California Supreme Court Holds That Employees Cannot Recover Allegedly Unpaid Wages in Lawsuits Brought Under PAGA
We have frequently written about California’s Private Attorneys General Act (“PAGA”), a unique statute that allows private individuals to file suit seeking “civil penalties” on behalf of themselves and other “aggrieved employees.”
The only remedy available to employees in actions brought under PAGA is a civil penalty. That is significant because civil penalties are unlike the remedies available in conventional lawsuits that are not brought under PAGA; such non-PAGA remedies can include allegedly unpaid overtime, vacation pay, or meal and rest period premiums.
Less than two years ago in Lawson v. ZB, N.A., 18 Cal. App. 5th 705 (2017), the California Court of Appeal held that one of the sections under the California Labor Code – section 558(a) – would also allow the recovery of certain types of unpaid wages that could be recovered under PAGA. That decision greatly expanded the scope of exposure that employers would face when defending lawsuits brought under PAGA. Not incidentally, it increased the potential exposure in PAGA actions and, as a result, the settlement value of those cases.
Fortunately for employers, the defendant in Lawson petitioned the California Supreme Court to review that decision, and the Court agreed to do so.
On September 12, 2019, the California Supreme Court issued its opinion in Lawson, holding that the Court of Appeal was wrong. The California Supreme Court held that a PAGA plaintiff may not recover the amount of allegedly unpaid wages. Instead, the only remedy available is the civil penalty, the amount of which can vary based on the type of violation. For purposes of section 558, that would be either a $50 or $100 penalty per employee for each pay period in which there was a certain type of violation.
The Lawson decision is a welcome development for all California employers. The potential exposure in PAGA cases – and the pressure to settle given that exposure – has greatly decreased.