The Private Attorney General Act (“PAGA”) is a California statute that authorizes employees to commence lawsuits against their employers for violations of the California Labor Code. PAGA permits employees to act as a private attorney general to pursue civil penalties as if they were actually California’s Attorney General. Moreover, employees can bring these claims on behalf of themselves and other employees.
Until the U.S. Supreme Court’s decision in Viking River Cruises, Inc. v. Moriana, PAGA claims were not allowed to be arbitrated and had to be resolved in California state courts, even if the employee signed a valid arbitration agreement. (See Viking River Cruises v. Moriana (2022) 142 S. Ct. 1906, 1925.) In Viking River, the Supreme Court held that employers could enforce arbitration agreements to require employees to arbitrate their individual PAGA claims. Although Viking River was considered a win for employers, it did not address whether an employee who was compelled to arbitrate their individual PAGA claims could continue to represent the other employees who may or may not have signed arbitration agreements. Although the U.S. Supreme Court suggested that an employee should lose their standing to represent other employees in Court once their individual PAGA claims were compelled to arbitration, they left the question of standing to the California legislators. However, rather than wait for the California legislature to weigh in, the Supreme Court of California addressed the issue in Adolph v. Uber Technologies. (Adolph v. Uber Technologies, Inc., 2023 Cal. LEXIS 4099, *1.)
In the highly anticipated Adolph v. Uber Technologies case, the California Supreme Court held that an employee who arbitrates their individual PAGA claims does not lose standing to litigate PAGA claims on behalf of other employees in court by focusing on the PAGA statute’s specific language and the goal of PAGA. The court explained that for an employee to have standing under PAGA, only the existence of a Labor Code violation must exist. Therefore, a plaintiff arbitrating their individual claim(s) does not change their status as an “aggrieved employee” to represent other aggrieved employees. The California Supreme Court further reasoned that limiting the scope of PAGA standing would be counterintuitive to the purpose of PAGA to allow employees to enforce sanctions on the state’s behalf. Time will tell if an employee will choose to pursue PAGA claims in Court for other employees when there is no financial gain for the employee, but the California Supreme Court thinks they will.
California employers may mitigate their exposure to PAGA claims by:
- Auditing their wage and hour policies and practices to ensure compliance with the Labor Code.
- Providing adequate training to managers and supervisors on wage and hour laws to ensure policies are uniform and compliant.
- Reviewing their arbitration agreements to ensure they are following Viking River and Adolph case law.
For more information on how to better protect your business, please reach out to our Labor and Employment department at 408.286.5800 or maysa.saeed@berliner.com.