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SCOTUS Issues Employers Relief in PAGA Actions

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Since 2004, the Private Attorneys General Act (“PAGA”) has been a thorn in the side of employers in the State of California. Indeed, there are approximately 17 PAGA actions filed every day in the state. A PAGA claim allows a single employee, who alleges a single labor code violation, to step into the shoes of the state and file a “representative” action on behalf of all other employees for a countless number of other violations all as predicates for liability against a single employer. The default penalties are $100 for each aggrieved employee for each pay period and $200 for each aggrieved employee for each pay period for each subsequent violation. Although the penalties are modest for an individual claim, an aggrieved employee can stack numerous violations on behalf of numerous employees leading to an extremely high dollar value case. The risks employers face in these PAGA actions can often exceed the value of the business itself. Despite multiple attempts to narrow down the exposure for PAGA claims, the California legislature and courts have refused to clean up the mess. To make matters worse, in 2014, the California Supreme Court issued its decision in Iskanian v. CLS Transportation Los Angeles, LLC, 59 Cal. 4th 348 (2014) (“Iskanian”) wherein it held that PAGA waivers in arbitration agreements – which prevent employees from litigating representative actions – were unenforceable. The end result is that since 2014, employers in California could not force PAGA claims into arbitration on an individual basis.

That changed yesterday when the U.S. Supreme Court issued its ruling in Viking River Cruises, Inc. v. Moriana, 596 U.S. _______ (2022) (“Viking River”). To learn more, click here.