Whether an Employee is an “Aggrieved Employee” for PAGA Purposes is Not Arbitrable.

Provost v. YourMechanic, Inc., 55 CalApp5th 982 (Oct. 15, 2020)

Defendant sought to compel Plaintiff to arbitrate the issue of whether he was an “aggrieved employee” before he could proceed with his complaint for civil penalties under the Labor Code Private Attorneys General Act of 2004 (“PAGA”). The Fourth Appellate District affirmed the trial court’s denial of Defendant’s motion on the grounds that forcing Plaintiff to arbitrate that issue would impermissibly split the PAGA claim in two: an arbitrable “individual” claim of willful misclassification (Labor Code § 226.8  (a)(1)), and a non-arbitrable representative action. The Provost court cited to several prior opinions directly on point holding that the issue of whether an employee was “aggrieved” may not be decided in arbitration.[i] Further, it noted that Section 226.8 does not give rise to a private cause of action.[ii] The Court also acknowledged the California Supreme Court’s recent opinion in Kim v. Reins Int’l Calif., Inc. (2020) 9 Cal.5th 73, in which the high court found that standing in PAGA actions was not dependent on maintaining an individual claim since a PAGA action does not provide individual relief (it collects penalties on behalf of the state) and noted that Section 226.8 was at issue in Kim, too. Thus, because a PAGA-only representative action is indivisible and solely an action of the state, the appellate court held Defendant could not require Plaintiff to arbitrate any part of the PAGA action. The Court further rejected the argument that U.S. Supreme Court’s decision in Epic Systems Corp. v. Lewis (2018) 138 S.Ct. 1612 had implicitly overruled the seminal California authority, Iskanian v. CLS Transp. Los Angeles, LCC (2014) 59 Cal.4th 348, as previously repudiated in Correia v. NB Baker Elec., Inc. (2019) 32 Cal.App.5th 602.

[i] See Williams v. Super. Ct. (2015) 237 CalApp4th 642, 649 (“‘Because the PAGA claim is not an individual claim, it was not within the scope of the [employer’s] request that individual claims be submitted to arbitration’ [citation].”); Brooks v. AmeriHome Mortgage Co., LLC (2020) 47 Cal.App.5th 624, 629 (a PAGA representative “cannot be compelled to separately arbitrate whether he was an aggrieved employee”); Hernandez v. Ross Stores, Inc. (2016) 7 Cal.App.5th 171, 178 (the “determination of whether the party bringing the PAGA action is an aggrieved party…should not be decided separately by arbitration”); and Perez v. U-Haul Co. of Calif. (2016) 3 Cal.App.5th 408, 421 (“California law prohibits the enforcement of an employment agreement provision that requires an employee to individually arbitrate whether he or she qualifies as an ‘aggrieved employee’ under the PAGA, and then (if successful) to litigate the remainder of the ‘representative action in the superior court’.”).

[ii] Noe v. Super. Ct. (2015) 237 Cal.App.4th 316, 337-341.

 

 

 

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