On June 15, 2022, the Supreme Court limited a California labor law that allows groups of workers to file private lawsuits against their employers on behalf of the state.
In an 8-1 decision, the court ruled that the Private Attorneys General Act (PAGA) is overridden by a federal law that requires settling such private disputes through arbitration.
In general, California employees use PAGA to succeed in wage-theft cases. California is the only state to permit such private lawsuits to enforce its employment laws.
What is the Private Attorneys General Act?
The California Legislature adopted PAGA in 2004 due to significant rates of wage theft and the state’s inability to adequately protect workers’ rights. The law enables employees to take labor disputes to court—without going through mandatory arbitration—even after signing an arbitration agreement when they began working for their employer.
When an employee makes a PAGA claim, they also represent the California Labor and Workplace Development Agency (LWDA). If the worker wins their case, they earn 25 percent of the damages, while the state recovers the remaining 75 percent.
Viking River Cruises vs. Moriana
After Angie Moriana quit her job as a sales agent for Viking River Cruises in 2017, she filed a claim against the company for allegedly failing to send Moriana her final check on time. She was the lead plaintiff—on behalf of multiple Viking employees—in a private lawsuit that alleged several labor violations.
Viking disagreed, claiming that she and other employees had previously agreed to arbitrate such matters and waived any right to take other courses of legal action. However, the Los Angeles County Superior Court and a state appeals court allowed the lawsuit to proceed, which led to the case being sent to the Supreme Court. Viking is arguing that California and its state courts declined to uphold binding arbitration agreements.
The Supreme Court ruled in favor of Viking, stating that the Federal Arbitration Act supersedes PAGA. Therefore, California employees must honor binding arbitration agreements they signed when they were hired.
What’s Next for PAGA?
California Attorney General Rob Bonta said that important parts of the PAGA remain effective and the law of the state. He said workers did not agree to individual arbitration, they can still bring claims on behalf of others. Additionally, it is anticipated the state will respond quickly and reaffirm that PAGA entitles employees to pursue civil action for all labor violations.
If your employer is withholding your pay or denying you your rightful overtime pay, call Polaris Law Group at (888) 796-4010 or complete our online contact form today to schedule a consultation with our experienced legal team. Serving clients throughout Northern and Central California!