The Supreme Court held that individual claims arising under California’s Labor Code Private Attorneys General Act (“PAGA”) can be compelled to arbitrate.
Background:
- PAGA permits an employee to sue their employer for Labor Code violations on behalf of the State of California and share in the recovery.
- Moriana, an employee of Viking River Cruises, signed an Arbitration Agreement during her employment which waived her ability to bring class-wide, representative, or PAGA claims.
- After her employment ended, Moriana filed a PAGA claim alleging Labor Code violations affecting her and other employees and seeking aggregated penalties for alleged violations.
- However, a PAGA claim cannot be divided into “individual” and “representative” claims brought in different proceedings. Put simply, the claims of all other employees were dismissed, while the lead plaintiff’s claims were allowed to move forward in arbitration
What this Means:
- The Court’s decision will likely lead to the enforcement of arbitration agreements in many PAGA actions with some potential variation depending on the precise language of the arbitration agreement.
- The joinder of non-individual PAGA claims with individual PAGA claims are incompatible with the FAA.
- The Court will rely on the specific language of the arbitration agreement to decide if the claim will be allowed to move forward as individual or if the non-individual claims will be accepted in the action.
- It is encouraged that employers have their arbitration agreements reviewed to ensure the agreement has the precise language the Court found compelling in their decision.
