Court again confirms PAGA claims not subject to arbitration

Many California employers have their employees sign arbitration agreements at the start of employment. These agreements usually state any claims that arise from the employment will be arbitrated and no jury or bench trial will be had, with a few exceptions. What if a dispute involves a claim under California's Private Attorneys General Act (PAGA)?

What are PAGA claims?

The PAGA, California Labor Code §§ 2698 - 2699.5, is a statute that imposes monetary penalties for most violations of the Labor Code's wage and hour provisions. An employee who contends she wasn't paid overtime may assert claims for payment of the unpaid overtime. In addition, she may seek "statutory penalties" under the Labor Code for the employer's failure to pay the overtime. On top of those claims, she may seek additional penalties under the PAGA for the same violation.

The PAGA is a statute that empowers the state of California to investigate an alleged wage and hour violation and prosecute an action against the errant employer. The Act, however, also has provisions that permit an "aggrieved employee" to act as the state's proxy and file claims under the PAGA as a "representative action" after fulfilling certain administrative requirements. These claims can be brought not only on behalf of the primary aggrieved employee but also on behalf of other employees who were aggrieved by the same employer and the same practice.