California Supreme Court Breathes New Life Into PAGA Actions

August 9, 2023 by Sarah Kanbar

The California Supreme Court in July issued an important decision restoring life to California’s Private Attorney General Act (“PAGA”).

The United States Supreme Court last year effectively gutted PAGA when it ruled that most employee agreements to arbitrate their employment claims, agreements that are enforceable under federal law, render the employee without standing under PAGA to pursue claims on behalf of the employee’s coworkers. But as Justice Sonya Sotomayor pointed out in her concurring opinion in that case, it is the California courts, not the U.S. Supreme Court, that has the last word on how PAGA’s standing requirement is interpreted.

The California Supreme Court delivered that last word in Adolph v. Uber Technologies, Inc. The Court unanimously held that even if an employee signs an agreement that compels arbitration of the employee’s “individual” employment law dispute, the employee is still an aggrieved employee who can pursue PAGA claims on behalf of other affected employees. Thus, an aggrieved employee does not lose standing under PAGA.

PAGA allows employees to sue their employers in the name of the state for violating state labor laws such as those regulating minimum wages, overtime, sick pay and meal and rest breaks. If the suits succeed, the employees collect 25% of the penalties provided by labor law, with the remainder going to the state. The California Court’s decision means that PAGA is once again an important tool for the enforcement of California’s labor laws.

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