Wins for PAGA in 2024 Mean Wins for Workers

Wins for PAGA in 2024 Mean Wins for Workers

2024 marks the twentieth anniversary of California’s Private Attorneys General Act (PAGA). Over the last two decades, PAGA has emerged as a uniquely important tool for vindicating workers’ rights in the courts. PAGA has overcome numerous challenges during this period, including several notable victories just this year.

Background

The California Labor Code guarantees a multitude of rights for employees, including requirements for meal and rest breaks, overtime pay, and sick leave, as well as protections from wage theft, late payments, and misclassification. A variety of state agencies are responsible for enforcing the Labor Code. However, before PAGA, these laws were consistently underenforced, largely due to a shortage of state resources. PAGA endeavors to address this problem by empowering workers to enforce the Labor Code themselves. Under PAGA, individual employees can bring a claim on behalf of the state to recover civil penalties for violations that their employer has committed against them and similarly impacted employees. If the claim succeeds, the state recovers the majority of the penalty amount, with the remainder going to the employees.

The rise of PAGA coincided with a rising trend of employers requiring their employees to sign pre-dispute arbitration agreements and class action waivers. These kinds of agreements limit employees’ rights to bring claims against their employers in court, instead forcing them to pursue their claims in private arbitration as individuals. While arbitration is supposed to be more streamlined and less expensive than judicial proceedings (a dubious proposition itself), data shows that arbitration places employees at a significant structural disadvantage. Outcomes for employees are far less favorable in arbitration, partly because arbitrators may be inclined to side with the employer so as to be selected in future arbitrations. Additionally, unlike in court, arbitration proceedings are closed to the public, and an arbitrator’s decision can be difficult if not impossible to appeal. Bryan Schwartz Law has written in the past many times about this issue, including here, here, and here.

In light of this trend, PAGA assumed special importance for workers and their advocates, because it allowed employees to continue to hold employers accountable for widespread labor violations even in situations involving arbitration agreements. In 2014, in Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348, the California Supreme Court invalidated a pre-dispute agreement that waived the employee’s right to bring a PAGA representative action. A contract between an employee and employer cannot waive this right, the Court reasoned, because a PAGA action is not just a dispute between private parties–it is a claim that can only be brought by the state or its representatives, where the resulting judgment is binding on the state. You can read more about Iskanian here.

In 2022, however, the United States Supreme Court placed this function of PAGA in jeopardy, in Viking River Cruises, Inc. v. Moriana (2022) 569 U.S. 639. Read about Viking River Cruises here. The majority opinion, authored by Justice Alito, treated a PAGA action as two constituent claims: one for violations suffered by the individual employee (an “individual” claim), and the other for those suffered by all affected employees (a “non-individual,” or “representative,” claim). The Court held that although a wholesale waiver of the right to bring a PAGA representative action would be invalid, an agreement requiring the employee to pursue their individual claim in arbitration is enforceable. But if an employee’s individual claim is ordered to arbitration, what happens to the employee’s representative claim? The Court interpreted California law to answer this secondary question. It concluded that an employee in this position would lack standing to bring their representative claim in court, meaning the claim would be dismissed entirely. In her concurring opinion, Justice Sotomayor pointed out that the California Supreme Court is the ultimate authority on California law, and that California courts would therefore have the last word on this issue.

Sure enough, the following year, in Adolph v. Uber Technologies, Inc. (2023) 14 Cal.5th 1104, the California Supreme Court corrected the high court’s interpretation of California law. The Court held that even when an employee’s “individual” PAGA claims are ordered to arbitration, the employee maintains standing in court as to the employer’s violations against other workers. This was the interpretation, the Court concluded, that best served PAGA’s purpose: ensuring effective Labor Code enforcement.

PAGA Wins in 2024

Following Adolph, PAGA could remain a powerful avenue for employees to vindicate their rights and deter labor violations by employers, even when an arbitration agreement is involved. In February, in Johnson v. Lowe’s Home Centers, LLC (9th Cir. 2024) 93 F.4th 459, the United States Court of Appeals for the Ninth Circuit held that Adolph is not inconsistent or in conflict with Viking River. As of today, the Adolph decision has been cited in hundreds of court filings and relied on by courts in over 200 other decisions. In cases like Balderas v. Fresh Start Harvesting, Inc. (2024) 101 Cal. App. 5th 533, where the plaintiff employee filed a “purely representative” PAGA action with no corresponding individual claim, and Diaz v. Macy’s West Stores, Inc. (9th Cir. 2024) 101 F.4th 697, where the court below improperly ordered both the employee’s individual and representative claims to arbitration, courts have continued to uphold employees’ rights to pursue representative PAGA claims in court, regardless of the status of their individual claims.

Earlier this year, workers’ PAGA protections won a separate procedural challenge, in Estrada v. Royalty Carpet Mills, Inc. (2024) 15 Cal.5th 582. In Estrada, the California Supreme Court rejected the employer’s argument that trial courts have the power to dismiss PAGA claims as “unmanageable,” something that courts can do in the class action context. The court highlighted key structural differences between PAGA claims and class action claims, including the fact that unlike class claims, PAGA claims are effectively administrative enforcement actions. It found that imposing a manageability requirement in PAGA cases would conflict with the California legislature’s objective in enacting PAGA—to maximize enforcement of the Labor Code.

Finally, in June, PAGA overcame an existential political threat, a ballot initiative that would have repealed the law in its entirety. The proposed initiative was tabled when worker advocates and corporate interests reached a compromise: a series of amendments to PAGA. These amendments limit certain penalties available under the law and provide employers with incentives to remedy violations, while protecting PAGA’s core enforcement mechanism. You can read more about this compromise and its implications for workers in Bryan Schwartz Law’s June blog post on the subject.

Thanks to this year’s victories for PAGA, employees in California should continue to have the power to enforce their workplace rights in court. If an entity like your employer is involved in systemic wage and hour violations, it can be held accountable under the California Labor Code using PAGA. If you believe you have experienced wage and hour violations at your employer, please contact Bryan Schwartz Law, P.C.