California and federal laws generally uphold arbitration waivers in employment agreements signed by an employees. These arbitration agreements often prevent employee lawsuits should a dispute arise regarding wages or other workplace conditions. In Iskanian v. CLS Transportation Los Angeles, LLC, however, the California Supreme Court entertained the issue of whether an arbitration agreement containing a waiver for class actions also applies to a disgruntled employee bringing or participating in a representative claim under the Private Attorneys General Act (“PAGA”).
What Are PAGA Claims?
Claims brought under PAGA, essentially allow a private citizen to sue an employer on behalf of the state. In California, the citizen (employee) essentially steps into the shoes of the California’s Labor & Workforce Development Agency (“LWDA”) and may sue for:
- • Serious Labor Code Violations
- • Health and Safety Violations
- • Other Labor Code Violations
In a mechanism akin to class action lawsuits, an employee may also bring representative PAGA claims on behalf of other current or former employees who have similar disputes against the same employer. In other words, despite signing a waiver clause that precludes the employee from bringing a class action lawsuit, they may essentially do so by bringing a representative PAGA claim instead.
The Court in Iskanian decided to create an exception to enforcing the waivers and ruled that, although an employee may waive their right to participate in a traditional class action lawsuit, an they cannot waive their right to bring a representative PAGA action.
What is the Effect of the Supreme Court Denying Review?
On January 20, 2015, CLS, the defendant in Iskanian, appealed to the United States Supreme Court to consider the issue. Generally, if there is a federal law in place, then any state law that contradicts it is invalid, or “preempted.” The Federal Arbitration Act (“FAA”) is the federal law governing arbitration waivers. CLS asked the Court to decide whether an employee’s arbitration agreement waiver of a representative PAGA action is different enough from a class action waiver, such that it is not preempted by the FAA. The FAA requires that arbitration agreements must be enforced “according to their terms” and, thus, no state law can rule such agreements as unenforceable. Despite, CLS’s arguments, the Court declined to review the decision of the California Supreme Court.
The Supreme Court’s decision to decline review at this time gives rise to a potential wave of representative PAGA claims, even where employees have signed arbitration agreements. It also extends additional protections, and the possibility of monetary damages, to employees whose employers are violating the California’s Labor Code.
If you believe that you have not been treated fairly by your employer either with respect to wages or working conditions, you are urged to contact a PAGA lawyer within the employment law group of Audet & Partners, LLP. You can request a free, confidential consultation either by completing and submitting our online form on the right side of this page or by calling (800) 965-1461.
NOTE: Employers are legally prohibited from retaliating against workers who move to enforce their legal rights. Please contact us to discuss in confidence potential rights and remedies you may have in the workplace.