In this episode of California Employment News, Lukas Clary and Meagan Bainbridge discuss recent developments relating to the labor code Private Attorneys General Act (PAGA) and steps that employers can take to mitigate the risk of PAGA exposure.
Continue Reading California Employment News – PAGA: The Four-Letter Word of Employment Law
What is PAGA?
California’s labor law enforcement agencies, including the Labor and Workforce Development Agency (“LWDA”) also known as the “Labor Board” has the authority to investigate whether employers violate the California Labor Code, and assess and collect civil penalties for any such violations. However, due to purported budget cuts and cited lack of state resources to prosecute such actions, in 2004, the Legislature enacted the Private Attorneys General Act of 2004 (PAGA), Lab. Code, § 2698 et seq., to authorize an employee to bring an action for civil penalties on behalf of the state against his or her employer for Labor Code violations committed against the employee and fellow employees, with 75% of the proceeds of that litigation going to the state, and 25% to the employees. A PAGA plaintiff therefore steps into the shoes of an attorney general to prosecute alleged Labor Code violations for civil penalties, on behalf of the state. PAGA penalties can be astronomical. Pursuant to PAGA, default civil penalties are $100 “for each aggrieved employee per pay period for the initial violation,” and $200 per aggrieved employer, per pay period, per “each subsequent violation.”
Continue Reading California Court of Appeal Holds That Trial Courts Have Authority to Strike PAGA Claims For Being Unmanageable
On March 12, 2020, in the case Kim v. Reins International California, Inc., the California Supreme Court addressed the issue: “Do employees lose standing to pursue a claim under the Labor Code Private Attorneys General Act (“PAGA”) … if they settle and dismiss their individual claims for Labor Code violations?” Unfortunately, for employers in
On September 12, 2019, the California Supreme Court issued it decision in ZB, N.A., and Zions Bancorporation v. Superior Court [Lawson, real party in interest] (“Lawson”). In analyzing whether the Plaintiff’s lawsuit could be compelled to binding arbitration under the arbitration agreement she entered into with her employer, the Supreme Court clarified that under Labor Code section 558, employees are not entitled to recover underpaid wages in a Private Attorneys General Act (“PAGA”) claim.
Before the enactment of the PAGA, section 558 gave the Labor Commissioner authority to issue overtime violation citations for a civil penalty as follows:
(1) For any initial violation, fifty dollars ($50) for each underpaid employee for each pay period for which the employee was underpaid in addition to an amount sufficient to recover underpaid wages.
(2) For each subsequent violation, one hundred dollars ($100) for each underpaid employee for each pay period for which the employee was underpaid in addition to an amount sufficient to recover underpaid wages.
(Labor Code §558, italics added.)
The Lawson case concerned a PAGA action seeking civil penalties under Labor Code section 558. Lawson brought the representative action against her employer, ZB, N.A. — with whom she agreed to arbitrate all employment claims and forego class arbitration — and its parent company, Zions Bancorporation (collectively, “ZB”). ZB filed a motion compelling that Lawson individually arbitrate her “unpaid wages” claim under section 558 because it was not a PAGA civil penalty claim.
The trial court generally agreed, bifurcating Lawson’s action and granting ZB’s motion to compel arbitration of the “unpaid wages” issue. However, it ordered the issue to arbitration “as a representative action” for the unpaid wages of all aggrieved ZB employees. ZB responded by filing both an appeal and petition for writ of mandate with the Court of Appeal. After consolidating the two, the appellate court dismissed the appeal, holding that Code of Civil Procedure section 1294 only gave it appellate jurisdiction over an order dismissing, not granting, a motion to compel arbitration. However, ZB persuaded the Court of Appeal to issue the writ of mandate, but the court did so on a different ground from the one ZB asserted. The appellate court concluded that Lawson’s request for “unpaid wages” under section 558 in fact could not be arbitrated at all. Relying on Thurman v. Bayshore Transit Management (Thurman), the Court of Appeal interpreted section 558 to expressly include “underpaid wages” within the scope of its “civil penalty” provision. In the appellate court’s view, an employee could pursue the entire, indivisible civil penalty through the PAGA action, and that pursuant to Iskanian v. CLS Transportation Los Angeles, LLC, her employer could not compel the PAGA claim to arbitration.
Continue Reading The California Supreme Court Clarifies Wages are NOT Part of the “Civil Penalty” under Labor Code Section 558 in a PAGA Action
Brendan Begley spearheads the firm’s Appeals and Writs group and is a member of the firm’s labor and employment, litigation, and trust, probate and elder abuse litigation groups. He is an Appellate Law Specialist certified by the State Bar of California Board of Legal Specialization.
Brendan will be speaking at The Rutter Group and the
