Recently, in Correia v. NB Baker Electric, the California Court of Appeal held employees cannot be compelled to arbitrate their claim under California’s Private Attorney General Act (PAGA) without the government’s consent, despite signing an arbitration agreement.
In Correia, plaintiffs sued their former employer, for wage and hour violations and sought civil penalties under PAGA. Defendant petitioned the Court for arbitration based on the parties’ arbitration agreement, which provided that arbitration would be the exclusive forum for any dispute. The arbitration agreement also stated that no dispute could be brought as a class or representative action.
The trial court granted the arbitration petition on all causes of action except for the PAGA claim. The defendant employer appealed and argued the PAGA claim was required by the arbitration agreement to be arbitrated due to the broad preemptive scope of the Federal Arbitration Act (FAA).
The Court of Appeal affirmed the trial court’s decision. The Court noted the cases that required arbitration under the FAA did not apply since they did not specifically address claims for civil penalties brought on behalf of the government, and the enforceability of an agreement barring a PAGA representative action in any forum. The Court concluded that a waiver of PAGA representative claims in any forum is unenforceable. The Court further determined that the State is the real party in interest in a PAGA claim. Therefore, the State must consent to an
agreement to effectively waive the right to bring a PAGA claim into court.
California employers cannot avoid PAGA lawsuits in Superior Court through a general pre-dispute agreement. While an employee may still agree to waive their right to a jury trial and proceed to arbitration on a variety of claims, such an agreement is unenforceable as it relates to a PAGA claim.
The best defense to employee claims is a good offense. Work with your legal counsel to assure proper compliance with all local, state and federal regulations, and document your compliance.
The information presented is not intended to be, and does not constitute, “legal advice.” Because each situation varies, and only brief summary information is provided here, you should not use this information as a basis for action unless you have independently verified with your own counsel that it applies to your particular situation.
Leave a Reply