Arbitration agreements are more and more popular among employers (and the United States Supreme Court) as a way to get out of concerted actions brought by wronged employees. In California, they cannot be enforced to stop state prosecution of wage claims through qui tam representative plaintiffs under the Private Attorney General Act (“PAGA”), Cal. Lab. Code § 2698 et seq. See Iskanian v. CLS Trans. Los Angeles, LLC (2004) 59 Cal.4th 348, 382-92.
Nevertheless, employers have sought ways to force PAGA actions out of court and into arbitration, arguing that PAGA claims for wages should go to arbitration, while only the statutory PAGA penalties could remain before a court. A handful of cases in the Courts of Appeal have dealt with this issue, one of which, Lawson v. ZB, N.A., (2017) 18 Cal.App.5th 705, is pending before the California Supreme Court. Bryan Schwartz Law, P.C. has submitted an amicus brief to the California Supreme Court in this case.
On March 28, 2019, a California appellate court issued another decision rejecting this argument, adding to the list of decisions protecting PAGA enforcement in this rapidly developing area of the law. See Zakaryan v. The Men’s Wearhouse, Inc. (Mar. 28, 2019) __Cal.App.5th__. To understand why Zakaryan is noteworthy, we must understand the legislative intent behind PAGA. Before PAGA was enacted in 2003, California struggled to enforce the worker protections in the Labor Code. The financial crisis was in full effect, and the state government could not afford to oversee California’s massive workforce. So it decided to let employees enforce the Labor Code themselves, on behalf of the state, provided that first they comply with some straightforward procedures and the state decides not to take the case itself. Cal. Lab. Code § 2699.3. A PAGA action is “brought by an aggrieved employee on behalf of himself or herself and other current or former employees.” Cal. Lab. Code § 2699. PAGA also provides for penalties to be assessed against liable employers. Cal. Lab. Code § 2699(f). The state gets 75% of any PAGA award, while the employee gets 25% plus reasonable attorney fees and costs. Cal. Lab. Code §§ 2699(g)(1), (I).
Employers have tried to contract around PAGA using arbitration agreements. It hasn’t worked. Although arbitration agreements can waive employees’ class action rights (Epic Systems Corp. v. Lewis, 138 S.Ct. 1612 (2018)), employers cannot force the state to arbitrate its claims, which are vindicated through PAGA. Iskanian, 59 Cal.4th at 378-92. The suing representative plaintiff just stands in the state’s shoes. Id at 386-87. Because an employee cannot contractually waive a right belonging to the state, an arbitration agreement cannot waive an employee’s right to proceed under PAGA.
Despite this, The Men’s Wearhouse tried to argue that a PAGA claim for wages should go to arbitration. The California Court of Appeals didn’t buy it in Zakaryan (Mar. 28, 2019) __Cal.App.5th__.
Plaintiff Zakaryan worked for The Men’s Wearhouse as a store manager from 2002 until 2016, before suing under PAGA, alleging that the company wrongfully misclassified its store managers as exempt from California’s overtime and meal and rest break laws. The Men’s Wearhouse moved to send the portion of Mr. Zakaryan’s claims involving underpaid wages to arbitration. It lost, and appealed.
After a careful analysis of PAGA and arbitration law, the appellate court rejected The Men’s Wearhouse’s argument for two reasons. First, splitting the PAGA claim would violate California’s “primary rights theory,” under which “one injury gives rise to only one claim for relief.” A PAGA claim, the court ruled, involves “one and only one‘particular injury’—namely the injury to the public that the ‘state labor law enforcement agencies’ were created to safeguard.” Therefore, a PAGA claim cannot be split between a court and arbitration.
Second, sending part of the case to arbitration would run contrary to labor and arbitration law. PAGA awards the state 75% and the aggrieved employee the remainder of “a single civil penalty,” the court observed, which could not be properly heeded if portions of the civil penalties were syphoned off to arbitration. Moreover, “a PAGA claim is, fundamentally, a representative claim,” in which the suing employee represents other aggrieved employees in a suit brought on behalf of the state. As such, there was no individual portion of the claim to break off in an arbitration proceeding. In addition, Mr. Zakaryan had elected to pursue claims under PAGA’s representative action mechanism rather than his individual claims. Forcing him to arbitrate as if he had brought individual claims would effectively hijack his case. Finally, splitting the PAGA action would send the most important aspect of the claim to be determined—the employer’s liability—to the arbitrator, thereby circumventing the state’s right to have its enforcement action heard in court.
The California Supreme Court will soon decide this issue in Lawson.
If you have California wage claims and your employer is trying to force you into arbitration, contact Bryan Schwartz Law, P.C..
I cannot say enough GREAT things about Bryan Schwartz Law, P.C. -- and in particular, former paralegal Devin Stuzin. I was recently part of a large class-action settlement -- one the firm tenaciously pursued for a whopping 17 years before getting a record settlement on…
Best people they took my case right a way and fought and win my case best lawyers in bay-area love you all
I was a member of the Doering Meyer class action lawsuit versus the State Department. Bryan Schwartz is a very tenacious and outstanding attorney. When this law firm first contacted me about the case, I was skeptical about their ability to win a case against…
Bryan Schwartz Law, P.C., is a leading employment rights law firm in the United States with a global reach. His is a legal practice of conscientiousness and virtue. Labor law protects a most fundamental right of citizenship and civic engagement. Worker rights are human rights.…
A great team, who kept me informed every step of the way along a many year path to winning a successful class action case.
The staff at this firm are very professional, responsive, friendly, and effective. They persevere for years to get results. I highly recommend them.
Amazing experience with communication and handling of this massive case; I appreciate the help and resolution.
I had a great experience with the firm. They represented me and others in a case that lasted for several years, yet I always knew who to contact and they were always responsive and professional, even as more junior team members transitioned over the years.…
I was recently part of an action. I didn't even know until they reached out! They checked in with me about participation, were very considerate in asking questions. The team was with me every step of the way once I came on board. They were…
Without going into any details about the matter Schwartz Law assisted me with, what I can say is that this is a TOP notch law employment law firm. They are incredibly client-oriented, attentive to your needs, and they feel like a 21st century firm. Like…
Schedule an initial consultation to have Bryan Schwartz Law, P.C. evaluate your situation.
*Your submission of an intake request form does not guarantee that Bryan Schwartz Law, P.C. will take your case or provide legal advice. You must be offered and sign a representation agreement with the firm before you will receive any legal advice.
How did we do?
Note: Your review may be shared publicly.