PAGA, or the Private Attorneys General Act of 2004, allows employees in California to file lawsuits on behalf of the state to recover civil penalties for Labor Code violations. However, a debate has arisen in recent years over whether employers can use arbitration agreements with PAGA waivers to prevent employees from suing them in court.
While some employers argue that the Federal Arbitration Act permits the enforcement of PAGA waivers, California employees have contended that PAGA waivers are unenforceable. The case of Jonathan Gregg in Gregg v. Uber Technologies, Inc. exemplifies this ongoing conflict between employers and employees regarding PAGA arbitration.
In this case, Uber attempted to compel arbitration under its "Arbitration Provision" in the "Technology Services Agreement" that Gregg had accepted. However, the trial court rejected Uber's motion, and in April 2021, the appellate court confirmed the decision. Yet, after the United States Supreme Court's ruling in Viking River Cruises, Inc. v. Moriana last year, Gregg's case was remanded back to the California appellate court for reconsideration.
The Supreme Court in Viking ruled that employees could not be forced to waive their right to bring "non-individual" PAGA claims (claims for harm suffered by other employees) in arbitration. But, they could be required to arbitrate their "individual" PAGA claims (claims suffered by the individual plaintiff). While it initially seemed like a victory for employees, Viking also established that a plaintiff must have an individual PAGA claim to bring a non-individual PAGA claim in court, thus making it impossible to bring non-individual claims in court after arbitration.
Citing Viking, Uber claimed that Gregg's individual claims should be arbitrated, and as per the Supreme Court's standing analysis, that his non-individual PAGA claims should be dismissed. However, the appellate court ruled that Gregg had standing to pursue non-individual PAGA claims in court as he was an aggrieved employee. The appellate court determined that to have standing to pursue non-individual PAGA claims, a plaintiff must simply be an aggrieved employee who was employed by the violator and suffered one or more of the alleged violations. Here, Gregg had standing to pursue PAGA claims as an aggrieved employee because his complaint alleged that he was an Uber employee, had suffered one or more of the Labor Code violations, and was seeking to recover civil penalties for himself and other Uber drivers who had been similarly affected by Uber's Labor Code violations.
To summarize this ongoing legal battle, PAGA waivers are enforceable insofar as they waive an employee's rights to bring PAGA claims on their own behalf, but an employee will not be prevented from pursuing non-individual claims in court even after the individual PAGA claim has been arbitrated.
Just last week, another Court of Appeal court decision came to the same conclusion. Seifu v. Lyft, Inc. The issue is currently slated to be heard by the California Supreme Court.
As the legal landscape regarding PAGA arbitration waivers continues to change, it is crucial for employers and employees to remain informed and seek the guidance of skilled legal counsel.