Private Attorney General Act Does Not Reach to Unpaid Wages, California Supreme Court Rules
Author: Robert S. Teachout, XpertHR Legal Editor
September 17, 2019
The California Supreme Court has ruled that employees bringing claims under the Private Attorneys General Act (PAGA) may not recover certain unpaid wages in any forum. The California PAGA grants employees the right to sue employers on behalf of the state for civil penalties in Superior Court for violations of the state's labor code.
In ZB, N.A. v. Superior Court, the employee filed a PAGA-only claim based on various alleged wage and hour violations, including a claim for civil penalties under Labor Code Section 558. This section calls for a civil penalty for violations relating to overtime, hours and days of work of $50 per underpaid employee per pay period for a first violation and $100 for any subsequent violation, "in addition to an amount sufficient to recover underpaid wages."
Because the employee and employer in this case had entered into an agreement to arbitrate all employment claims and forego class arbitration, the employer sought to move the portion of the lawsuit for individual unpaid wages to arbitration. The California Supreme Court granted review to resolve a split regarding whether PAGA claims for unpaid wages under Labor Code Section 558 could be compelled to arbitration.
In its review, the Court concluded that the $50/$100 penalty for each underpaid employee per pay period is a civil penalty recoverable under the PAGA law, but that an employee's unpaid wages are not part of that civil penalty, and are therefore not recoverable under the PAGA in any forum.
The Court also ruled that Section 558 does not provide for a private right of action. Instead, employees must bring claims for unpaid wages under other, non-PAGA Labor Code provisions, but such claims are subject to employment arbitration agreements that may require them to arbitrate claims on an individual basis only and not in a class action.