Court Expands Reach of California PAGA Representative Actions
The California Court of Appeals recently decided a new case potentially expanding the scope and impact of Private Attorneys General Act (PAGA) claims brought by an employee against his employer. In Huff v. Securitas Security Services USA, Inc., the court posed the question of “whether a plaintiff who brings a representative action under PAGA may seek penalties not only for the Labor Code violation that affected him or her, but also for different violations that affected other employees.” The court then answered that question in the affirmative, concluding “PAGA allows an ‘aggrieved employee’ – a person affected by at least one Labor Code violation committed by an employer – to pursue penalties for all the Labor Code violations committed by that employer.” Accordingly, an employee alleging a single violation of the California Labor Code may now bring PAGA claims against his employer for all violations, suffered by any other employee, of the same employer.
PAGA, a statute enacted by the California legislature in 2003, authorizes private litigants to bring an action on behalf of public law enforcement agencies against employers for violations of the California Labor Code. Aggrieved employees receive a 25% share of any civil penalties recovered, with the state receiving the remaining 75%. The statute also allows recovery of attorneys’ fees to further incentivize lawyers to supplement the state’s enforcement efforts.
The decision in Huff resolves an unsettled area of law regarding what types of claims an aggrieved employee could bring through a PAGA action. Employers previously argued that an employee could bring PAGA claims only for those Labor Code violations which the employee actually suffered. Assuming Huff remains the law, the law now holds that even though an employee suffers only a single Labor Code violation, he may bring a representative action to recover for all violations any co-employee experienced during the limitations period. The court noted in so holding that if the result seems like bad public policy, the fault lies with the legislature who drafted PAGA so broadly. In litigation, employers can now expect plaintiffs to attempt to use this case to justify sending a barrage of discovery demands, seeking essentially to conduct a complete audit of the organization’s compliance with state wage and hour laws.
Although a defeat for employers, the practical effect of Huff may be limited. First, an employee is required to provide the Workforce Development Agency with written notice of the facts and circumstances relating to each alleged violation of the Labor Code before bringing a representative action under PAGA. This may be difficult to do when addressing speculative or ill-defined violations, and an employer may attempt to use the scope of the letter actually submitted to limit discovery. If the employee just submits a fact-free letter citing a long list of Labor Code violations, that vagueness may provide a basis to demur to the PAGA claim for failure to properly exhaust administrative remedies with the required specificity. Furthermore, employers may still assert the defense of manageability against a PAGA action. Even if an employee can now plead a broad spectrum of Labor Code violations, it doesn’t follow that those violations can all be manageably tried through a single lawsuit.
With employees now able to bring a representative action for all Labor Code violations, it is more important than ever for employers to take proactive steps, such as performing a thorough internal audit of HR policies and practices, to ensure they are in complete compliance with the law.