Unpaid Wages and PAGA: A Third Approach in Zakaryan v. The Men’s Wearhouse

On March 28, 2019, a third California Court of Appeal weighed in on the issue of whether California employees who have signed arbitration agreements can bring claims under the Private Attorneys General Act (PAGA) for unpaid wages.

To set the stage, in Esparza v. KS Indus., L.P. (2017) 13 Cal.App.5th 1228, the Fifth District Court of Appeal held that a PAGA claim can be split, and that PAGA claims for unpaid wages under Labor Code section 558 can be sent to individual arbitration.   In Lawson v. ZB, N.A. (2017) 18 Cal.App.5th 705, the Fourth District Court of Appeal disagreed, holding that employees can bring those PAGA claims on a representative basis in court.

The Second District Court of Appeal has now weighed in on this issue in the case of Zakaryan v. The Men’s Wearhouse (March 29, 2019) Case No. B289192.  In that case, the court agreed with Lawson for the most part, but added this interesting twist:  Of the unpaid wages recovered, 75 percent must go to the State, and 25 percent to the workers.  In reaching this holding, the Zakaryan court relied on the fact that Labor Code section 558 was enacted before PAGA.  Therefore, PAGA’s later-enacted rule regarding the distribution of civil penalties recovered under that statute must control.

The California Supreme Court granted review in Lawson on March 21, 2018, so we will have to wait for that decision to know how this dispute turns out.  But for now at least there is another decision that fundamentally disagrees with Esparza.

If you have questions about your unpaid wages in California, feel free to call the attorneys at Hunter Pyle Law.  We can be reached at 510-444-4400, or at hunter@hunterpylelaw.com.