Since the California Supreme Court’s decision in Iskanian v. CLS Transp. Los Angeles, LLC (Iskanian), California employees have been able to successfully join their own claims against their employer with claims under California’s Labor Code Private Attorneys General Act of 2004 (PAGA) and avoid arbitrating their disputes pursuant to employment mandatory arbitration agreements and policies. PAGA allows employees to bring claims against their employers for wage and hour violations for all affected employees and obtain all recoveries the California Department of Labor (DOL) would have been able to recover as if the DOL had brought the action. The California Supreme Court in Iskanian held that PAGA claims could not be made subject to
mandatory arbitration since the State had not agreed to arbitration, and that the employee’s individual claims were indivisible and could, thus, be litigated in Court irrespective of the existence of a mandatory arbitration provision or policy.
Apparently, the United States Supreme Court did not take kindly to the California Supreme Court’s approach with regard to PAGA and its effect on employment mandatory arbitration provisions and policies. On June 15, 2022, the US Supreme Court in Viking River Cruises, Inc. v. Moriana held Iskanian’s rule that PAGA actions cannot be divided into individual and non-individual claims and was preempted by the Federal Arbitration Act (FAA), however, Iskanian’s rule that wholesale waivers of PAGA claims are invalid was not preempted by the FAA.
Procedurally and legally, this means that the employee subject to a mandatory arbitration provision will be required to arbitrate their individual claims and, therefore, will lack standing to litigate PAGA.
If you are an employer and have not yet instituted mandatory arbitration agreements and policies, contact your business or employment law attorney to see if a properly drafted mandatory employment arbitration agreement can protect you.
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.
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