Can plaintiffs bring non-individual PAGA claims to avoid arbitration?

A recent California court of appeal decision has addressed the question of whether a plaintiff can file a PAGA claim that is representative only, disavowing any individual PAGA claims, and thereby avoid arbitration altogether. In that case, Leeper v. Shift (December 30, 2024) B339670, the court held that every PAGA action includes an individual PAGA claim regardless of how it is pled by the plaintiff. As a result, that individual PAGA claim may be compelled to arbitration if there is a valid and enforceable arbitration agreement.

In Leeper, the plaintiff alleged in her complaint that she was bring a single count for “non-individual” PAGA penalties. She further alleged that because she was doing so, Shipt could not compel her claims to arbitration.

Shipt then filed a motion to compel arbitration, which the trial court denied.

The Second District Court of Appeal (DCA) reversed the trial court. The DCA looked first to the statutory language of PAGA, finding that it clearly referred to PAGA actions as being brought “on behalf of the employee and other current or former employees.” (emphasis added.) From this, the DCA concluded that PAGA actions contain both individual and representative components.

The DCA then distinguished several cases, including Balderas v. Fresh Start Harvesting, Inc. (2024) 101 Cal.App.5th 533. Some plaintiffs, including Ms. Leeper, had relied upon that case for the idea that it was possible to file non-individual PAGA claims. The Leeper court rejected that analysis, reasoning that Balderas was about standing, not the question of whether plaintiffs could bring non-individual PAGA claims.

The DCA recognized the adverse results that its holding could have: allowing PAGA claims to be forced into arbitration, resulting in the possible stay of the representative PAGA claims, as well as possible issue preclusion. This means that employers may be able to use Leeper to put representative PAGA claims on ice for significant amounts of time.

The practical impact of Leeper

The practical impact of Leeper is heightened by the California Supreme Court’s recent decision in Turrieta v. Lyft, Inc. (2024) 16 Cal.5th 664. In that case, the Court made it easier for defendants to reverse auction PAGA claims. As Justice Goodwin Liu noted in his dissent, this issue “calls for legislative attention, lest the statute’s goal of strengthening Labor Code enforcement be thwarted by settlement incentives that drive a race to the bottom.”

The attorneys at Hunter Pyle Law PC have handled many PAGA actions against employers large and small. If you have questions about your rights at work, please feel free to contact us and to make use of our free and confidential intake process.

Challenging Electronic Signatures in Arbitration Agreements

Many companies now require employees to agree to arbitration of any claims that the employee may have against the employer. They do so for several reasons: (1) Employers want to prevent their employees from bringing class actions; (2) Employers think they are more likely to win in arbitration than before a jury and that if they lose the verdict will be lower; (3) Arbitration is a great way for employers to drag out the process; and (4) Appeals from arbitration decisions are normally limited in scope.

Many such companies now use some kind of electronic on-boarding process. These processes often include an agreement to arbitrate that is so buried in other documents  that the employee does not notice it. But some employees are brave enough not to sign the arbitration agreement. Accordingly, it is important to figure out at the outset of a case whether the employee actually signed an arbitration agreement. (more…)

Severing Unconscionable Terms in an Arbitration Agreement: Guidance from the California Supreme Court

Employers use arbitration agreements to try to accomplish two main things: to force employees out of court and into a form that is less favorable to the employees and to prevent employees from bringing class actions. However, employers cannot force employees to comply with arbitration agreements that are unfairly one-sided. Such agreements can be voided if they are both procedurally and substantively unconscionable.

On July 15, 2024, the California Supreme Court issued its opinion in the case of Ramirez v. Charter Communications Inc. (2024) 16 Cal.5th 478, clarifying four issues that often arise when plaintiffs are challenging arbitration agreements as unconscionable:

1. Whether excluding from arbitration claims that the employer is more likely to bring is unconscionable;
2. Whether a shortened limitations periods for filing is unconscionable;
3. Whether limitations on discovery such as a limited number of permitted depositions are unsconscionable; and
4. Whether arbitration agreements can provide for the potential of an unlawful award of attorney fees.

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PAGA and Public Entities: The End of an Era

On August 30, 2024, the California Supreme Court considered the question of whether plaintiffs could recover PAGA penalties against public entities in a case called Stone v. Alameda Health System (“AHS”).

This question had previously been addressed in a court of appeal case called Sargent v. Board of Trustees of California State University (2021) 61 Cal.App.5th 658. In Sargent, the court held that PAGA penalties could be collected against public entities if the underlying Labor Code section provided for a specific penalty (as opposed to the default penalties under Labor Code section 2699(a)).

The Supreme Court concluded, contrary to Sargent, that public entity employers are not subject to PAGA suits for civil penalties for the following reasons:

1. The Labor Code’s definition of “employers” did not include public entities; and
2. PAGA exempts public entity employers from penalties for violations of Labor Code provisions carrying their own specific penalties.

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Timing is Everything for California Whistleblowers

If you are an employee who has reported something in the workplace that you thought broke some kind of law, this article is for you.

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The Role of the “Same Decision” Defense in California Whistleblower Cases

Whistleblower cases in California differ from discrimination cases in several important ways. Among other things, Section 1102.6 of the Whistleblower Protection Act (found in the California Labor Code) provides that where an employee proves by a preponderance of the evidence that discriminatory activity was a “contributing factor” with respect to a discriminatory act, the burden then shifts to the employer. To meet that burden, the employer must prove by “clear and convincing evidence” that the action would have occurred for other legitimate, independent reasons even if the employee had not engaged in protected activity. The statute reads as follows:

In a civil action or administrative proceeding brought pursuant to Section 1102.5, once it has been demonstrated by a preponderance of the evidence that an activity proscribed by Section 1102.5 was a contributing factor in the alleged prohibited action against the employee, the employer shall have the burden of proof to demonstrate by clear and convincing evidence that the alleged action would have occurred for legitimate, independent reasons even if the employee had not engaged in activities protected by Section 1102.5.

This framework, and particularly the requirement that an employer present “clear and convincing evidence,” can be useful for employees in situation in which a number of factors contributed to the decision to discipline or terminate. Furthermore, in Lawson v. PPG Architectural Finishes, Inc. (2022) 12 Cal.5th 703, the California Supreme Court concluded that Section 1102.6 provides the “applicable substantive standards and burdens of proof for both parties in a section 1102.5 retaliation case” and is a “complete set of instructions” for adjudicating whistleblower retaliation claims.

The language in Section 1102.6 does not appear in California’s Fair Employment and Housing Act (FEHA), where many of the state’s antidiscrimination laws are found. For this reason, the FEHA treats cases in which there are multiple reasons for an adverse employment action differently. In Harris v. City of Santa Monica (2013) 56 Cal.4th 203, the California Supreme Court held that in FEHA claims, where an employer proves that it that it would have made the same decision even absent any unlawful discrimination, the employee is still entitled to declaratory or injunctive relief, as well as attorneys fees. However, to trigger this situation, an employee must show that discrimination was a “substantial factor” in the underlying decision.

In other words, the first step of the analysis under FEHA discrimination claims is more challenging for the employee to meet because the employee must show what discrimination was a “substantial factor” as opposed to just “a contributing factor”. However, once the employee meets that burden, in the second step of the FEHA analysis he or she can prevail even if there were other reasons for the discriminatory act.

A recent decision of the First District of the California Court of Appeal clarifies the ramifications of the difference in language between the FEHA and the Whistleblower Protection Act. In Ververka v. Department of Veterans Affairs (May 22, 2024), A163571, the plaintiff tried to import the Harris framework into a whistleblower case. The court rejected that effort, holding that the “same decision” defense is a complete defense in cases brought under the Whistleblower Protection Act.

If you have questions about your rights at work-either a whistleblower or under California’s Fair Employment and Housing Act, please feel free to contact the attorneys at Hunter Pyle Law and to make use of our free and confidential intake process. We can be reached at (510) 444-4400 or at inquire@hunterpylelaw.com.

Attorneys’ Fees in Individual Wage and Hour Cases

California Labor Code section 1194 provides that an employee who is paid less than the legally-required minimum wage or overtime compensation who prevails in a civil action can recover their reasonable attorney’s fees and costs of suit. This provision is important, because many individual wage and hour claims are small, and, absent the possibility of recovering attorneys’ fees, many private attorneys will not take them.

In Gramajo v. Joe’s Pizza on Sunset, Inc., B322697 (March 25, 2024) the court considered whether a trial judge could award no attorney’s fees or costs to a plaintiff who had won $7,659.63 after a seven-day jury trial. The trial judge in that case had done so after finding that the plaintiff”s attorney had severely over litigated the case, which should have been brought in a court of limited jurisdiction because it was worth less than $25,000.

The court of appeal found that even given these facts the trial judge was required to award reasonable fees and costs. However, the court noted that “trial courts must always be guided by what is reasonable and exercise their discretion to strike costs or reduce fees they find unreasonable.”

If you have an individual claim for unpaid wages, please feel free to contact the attorneys at Hunter Pyle Law. We can be reached at (510) 444-4400, or at inquire@hunterpylelaw.com.

The Transportation Worker Exemption: What it is, why it matters, and what we can learn from two 2024 cases addressing it.

In recent years, many employers have sought to shield themselves from class actions, as well as individual claims of all sorts, by requiring their workers to sign arbitration agreements. These agreements usually bar any kind of collective action. They also require workers to proceed in arbitration forums rather than in court. The reason for this development is clear: Employers want to avoid class actions. They also want to avoid being accountable to a jury and/or a judge. Instead, they would rather have any claims made against them decided by an arbitrator whom they pay for.

One of the main reasons that employers can get away with this tactic is that the Federal Arbitration Act (FAA) provides generally that arbitration agreements are “valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” 9 U. S. C. § 2. This clause largely prevents states from limiting the scope of arbitration agreements. See, e.g., Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348, 360 (holding that Gentry v. Superior Court (2007) 42 Cal.4th 443 was abrogated by United States Supreme Court precedent interpreting the FAA).

However, due to historical reasons not explored here, the FAA provides that “nothing herein contained shall apply to contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.” 9 U. S. C. § 1. This is known as the transportation worker exemption. Generally speaking, workers who fall within the scope of that exemption are not required to arbitrate claims against their employers.

Over twenty years ago, the U.S. Supreme Court limited the scope of the transportation worker exemption in a case called Circuit City Stores, Inc. v. Adams, 532 U.S. 105 (2001). In that case, the plaintiff had argued that section 1 of the FAA exempts all contracts of employment, regardless of what a worker does. The Supreme Court rejected that argument, holding instead that  the general phrase “class of workers engaged in … commerce” is “controlled and defined by reference to” the specific categories “seamen” and “railroad employees” that precede it. 532 U.S. at 115.

In other words, the transportation worker exception must be interpreted narrowly, limiting its applicability to the contracts of workers who are similar to “seamen” and “railroad employees.”

More recently, however, this tide seems to have turned a bit in favor of workers. In 2019, the Supreme Court held that the exemption’s reference to “contracts of employment” applies both to employer-employee agreements and to agreements with independent contractors. See New Prime Inc. v. Oliveira (2019) 586 U.S. 105, 116. Then, in 2022, the Supreme Court held that the transportation worker exemption applied to a worker who loaded and unloaded cargo from airplanes that travelled in interstate commerce. Southwest Airlines Co. v. Saxon (2022) 596 U.S. 450, 463.

2024 has brought more good news for workers regarding the exemption, both from the Supreme Court and from the Ninth Circuit Court of Appeals.

Ortiz v. Randstad

First, in Ortiz v. Randstad Inhouse Services, LLC (9th Cir. 2024) 95 F.4th 1152, 1161–1162, the Ninth Circuit applied the test set forth in Saxon and concluded that a worker who performed warehouse work in California was covered by the exemption. In that case, the plaintiff’s job duties included exclusively warehouse work: transporting packages to and from storage racks, helping other employees in obtaining packages so they could be shipped, and assisting another department with preparing packages for their subsequent shipment. The court noted that the plaintiff was not involved in unloading shipping containers upon their arrival or loading them into trucks when they left the warehouse.

Turning to Saxon‘s second step, the Ninth Circuit found that the district court had correctly concluded that the plaintiff’s class of workers “play[ed] a direct and ‘necessary role in the free flow of goods’ across borders” and “actively ‘engaged in transportation’ ” of such goods. The plaintiff handled Adidas products near the very heart of their supply chain. In each case, the relevant goods were still moving in interstate commerce when the employee interacted with them, and each employee played a necessary part in facilitating their continued movement.

Accordingly, the Ninth Circuit concluded that the plaintiff’s job description met all three benchmarks laid out in Saxon: he fulfilled a small but nevertheless “direct and necessary” role in the interstate commerce of goods by ensuring that goods would reach their final destination by processing and storing them while they awaited further interstate transport. He was also “actively engaged” and “intimately involved with” transportation: he handled goods as they went through the process of entering, temporarily occupying, and subsequently leaving the warehouse—a necessary step in their ongoing interstate journey to their final destination.

He was therefore actively engaged in the interstate commerce of goods. So the exemption applied and he was free to bring his class action claims against the defendant.

Bissonnette v. LePage Bakeries Park St., LLC

Then, in April 2024, a unanimous Supreme Court clarified that a transportation worker does not have to work for a company in the transportation industry to be exempt under section 1 of the FAA. Bissonnette v. LePage Bakeries Park St., LLC (2024) 601 U.S. –, 144 S.Ct. 905, 909. In that case, the plaintiffs delivered baked goods made by Flowers Foods (which makes Wonder Bread, among other things). The Second District Court of Appeals held that the plaintiffs were in the “bakery industry” not the transportation industry. The Supreme Court rejected that analysis, holding instead that what mattered was what the plaintiffs actually did.

These cases help to clarify which types of workers are exempt from the FAA which, as discussed above, would generally allow them to bring class actions and other types of claims in court. If you have questions about your rights at work, please feel free to contact Hunter Pyle Law and to make use of our free and confidential intake process. We can be reached at (510) 444-4400, or at inquire@hunterpylelaw.com.

When are Temporary Workers owed Their Final Wages?

Payment of final wages upon termination (or resignation) can be a big deal in California. Labor Code sections 201-203 set forth important rules that employers must follow, and can result in stiff penalties when they are violated: up to 30 days of pay at the employee’s regular daily wages.

A recent California Court of Appeal decision explores the question of when temporary workers are owed their final wages. In Young v. REMX Specialty Staffing (2023) 91 Cal.App.5th 427, the plaintiff was hired by a temporary staffing agency in July 2013. She was then assigned to a Bank of the West location and, soon thereafter, terminated. The plaintiff then sued, claiming that she had not been properly paid her final wages upon the termination of her employment.

The case thus turned on California Labor Code section 201.3(b)(4), which provides that if an employee of a temporary services employer is assigned to work for a client and is discharged by the temporary services employer or leasing employer, wages are due and payable immediately. (more…)

California Whistleblower Protections Cover Complaints that Employers Already Know About

On May 22, 2023, the California Supreme Court issued an important decision clarifying that employers violate the law if they terminate or retaliate against employees who complain about violations that were already known to the employer. In People ex rel. Garcia-Brower v. Kolla’s (S269456), the employee worked for a nightclub in Orange County. She complained that she had not been paid for her three previous work shifts. The employer then threatened to report her to immigration authorities and fired her.

The plaintiff then filed a complaint with the Division of Labor Standards Enforcement (DLSE) of the State of California’s Department of Industrial Relations. The DLSE investigated and prosecuted her complaint. Unfortunately, the trial court held that Labor Code section 1102.5, California’s whistleblower protection law, did not apply because the employee had complained to her employer rather than to a government agency. The court of appeal affirmed on different grounds, holding that in order to be protected under section 1102.5, an employee’s complaint must report something that the employer was not already aware of. (more…)