Chipping Away at the Enforceability of Class Waivers in Employment Claims
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For years, California has been in a state of confusion over the validity of class action waivers that require plaintiffs to arbitrate their claims individually. This issue has been particularly volatile in the employment law arena, where workers and employers have taken passionately opposing positions. Adding to the constant confusion has been a long line of related split decisions in various state and federal courts, including some that have involved National Labor Relations Board (NLRB) rulings.
For the moment at least, California seems to know where it stands. In this regard, the California Supreme Court and the U.S. Court of Appeals for the Ninth Circuit have given a unified directive on class waivers, including how they apply to representative claims for violations of California’s Private Attorneys General Act (PAGA). More specifically, they agree that these waivers will not be enforced as to PAGA claims but will be enforced as to the underlying Labor Code violations. Whether this directive changes through a future ruling on the applicability of preemption under the Federal Arbitration Act (FAA) remains to be seen, which would not be a surprise to most California litigators.
What Is a PAGA Claim?
The PAGA is a provision of the California Labor Code that authorizes employees to bring actions for civil penalties on behalf of the state against their employers—frequently in connection with claims for failure to pay wages or overtime or both. Pursuant to the PAGA, workers are permitted to sue on behalf of themselves and other current or former employees in representative suits that are similar to class actions. By statute, 75 percent of the recovered penalties must be turned over to the state.
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