California General Law of Private Attorneys of 2004 (“PAY”) allows employees to act as “agents” of the State of California and recover civil penalties for violations of the Labor Code through a civil action brought on behalf of themselves and other current or former employees. In Viking River Cruises, Inc. vs. MorianaThe Supreme Court of the United States held that the Federal Arbitration Law partially preempted a California rule that prohibits employers from requiring their employees to enter into pre-dispute arbitration agreements that contractually waive the right to make “representative” claims under PAGA. viking river held that while California could validly prohibit pre-dispute arbitration agreements that effect “wholesale waivers” of PAGA claims, the Federal Arbitration Act supersedes any rule against requiring employees to arbitrate their “individual” PAGA claims. PAY.
viking river also held that an employee subject to a valid agreement to arbitrate his individual PAGA claims could not maintain “non-individual” PAGA claims based on alleged violations of the Labor Code against other employees. In concurring opinions, however, several justices indicated that the permanent question presented a state law issue on which the California courts would have the last word.
On March 24, 2023, the California Court of Appeals for the Second Appellate District concurred with the concurring opinions in viking river and gave his own answer to PAGA’s standing question on Gregg v. Uber Technologies, Inc.
The decision in Gregg v. Uber Technologies, Inc.
Greek involved an Uber driver who alleged that Uber misclassified drivers as independent contractors, leading to a violation of several provisions of the Labor Code against him and other drivers. The “Technology Services Agreement” Plaintiff signed as a condition of using the Uber smartphone app to be an Uber driver included an arbitration agreement. With respect to PAGA, the arbitration agreement:
- prohibited non-individual PAGA claims against Uber in any court of arbitration;
- required drivers to resolve their PAID claims against Uber “on an individual basis” through binding arbitration; It is
- stated that the outcome of an individual PAGA arbitration could not be used to “resolve whether other individuals have been harmed or subjected to any violations of law.”
Uber asked the Court of Appeals to (a) compel arbitration of plaintiff’s individual PAGA claims under the contract and (b) dismiss non-individual PAGA claims that plaintiff sought to bring on behalf of other drivers. Based on viking riverUber argued that the agreement to arbitrate “individual” PAGA claims deprived the plaintiff of the standing to bring PAGA claims on behalf of other drivers.
The Court of Appeal agreed that the plaintiff had signed an arbitration agreement, which pursuant to viking riverThe Federal Arbitration Act’s review of the Federal Arbitration Act required him to arbitrate his individual PAGA claims. However, the Court of Appeal concluded that the PAGA standing requirements presented a state law issue as to which viking river it was not binding.
Analyzing the standing issue of PAGA for itself, the Court of Appeal disagreed viking riveranalysis of and considered that the Greek the plaintiff retained standing to pursue non-individual PAGA claims in court despite his agreement to arbitrate his individual PAGA claims. The Court concluded that the arbitration agreement only required him to “litigate” the non-individual “part” of his PAGA claim in an “alternative forum”.
As a result, the Court of Appeals concluded that portions of the arbitration agreement intended to require Greek plaintiff’s “waiver” of his right to invoke the position of “representative” to recover penalties based on violations against other employees committed were invalid under California law. The Court severed these provisions from the arbitration agreement.
Greek marks the second decision by the California Court of Appeals to disagree viking riverinterpretation of ongoing PAGA requirements. As we shared in a previous post, the recent decision by the Fifth Appellate District of California in Galarsa v. Dolgen California, LLC also held that an agreement to arbitrate an employee’s individual PAGA claims does not deprive the employee of standing to pursue further representative PAGA claims.
Both Greek It is if remain are published decisions that are binding in the lower courts of California. As a result, when a PAGA plaintiff has an arbitration agreement that requires arbitration of its individual PAGA claim, California trial courts will likely not reject any representative PAGA claim that is also alleged, such as viking river interpreted California law to require. Instead, lower courts are likely to uphold representative claims pending individual arbitration.
However, Greek It is if remain it will not be the final word on whether an employee who has been required to arbitrate his individual claims under PAGA retains statutory standing to pursue representative PAGA claims based on alleged violations of the Labor Code against other employees. The California Supreme Court granted review in Adolf v. Uber Technologies to answer the same question. adolph is fully informed, but the oral argument has not yet taken place.
Pending adolphemployers should be careful to draft arbitration agreements that comply with the latest rulings on the interaction between PAGA and the Federal Arbitration Act, while allowing for the possibility of adolph can agree with viking riveranalysis of this issue. Due to the complex and ever-evolving case law surrounding the arbitration of PAGA claims – and the enforcement of arbitration agreements in general – employers are strongly encouraged to regularly review their arbitration agreements with counsel.