PAGA Lawsuits Must Comply with Arbitration Agreements Between Employers and Employees
2024-09-24 11:33:17
On June 15, 2022, the U.S. Supreme Court ruled in Viking River Cruises, Inc. v. Moriana (Case No. 20-1573) that lawsuits under the California Private Attorneys General Act (PAGA) are subject to arbitration agreements between employers and employees. This decision will have a significant impact on PAGA lawsuits brought by employees who have signed valid arbitration agreements with their employers.
PAGA authorizes aggrieved employees to file lawsuits on behalf of themselves, other employees, and the State of California for labor law violations. Employees act as "private attorneys general" and sue employers as agents of the state. PAGA sets default penalties at 100 peremployeeperpayperiodforan"initialviolation"and 200per employee per pay period for each subsequent violation. PAGA lawsuits have historically been excluded from arbitration in California.
In Viking River Cruises, Inc. v. Moriana, the plaintiff filed a PAGA lawsuit against her former employer, Viking River Cruises, Inc., on behalf of herself and other employees, alleging various labor law violations. The plaintiff had previously agreed to arbitrate any disputes arising from her employment under a valid arbitration agreement that included a "class action waiver." As a result, Viking River Cruises sought to compel arbitration of the plaintiff's PAGA claims, but the California trial court denied the motion. On appeal, the California Court of Appeal affirmed the trial court's decision. However, the U.S. Supreme Court sided with Viking River Cruises, holding that the plaintiff must arbitrate her individual PAGA claims as agreed in the arbitration agreement.
In light of the Supreme Court's ruling, California employers should consider reviewing their employment arbitration agreements to ensure compliance.