SAN FRANCISCO – A California Supreme Court ruling has made recent changes to suits filed under the Private Attorneys General Act and will limit certain attempts to recover wages by employees who claim they were unpaid in civil lawsuits.
Zach Hutton, a partner with Paul Hastings LLP in San Francisco who specializes in employment law, explained some of the changes that the Supreme Court’s ruling will bring.
“The decision makes clear that plaintiffs suing under the California Labor Code Private Attorneys General Act (PAGA) can recover civil penalties, but not back wages,” Hutton said.
This, Hutton says, is different from previous decisions that allowed employees considerable recovery of back wages and could cause employers to suffer a great deal.
“Previously, some courts had held that a plaintiff in a PAGA lawsuit brought under Labor Code Section 558 could recover up to one year of back wages as a ‘civil penalty’ and that 100 percent of the wage recovery went to employees—even though PAGA expressly provides only for penalties and directs that 75 percent of any recovery go to the State of California’s Labor and Workforce Development Agency,” Hutton said. “The California Supreme Court held that the 'civil penalties a plaintiff may seek under section 558 through the PAGA do not include ... [back wages].'"
Hutton said the decision does not impact a plaintiff’s ability to sue for back wages in an individual action or class action, as opposed to a PAGA lawsuit.
"However, more and more plaintiffs’ attorneys are trying to get around arbitration agreements that bar class/collective actions by suing only under PAGA," he said. "The law now is clear that plaintiffs in PAGA-only actions can recover penalties, but not back wages.”
As to whether or not the Supreme Court’s ruling will reduce the PAGA-specific lawsuits, Hutton says, is yet to be seen.
“It provides important clarity about the definition of 'civil penalties' that are recoverable under PAGA, and makes clear that PAGA is a punitive statute, not an all-purpose statute for recovering other forms of relief,” Hutton said.