Employers May Not Force Employees to Arbitrate PAGA Claims for Labor Code Violations

Brown v. Superior Court, Case No. H037271 (6th App. Dist. June 5, 2013) represents another important victory for workers in California.  In Brown, the court held that employers may not force employees to arbitrate their claims under California’s Private Attorney General Act, Labor Code section 2698, et seq., also known as “PAGA.”  This is because PAGA claims are representative actions intended to advance a public purpose.  A private agreement attempting to waive the right to take such representative actions is unenforceable because it prevents employees from exercising their unwaivable statutory rights.

In Brown, the plaintiffs had signed an arbitration agreement that waived their right to pursue any type of class or representative action.  In their lawsuit, the plaintiffs brought claims for unpaid wages and overtime, among others.  They also brought claims under PAGA.  (Many sections of the California Labor Code provide for civil penalties, often in the amount of $50 or $100 per violation.  PAGA allows employees to bring representative actions to recover those penalties in representative actions brought on behalf of other employees.)

The employer then attempted to force the plaintiffs to arbitrate all of their claims, including their PAGA claims.  If successful, this would have resulted in the plaintiffs losing their right to pursue claims on behalf of other employees.  The trial court agreed with the employer.  However, the Court of Appeal for the Sixth Appellate District blocked the employer from doing so. (more…)