Lessons for California Employers from Viking River (US)

Final Wednesday, the U.S. Supreme Court docket waded into the sophisticated and controversial waters of California’s Labor Code Personal Attorneys Normal Act (“PAGA”).  At difficulty was whether or not pre-dispute arbitration agreements between employers and workers might be enforced to compel PAGA claims into arbitration – California courts had mentioned no.  At stake is a large loophole which permits plaintiffs to disregard arbitration agreements and sophistication motion waivers in such agreements to convey circumstances on behalf of big teams of previous and present workers. Because the plaintiff and their counsel are thought of to be standing in for the State of California, PAGA claims additionally enable plaintiffs to bypass conventional class certification proceedings.

In Viking River Cruises, Inc. v. Moriana, the employer argued that California’s rule exempting PAGA claims from worker arbitration agreements violated the Federal Arbitration Act (“FAA”).  The Supreme Court docket agreed, however solely partially. Its nuanced opinion in the end held {that a} California rule precluding dividing PAGA actions into two parts – particular person and non-individual claims – is preempted by the FAA. The Court docket went on to rule that employers might compel arbitration of a person declare despite the fact that it couldn’t compel arbitration of non-individual claims. Lastly, the Court docket concluded that the California court docket should dismiss the non-individual claims as a result of there was “no mechanism” in PAGA that gave an arbitration-bound plaintiff standing to pursue consultant claims for others in a unique discussion board (that being a court docket continuing).  

There are a number of key takeaways for employers from this choice:

  • Arbitration agreements should be reviewed to make sure they’ve applicable and enforceable class, collective, and consultant motion waiver provisions.

  • Severability clauses additionally want assessment in mild of Viking River. The Court docket famous that Viking River’s waiver clause was overbroad to the extent it was a wholesale waiver of PAGA claims, however due to a fastidiously worded severability clause, the employer was permitted to implement it as to the person declare which was, in the end, all they wanted with a view to prevail.

  • Though a win for employers, this victory, in its totality, could also be short-lived. Each the bulk choice and a separate concurrence particularly spotlight the truth that the California legislature can revise PAGA to create a mechanism for people to pursue non-individual PAGA claims, regardless of having to arbitrate their very own claims. You will be positive worker advocates are already engaged on the textual content of such payments. Whereas lobbying the California Statehouse usually seems like a useless train given the employee-friendly environment that prevails all through California politics, employers ought to, nonetheless, monitor such laws and converse as much as protect as a lot from this victory as attainable.

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