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August 3, 2023
A Short Primer on PAGA
After recognizing a shortage of government resources to pursue enforcement of Labor Code violations, the California Legislature enacted the Private Attorneys General Act of 2004 (PAGA). PAGA created new civil penalties for Labor Code violations and allows aggrieved employees, acting as “private attorneys general,” to bring a civil action against an employer on behalf of themselves and other current or former employees to recover civil penalties for Labor Code violations that they have sustained.
SCOTUS’s Decision in Viking River
In Viking River Cruises, Inc. v. Moriana, the U.S. Supreme Court considered an arbitration provision in a pre-dispute employment contract that prohibited the employee from filing any dispute as a class, collective, or representative PAGA action (the waiver). 596 U.S. ___ (2022). The agreement also contained a severability clause, stating that, if the waiver was found to be invalid, then any class, collective, or representative PAGA action would be litigated in court; however, if any “portion” of the waiver remained valid, that portion would be enforced in arbitration.
The U.S. Supreme Court held that:
The California Supreme Court’s Decision in Adolph
The California Supreme Court recently disagreed with point #3. See Adolph v. Uber Technologies, Inc., S274671 (July 17, 2023). Specifically, the California Supreme Court flexed its muscle and noted that it, as the highest court of the State, remains the final arbiter of what is state law and, thus, is not bound by the U.S. Supreme Court’s interpretation of California law. As for the case, the court held that, even if an employee is compelled to arbitrate individual claims, they maintain standing under PAGA to pursue claims arising out of events involving other employees (non-individual claims) in court.
In making its decision, the California Supreme Court first looked to the plain language of PAGA. The statute has only two requirements for PAGA standing: the plaintiff must allege that they are (1) someone who was employed by the alleged violator; and (2) someone against whom one or more of the alleged violations was committed. The complaint in Adolph alleges that Adolph experienced Labor Code violations while driving for Uber. The court held that his allegations that Labor Code violations were committed against him while he was employed by Uber suffice to confer standing to bring a PAGA action.
The California Supreme Court then looked to legislative intent. It found that the Legislature’s sole purpose in enacting PAGA was to augment the limited enforcement capability of the State. Thus, it empowered employees to enforce the Labor Code as representatives of the State and “conferred fairly broad standing on all plaintiffs who were employed by the violator and subjected to at least one alleged violation.”
Employer Takeaways
Seek a stay of non-individual claims in court pending arbitration of individual claims, so you are not simultaneously litigating the PAGA claims in two forums.
In Adolph, the court held that, if an arbitrator determines that an employee was not aggrieved, then the employee can no longer prosecute non-individual claims due to lack of standing. Thus, if you defeat an employee’s individual claims in arbitration by showing that the employee was not an aggrieved party, you defeat the non-individual claims in court as well.
*Special thanks to Ava Petrellese, our Paralegal, for her contributions to this article.
The author of this article, Patricia Tsipras, is a member of the Bar of Pennsylvania. This article is designed to provide one perspective regarding recent legal developments, and is not intended to serve as legal advice in California, Pennsylvania, or any other jurisdiction, nor does it establish an attorney-client relationship with any reader of the article where one does not exist. Always consult an attorney with specific legal issues.
