CA SUPREME COURT RULING IN ADOLPH v. UBER: EMPLOYEE SUING UNDER PAGA CAN STILL BRING REPRESENTATIVE CLAIMS AGAINST EMPLOYER IN COURT EVEN IF INDIVIDUAL CLAIM IS ARBITRATED
The California Supreme Court has just issued a key ruling that affects California employers and any potential future civil actions that their employees may take against them. In general, PAGA claims under the Private Attorneys General Act of 2004 (PAGA) allow “aggrieved” employees to pursue civil actions against their employers 1) on behalf of themselves (referred to as individual claims) and 2) on behalf of other employees as an agent of the state (referred to as representative claims). Over the last few years, litigation has surfaced at the state and national levels over whether the individual and representative claims must be arbitrated in the presence of an existing arbitration agreement signed by both parties at the start of employment.
Going back to the 2014 decision of Iskanian v. CLS Transportation Los Angeles LLC, the California Supreme Court prohibited the separation of PAGA actions through an arbitration agreement.
Fast forward to May of last year, the United States Supreme Court in Viking River Cruises, Inc. v. Moriana held that an individual PAGA claim could be separated from a representative PAGA claim and compelled to arbitration by virtue of the Federal Arbitration Act’s preemption. As a result, representative claims would be dismissed for lack of standing, seemingly a win for employers. However, employers could only muster a lukewarm cheer since the high court left the door open for the California Supreme Court to have the final say as to how having individual claims compelled to arbitration could influence a plaintiff’s standing to pursue the representative claims. Viking River left alone the decision in Iskanian which said that representative claims cannot be compelled to arbitration.
Since the Viking River decision, appellate courts in California have consistently agreed that employees DO NOT lose standing to take up their representative claims in court merely because the individual claims were sent to arbitration.
And now in the most recent blow to employers, the California Supreme Court on July 17, 2023, in Adolph v. Uber has affirmed these appellate court decisions. So, what is the bottom line? Employees who have their individual PAGA claims compelled to arbitration can still litigate in civil court any representative PAGA action.
Are there any bright spots for employers after Adolph? In a way, yes. For instance, a valid arbitration agreement may send an employee’s individual claim to arbitration. If the arbitrator determined that the employee is not “aggrieved,” and this decision is substantiated by a lower court, the representative claims could not then be pursued in court by virtue of a lack of standing. Absent this fact pattern, however, employers should be ready to defend representative PAGA claims in civil court.
What should employers do in the meantime? Make sure your arbitration agreements are airtight and up to date. Rosasco Law Group, APC can give you needed advice regarding arbitration agreements in your workplace, whether it be the proper drafting of a new agreement or an attorney review of an existing one.
