Hunton Employment & Labor Perspectives

On August 15, 2024, the California Supreme Court held in a unanimous decision that public employers are not “employers” within the meaning of the meal-and-rest-break provisions of the California Labor Code, and the California Private Attorneys General Act (“PAGA”) exempts public employers from penalties for violations of Labor Code provisions carrying their own penalties.  The Court’s ruling substantial limits public employees’ ability to sue for wage-and-hour violations.

Last week, we reported Governor Gavin Newsom had announced that business and labor groups in California had reached a deal to preserve and reform the Labor Code Private Attorneys’ General Act of 2004, Cal. Lab. Code § 2698, et seq. (“PAGA”).  At the time of our report, the text of the new bills had not yet been released, but additional details are now available as the bills race to the Governor’s desk.

Business and labor groups in California have reached a tentative legislative deal to preserve—but reform—the State’s much criticized law known formally as the California Labor Code Private Attorneys General Act of 2004, Cal. Lab. Code § 2698, et seq. (“PAGA”).  Governor Gavin Newsom announced the deal on Tuesday.

California law requires employers to provide employees written wage statements listing gross and net wages earned, hourly pay rates, hours worked, and other employment-related information. (Lab. Code, § 226.) If a claimant demonstrates that an employer has failed to comply with this requirement, the claimant is entitled to an injunction compelling compliance and an award of costs and reasonable attorney’s fees. (Id., subd. (h).)

The legal path between employee arbitration agreements under the Federal Arbitration Act (“FAA”) and representative claims under the California Private Attorney General Act (“PAGA”) has been anything but smooth. A new (albeit unpublished and uncitable) case, Piran v. Yamaha Motor Corp., et al., No. G062198, 2024 WL 484845 (Cal. Ct. App. Feb. 8, 2024)(unpub.) (“Yamaha”), helps to illustrate the challenges and unanswered questions lingering in the wake of this rapidly-developing area of law.

On August 29, 2023, the California Court of Appeal issued a new opinion that, once again, changes how parties litigate and settle claims brought under California’s Private Attorneys’ General Act (“PAGA”).  See Robert Lacour v. Marshalls of California, LLC, et al., 94 Cal.App.5th 1172, 313 Cal.Rptr.3d 77.

Since the United States Supreme Court issued its decision in Viking River Cruises, Inc. v. Moriana in June 2022, trial courts in California have grappled with how to address the non-individual portion of a plaintiff’s PAGA claim that remains in court when a plaintiff’s individual PAGA claim is compelled to arbitration.[1]  Most trial courts have found it appropriate to stay the non-individual portion of the PAGA claim until the arbitration’s conclusion because that outcome would determine whether the employee retains standing to proceed in court.  On July 17, 2023, in the highly anticipated decision of Adolph v. Uber Technologies, the California Supreme Court addressed several questions in the post-Viking River landscape, including the propriety of staying non-individual PAGA claims pending the completion of arbitration. 

On June 15, 2022, the U.S. Supreme Court issued its decision on Viking River Cruises, Inc. v. Moriana (Case No. 20-1573) reversing the California Court of Appeal’s decision to affirm the denial of Viking’s motion to compel arbitration Moriana’s “individual” PAGA claim and to dismiss her other PAGA claims.

The United States Supreme Court has agreed to take a closer look at the enforceability of arbitration agreements that bar representative claims brought under PAGA, a California law that allows individual employees to police labor code violations.

A California appellate court recently upended a representative PAGA and class action settlement because the named plaintiff did not exhaust administrative remedies under PAGA because he failed to identify each separate theory of liability.

In a huge win for California employers, the California Court of Appeals recently confirmed that courts have discretion to strike claims for penalties under the Private Attorneys General Act of 2004 (“PAGA”) if the claims will be unmanageable at trial.  This decision will help employers defeat—or significantly pare down—the broad and unwieldy claims for PAGA penalties that have become popular with the plaintiffs’ bar.

Over the past six months, the California Supreme Court as well as the State’s appellate courts have published a number of important decisions in the area of California labor and employment law. The California Supreme Court’s decisions published earlier this year in Donohue v. AMN Services, LLC (2021) 11 Cal.5th 58 and Vazquez v. Jan-Pro Franchising International, Inc. (2021) 10 Cal.5th 944 were previously covered in Hunton Labor & Employment perspectives. (See Link 1 & Link 2 [discussing the Ninth Circuit’s earlier 2019 decision].)

As originally reported on the Hunton Retail Law Resource Blog, the US Chamber of Commerce, along with two other business-oriented groups, filed an amicus brief urging the Ninth Circuit to overrule a $102 million judgment against Wal-Mart.

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Yesterday, the California Supreme Court issued its highly-anticipated decision in ZB, N.A. v. Superior Court bringing some welcomed good news for California employers.   The case concerned an action brought under the Private Attorneys General Act, wherein the representative employee was seeking, among other things, lost wages under Labor Code Section 558.  The question presented was whether the employee’s claim for lost wages under Labor Code Section 558 could be broken off and sent to arbitration on an individual basis, while the remainder of the PAGA action for civil penalties proceeded in court.  As discussed in a previous post, California courts were split on this issue.

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.

Claims under California’s Private Attorneys General Act (PAGA) are recently much in vogue.  With the proliferation of arbitration agreements and class action waivers, plaintiffs’ attorneys all over California been using PAGA claims – which cannot be waived in an arbitration agreement – as a preferred vehicle to pursue representative wage-and-hour lawsuits against employers.

While there are many unresolved issues relating to the litigation of PAGA lawsuits, California courts are making clear that a PAGA lawsuit will fail if the plaintiff does not send a compliant pre-filing notice to the Labor and Workforce Development Agency (LWDA) prior to the elapse of the statute’s 1-year limitations period.

In a recent case, Correia v. NB Baker Electric, Inc., the California Court of Appeal held that employers cannot require employees to arbitrate their representative claims under the California Private Attorney General Act of 2004 (“PAGA”), Labor Code § 2699 et seq., without the State’s consent.

In Correia, two former employees sued their employer, NB Baker Electric, Inc. (“Baker”), alleging wage and hour violations and seeking civil penalties under PAGA. Baker petitioned the trial court for arbitration pursuant to the parties’ arbitration agreement, which provided that arbitration would be the exclusive forum for any dispute and which prohibited employees from bringing “any class action or representative action” in any forum.

Date: Thursday, November 16, 2017
Time: 12:00 PM to 1:00 PM PST

Please join Hunton & Williams LLP for a complimentary webinar that will address current concerns faced by employers in California. This program, co-sponsored by Welch Consulting, will examine the following issues:

• Fair Pay issues
• Recent PAGA concerns
• “Ban the Box” and background checks
• Sick leave
• Changing local and regional ordinances
• Sexual harassment

We will also discuss ways to address potential risks proactively, including the use of statistical analyses to avoid future litigation.

We hope you can join us for ...

On Friday October 2, 2015, Governor Jerry Brown signed AB 1506 into law, amending California’s Private Attorneys General Act (“PAGA”) to provide an employer the right to cure certain technical violations of the California Wage Statement Law (Labor Code § 226) before the employer can be sued.  The law sets forth specific steps that must be taken before a technical violation can be cured.

Emily Burkhardt Vicente will present “Litigating Private Attorney General Act Claims in the Aftermath of Supreme Court Decisions” at the California State Bar’s Annual Meeting on Sunday, October 11, 2015.

Link to Sunday’s schedule here.

The Ninth Circuit ruled on Monday, September 28, that California Private Attorney General Act (“PAGA”) claims cannot be waived in employment arbitration agreements, following the rule announced by the California Supreme Court in Iskanian v. CLS Transportation Los Angeles, LLC, 59 Cal. 4th 348 (2014).  With this 2-1 ruling, the Ninth Circuit majority found that the Iskanian rule barring PAGA waivers is not preempted by the Federal Arbitration Act (“FAA”).

The U.S. Supreme Court refused on Monday to take up a challenge to the California Supreme Court’s holding that California Private Attorney General Act (“PAGA”) claims cannot be waived in employment arbitration agreements containing a class action waiver.

A California appellate court recently invalidated an arbitration agreement that an employee had voluntarily entered into on the basis that it contained an unenforceable waiver of the employee’s claims under the California Private Attorneys General Act (“PAGA”) and, under the parties’ agreement, that provision could not be severed.

On June 23, 2014, the California Supreme Court announced a landmark ruling that arbitration agreements with mandatory class waivers are generally enforceable while carving out one notable exception.  That exception consists of representative claims brought under the Private Attorneys General Act (PAGA) which is unique to California.

Following the Supreme Court’s game-changing decision in Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541, 2551 (2011), courts have struggled to determine the level and nature of proof a class plaintiff must present at the class certification stage. This is especially so when it comes to the requirements related to commonality: that there be questions of law or fact common to the class and that the common questions predominate over any questions affecting only individual class members. Fed. R. Civ. P. 23(a)(2), (b)(3). Recently, Chief District Judge George King of the Central District of California refused to certify a wage-and-hour class on the ground that plaintiff was unable to establish commonality. See Pedroza v. PetSmart, Inc., No. ED CV 11-298-GHK (DTBx) (C.D. Cal. Jan. 28. 2013) (minute order).  This detailed order offers many great lessons for wage-and-hour actions brought on a class basis.

On June 4, 2012, the California Court of Appeal held that class-action waivers in employment arbitration agreements are enforceable under the Federal Arbitration Act (“FAA”).  In Iskanian v. CLS Transportation Los Angeles LLC, the appeal court affirmed an order to compel arbitration of wage-and-hour claims in light of the 2011 United States Supreme Court case AT&T Mobility LLC v. Concepcion.  As a result, Iskanian provides employers with the necessary ammunition to argue for the enforceability of employment contract provisions providing for arbitration of claims and waiver of class-action lawsuits.

When settling class actions, there is always a question regarding how broad the release can be, and whether an employee can stay silent through the settlement process, only to later sue for claims that arguably were not released.  A California Court of Appeal recently held in Villacres v. ABM Industries that a court-approved class action settlement can prevent a class member from filing a new lawsuit asserting claims that were brought in the previously settled class action and also claims that could have been brought in the prior action − as long as the terms of the settlement’s general release are broad enough to cover those types of claims.