US Supreme Court to Review Whether PAGA Claim Can Be Arbitrated

California’s Non-public Attorneys Common Act (PAGA) has to this point evaded arbitration agreements. Now, the Supreme Court of the US will take up Viking River Cruises, Inc. v. Moriana to decide whether or not the Federal Arbitration Act (FAA) “requires enforcement of a bilateral arbitration agreement providing that an employee cannot raise representative claims, including under PAGA.”

IN DEPTH

PAGA is a personal enforcement mechanism that deputizes “aggrieved employees” to carry lawsuits to recuperate civil penalties for California Labor Code violations on behalf of themselves, different workers and the State of California. PAGA “representative actions” enable plaintiffs’ counsel to carry the claims of tons of or hundreds of workers in a single motion with out having to fulfill the category certification requirements.

This sweep is important as a result of PAGA supplies for penalties calculated on a per pay interval foundation for every worker. Thus, technical violations of the California Labor Code shortly translate into seven-figure exposures. For instance, the PAGA penalty for wage assertion violations is $250 per worker per pay interval for the preliminary violation and $1,000 for every subsequent violation, which nets over $6 million in penalties for a workforce of 250 workers.

California’s Supreme Court held in Iskanian v. CLS Transportation Los Angeles, LLC, 59 Cal.4th 348 (2014) that PAGA claims usually are not coated by the FAA as a result of such claims are legislation enforcement actions introduced on behalf of the State. The US Court of Appeals for the Ninth Circuit has concurred.

In Viking River Cruises, Inc. v. Moriana, the employer sought assessment from the Supreme Court, contending that the holding in Iskanian immediately conflicts with the Supreme Court’s holdings in AT&T Mobility LLC v. Concepcion, 563 US 333 (2011) and Epic Techniques Corp v. Lewis, 138 S.Ct. 1612 (2018). There, and elsewhere, the Supreme Court has held that, beneath the FAA, courts should implement arbitration agreements in accordance to their phrases, together with phrases that present for individualized proceedings and waive consultant or class proceedings.

TAKEAWAY

A good ruling for California employers might change the panorama by permitting employers to implement and implement arbitration agreements with PAGA waivers. Briefly, it could enable arbitration agreements to management PAGA claims on parity with all different statutory employment claims beneath state and federal legislation. A call from the Supreme Court is anticipated by June 2022.

Authorities prosecutions, after all, can’t be compelled into arbitration. See, e.g.EEOC v. Waffle Home, Inc., 534 US 279 (2002). However, PAGA seeks to end-run that slim exception—a tool that, if permitted, would allow each state to carve out claims from arbitration by related laws. Up to now, the Supreme Court has had zero tolerance for such public coverage exceptions to the broad sweep of the FAA. See, e.g.Marmet Well being Care Heart, Inc. v. Brown, 565 US 530 (2012).

California courts wrestle in accepting the FAA’s sweep. That is likewise evident in Chamber of Commerce of United States v. Bonta, 13 F.4th 766 (ninth Cir. 2021) the place the Ninth Circuit held that California’s legislation trying to ban necessary employment arbitration agreements just isn’t fully preempted by the FAA. En banc assessment by the complete Ninth Circuit has been requested; if denied, Supreme Court assessment might be anticipated to comply with.

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