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Class Action Waivers Remain Inapplicable to PAGA Claims

The U.S. Supreme Court’s recent ruling that class action waivers in employment arbitration agreements are enforceable under the Federal Arbitration Act (FAA) does not extend to claims under the California Private Attorneys General Act (PAGA). Epic Systems Corp. v. Lewis, No. 16-285; Ernst & Young LLP et al. v. Morris et al., No. 16-300; National Labor Relations Board v. Murphy Oil USA, Inc., et al., No. 16-307 (May 21, 2018); Iskanian v. CLS Transportation Los Angeles (2014) 59 Cal.4th 348.

Last week’s much anticipated U.S. Supreme Court ruling that class action waivers in employment arbitration agreements are enforceable sent waves across both sides of the employment bar.  The decision favors the implementation of arbitration agreements for employers that do not yet have them and updating arbitration agreements for employers that do.  But the Supreme Court’s decision does not extend to claims under the PAGA.  Under the  PAGA, employees can recover civil penalties for violations of the California Labor Code.  Seventy-five percent of the civil penalties are recoverable by the State, with the remaining amount recoverable by employees.  The rationale underlying the carve-out for PAGA claims from class action waivers is that PAGA claims are brought on behalf of the State, and the State is not a party to the arbitration agreement.  Therefore, PAGA claims remain exempted from class action waiver provisions in arbitration agreements.  Whether or not PAGA claims may be brought on a class-wide basis in arbitration or whether they must be decided by a court remains an open question in California.

Jackson Lewis P.C. © 2022National Law Review, Volume VIII, Number 149
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About this Author

Zoe Yuzna, Jackson Lewis Law Firm, Los Angeles, Labor and Employment Litigation Attorney
Associate

Zoe Yuzna is an Associate in the Los Angeles, California, office of Jackson Lewis P.C. She represents employers in all types of employment litigation including wage and hour, harassment, discrimination, retaliation, and wrongful termination matters. She also advises and counsels employers with respect to a diverse range of legal issues.

Ms. Yuzna joined Jackson Lewis from the Division of Labor Standards Enforcement (DLSE) where she represented and advised the California Labor Commissioner and her staff on all aspects of...

213-630-8292
Principal

Hazel U. Poei is a Principal in the Los Angeles, California, office of Jackson Lewis P.C. Her practice is focused on single-plaintiff, multi-plaintiff, and class action employment litigation in state and federal courts.

Ms. Poei has also handled arbitration proceedings and matters before administrative agencies such as the Equal Employment Opportunity Commission, the California Department of Fair Employment and Housing, and the California Division of Labor Standards Enforcement. Ms. Poei has also prepared briefing to the...

213-689-0404
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