Hunton Employment & Labor Perspectives

The arbitrability of wage-and-hour actions brought under the California Private Attorneys General Act (PAGA) is an increasingly important issue due to the growth of PAGA-only actions in California.   In that regard, a split has emerged among courts regarding the arbitrability of PAGA claims for unpaid wages under Labor Code Section 558.

In 2017, a California court held that PAGA claims for unpaid wages under Section 558 could be sent to arbitration on an individual basis because they sought individual-specific relief (i.e., a particular employee’s lost wages).  See Esparza v. KS Industries, L.P., 13 Cal.App.5th 1228 (2017).  However, two subsequent California decisions held that PAGA claims for unpaid wages under Labor Code Section 558 – like claims for civil penalties under PAGA – were not arbitrable on an individual basis. See Lawson v. ZB, N.A., 18 Cal.App.5th 705 (2017); Zakaryan v. The Men's Wearhouse, Inc., 33 Cal.App.5th 659 (2019).  Now, another court has joined Lawson and Zakaryan.  On August 13, 2019, the California Court of Appeal for the Fourth District issued an opinion in Mejia v. Merchants Bldg. Maint., LLC that rejected an employer’s bid to break off the employee’s PAGA claim for lost wages under Labor Code Section 558 and send it to arbitration on an individual basis.  The Court concluded “that a single PAGA claim seeking to recover section 558 civil penalties may not be ‘split’ between that portion of the claim seeking an ‘amount sufficient to recover underpaid wages’ and that portion of the claim seeking the $50 or $100 per-violation, per-pay-period assessment imposed for each wage violation.”   Per the Mejia court, the PAGA claims had to be tried in a single forum, and on a representative basis.

This split among California appellate courts is due for resolution soon.  The California Supreme Court granted review regarding this issue (see Lawson v. ZB, N.A., S246711), and a decision is expected to issue within approximately 30 days.