in the management, procurement, or counseling of models. The Act applies to clients of model management companies, including retail stores, manufacturers, clothing designers, advertising agencies, photographers, publishing companies or any other person or entity that receives modeling services. Requirements and Prohibitions for Model Management Companies All model management companies must register with the New York Department of Labor within one year of the effective date of the Act, by June 19, 2026. After the registration is complete, the model management company must post their certificate of registration in a conspicuous place within their physical office and on their website. Model management companies may file a request for exemption if it: 1) submits a properly executed request for exemption; 2) is domiciled outside of New York and is licensed or registered as a model management company in another state that has the same or greater requirements as the requirements under this Act; and 3) does not maintain an office in New York or solicit clients located or domiciled within New York. The registration and exemption status only lasts for a two-year period. Notably, if the management company employs more than five employees, then it must post a surety bond of $50,000. The Act broadly imposes a fiduciary duty upon model management companies that is owed to their models. Acting in good faith, model management companies must, inter alia, conduct due diligence, procure opportunities, provide final agreements to models at least twenty-four hours prior to the start of modeling services, disclose any financial relationship with a client, and identify their registration number in any advertisement (including social media). The Act seeks to provide transparency to models’ compensation by requiring the management companies to clearly specify costs that the model must reimburse and providing the model with supporting documentation of those costs on a quarterly basis. The management companies must ensure that employment of a sexual nature or involving nudity complies with state civil rights law. The Act also considers the management company’s past and future use of images. For former models, the Act requires the management companies to send a written notification to the models informing them if the company continues to receive royalties. For future use of a model’s image, the management company must obtain a written consent separate from the representation agreement that details the creation, use, duration, scope and rate for that digital replica. The Act also prohibits management companies from engaging in certain activities. Among prohibitions related to compensation and fees, the Act prohibits a contractual term greater than three years and prohibits the contract from automatically renewing without affirmative consent from the model. The model management companies are prohibited from taking more than twenty percent of a commission fee. Model management companies are prohibited from discrimination, harassment and retaliation. A new topic of interest is the Act’s prohibition on altering the model’s digital replica using artificial intelligence. Finally, the Act specifies that a management company cannot present a power of attorney agreement as a necessary condition to working with the management company. Requirements of Clients The language of the Act establishes client responsibilities owed to models as it relates to compensation and safety. Clients should be aware that if a model works over eight hours in a twenty-four-hour period, they must receive overtime pay and they must receive at least one thirty-minute meal break. Clients must only offer opportunities that do not pose an unreasonable risk of danger, ensure that work opportunities of a sexual nature or involving nudity comply with civil rights law, and allow the model to be accompanied by a representative to any work opportunity. Causes of Action and Penalties Under the Act, models have a private right of action in addition to the enforcement authority of the commissioner and attorney general. The Act provides a six-year statute of limitations. The commissioner may impose penalties of $3,000 for the initial violation and $5,000 for subsequent violations. Before a court of competent jurisdiction, a plaintiff may obtain actual damages, reasonable attorneys’ fees and costs, and liquidated damages up to 100% for non-willful violations and up to 300% for willful violations. Conclusion In anticipation of the Act going into effect, model management companies should thoroughly review and update their policies and practices and prepare to register or seek an exemption. Likewise, businesses that hire models should review their practices and revise policies as necessary to ensure compliance with the Act. Polsinelli attorneys are available to assist with any questions that may arise in anticipation of the June 19, 2025, effective date and any questions that may arise thereafter.

New Jersey recently became the newest state to enact pay transparency legislation. On November 18, 2024, New Jersey Governor Murphy signed Bill S2310 (the “Act”) into enactment. The Act will go into effect on June 1, 2025. The Act applies to employers – broadly defined as “any person, company, corporation, firm, labor organization or association which has 10 or more employees over 20 calendar weeks and does business, employs persons or takes applications for employment within this State, including the State, any county or municipality or any instrumentality thereof.” The Act also applies to employment agencies. Beginning this summer, employers must incorporate two new practices under the Act. First, the Act attempts to provide notice of promotional opportunities to the employer’s existing workforce. The Act requires that employers “make reasonable efforts to announce, post or otherwise make known opportunities for promotion that are advertised internally within the employer or externally on internet based advertisements, postings, printed flyers or other similar advertisements to all current employees in the affected department or departments of the employer’s business prior to making a promotion decision.” However, there are exceptions to the notice requirement. Promotions for current employees based on years of service or performance, or instances of emergencies, are not subject to the notice requirement.   Second, the Act requires that employers specify the compensation package offered for new job openings and transfers. Specifically, employers are required to include the hourly or salary rate, or range and general description of benefits in the job advertisements for internal and external new jobs and transfer opportunities. Failure to comply with the Act’s requirements will lead to a summary proceeding with the Commissioner of Labor and Workforce Development. Employers found in violation of the Act are subject to civil penalties ranging from $300 for first time violations and $600 for subsequent violations. Only one violation exists despite an employer listing the opportunity for a new job, transfer or promotion on multiple forums. In anticipation of the Act going into effect, employers should review and update their job posting policies and practices. Employers should provide training to those employees involved in the hiring process to ensure understanding of compliance with the Act. Polsinelli attorneys are available to assist with any questions that may arise in anticipation of the June 1, 2025 effective date and any questions that may arise thereafter.