The Supreme Court of the United States (SCOTUS) fell short of what the business community wanted in its Viking River Cruises ruling involving the state's Private Attorneys General Act (PAGA).
“We had hoped that they would have treated a representative action the same way under PAGA that they did class actions in AT&T vs Concepcion and its progeny,” said Fred Hiestand, general counsel with the Civil Justice Association of California (CJAC).
PAGA was enacted in 2004 and allows employees to file lawsuits seeking civil penalties on behalf of themselves, other employees, and the State of California for labor code violations.
In AT&T v Concepcion, the SCOTUS held that class action procedures cannot be imposed by state law on arbitration contracts because they are incompatible with the individualized and informal mode of bilateral arbitration contemplated by the Federal Arbitration Act.
“You can waive a class action remedy with an employer but you can't wave it by itself with PAGA,” Hiestand told the Southern California Record. “The state can provide representative action relief as opposed to a class action relief even though there's an individual arbitration agreement that's been signed. They can do this separately but they can't require you to do them together, which is what PAGA requires you to do now.”
However, on June 15, SCOTUS decided in Viking River Cruises v Moriana that the compulsory joinder feature of PAGA strikes down the ability to bring representative actions.
“According to the way I read Viking, if there's an arbitration agreement that employees have signed with their employer about resolving any dispute they have dealing with their jobs, that has to come first,” Hiestand said. “They have no standing thereafter to bring a representative action.”
Although it’s favorable to businesses because it extinguishes representative actions, Hiestand predicts the reprieve the ruling provides is temporary.
“It will be a year or two before it's fixed against businesses and employers,” he said. “I think their only chance of getting out of what's going to happen to them in the next year or two that will correct what the U.S. Supreme Court has given them in the way of a temporary reprieve, is the ballot and that’s going to be tough.”
As previously reported in the Southern California Record, the ballot initiative, the California Fair Pay and Employer Accountability Act of 2022, proposed to double all penalties for businesses willfully violating wage and hour laws with workers receiving 100% of the penalties rather than having to divide the money between the state and the worker. However, the ballot initiative has been postponed.