Labor & Employment Law Blog

I. Summary

On December 30, 2024, and just before the New Year struck, the California Court of Appeal issued a favorable employer decision on the enforceability of arbitration agreements in Private Attorneys General Act (PAGA) cases. In Leeper v. Shipt, Inc., (2024 WL 5251619), the Second District Court of Appeal, Division One, in Los Angeles, held that because every PAGA action necessarily includes an “individual PAGA claim,” PAGA plaintiffs cannot attempt to avoid arbitration by characterizing their lawsuit as a purely representative PAGA claim made on behalf of only other allegedly aggrieved employees, but not the named representative themself. In other words, the court would not allow a “headless” PAGA action to proceed. Accordingly, the court directed the trial court to order the plaintiff, Christina Leeper’s individual PAGA claim to arbitration and stay the representative action in accordance with California Code of Civil Procedure section 1281.4.  This guidance should help end recent attempts by many plaintiffs attempting to circumvent arbitration by “disclaiming” their own individual claims in order to represent only others.

Plaintiff attorneys have deluged the courts with wage and hour class actions and PAGA lawsuits.  The first question an employee advocate asks of their potential client is, “can I see a pay stub?”  Instead of agreeing to represent employees for their harassment or wrongful termination claim, they convince the disgruntled ex-employee to act as a representative for a PAGA or class action for improper wage and hour practices. 

Wage and hour claims asserted under the Private Attorneys General Act of 2004 (“PAGA”) are often compared to class actions, but without the same gatekeeping principles. Under PAGA, a single employee can potentially represent hundreds or thousands of other employees for a garden variety of wage and hour allegations, even if the representative did not experience the same violations—and even if the representative only ever experienced one violation. PAGA’s lack of standards, combined with the persnickety character of the Labor Code, are a recipe for “sue first, ask questions later” lawsuits and difficult decisions to fight or fold.

On September 2, 2022, the California Court of Appeal, Second District, delivered a rare victory for California construction employers in Jerome Oswald v. Murray Plumbing and Heating Corporation (2022) __ Cal.Rptr.3d __, Dkt. No. B312736.  At its core, this case shows how qualifying employers can—and should—take advantage of California’s construction industry exemption from the Private Attorneys General Act of 2004 (“PAGA”).

Seventeen years ago, in 2004, the California Legislature enacted the Labor Code Private Attorneys General Act of 2004 (“PAGA”).  Appropriately dubbed a “bounty hunter” law, PAGA authorizes any current or former “aggrieved” employee of a California employer to file suit to seek statutory penalties for essentially any violation of the California Labor Code together with attorney’s fees, hence the incentive for plaintiff attorneys to bring such cases.  Specifically, under PAGA a current or former employee who is “aggrieved” by a violation of the California Labor Code can seek in addition to damages and liquidated damages, civil penalties on the employee’s behalf and on behalf of all other similarly “aggrieved” (i.e., affected) current and former employees.  The recoverable civil penalties are up to $100 per employee per pay period for an initial violation and $200 per employee per pay period for each subsequent violation, plus attorney’s fees and litigation costs.  When such penalties are awarded, the plaintiff current or former employee along with all other similar “aggrieved” employee will receive 25% of the penalties together with their attorney’s fees as a “bounty,” with the balance of the penalties payable to a State agency known as the California Labor and Workforce Development Agency.  Click Here to read entire post.

On September 12, 2019, the California Supreme Court decided in a unanimous decision that in a Private Attorneys General Act (PAGA) action seeking to recover penalties under California Labor Code Section 558, a plaintiff may recover civil penalties but may not recover actual unpaid wages. This is an important decision, which now clearly prevents a plaintiff from seeking both statutory penalties and wages under PAGA (as is often argued by the plaintiff). The high court did, however, reinforce that actions seeking statutory penalties under PAGA cannot be compelled to arbitration.

Representative claims brought under the California Private Attorney General Act of 2004 (“PAGA”), Labor Code § 2699 et seq., will remain before the court for the foreseeable future. In a recent case, Correia v. NB Baker Electric, Inc., the California Court of Appeal again confirmed that employers cannot compel employees to arbitrate their PAGA claims, no matter the existence of an arbitration agreement, without some evidence that the State of California consented to the employee’s waiver of the right to bring the PAGA claim in court.